8.1.1 OPERATING MODALITIES FOR HOSPITALITY ARRANGEMENT BETWEEN IOC & HPC OR BPC & HPC

Hospitality Arrangement envisages extending storage assistance by the company owning the facilities to another company who may or may not have storage facilities at that location. This arrangement shall be at various locations in hinterland. All the locations will be covered under this arrangement depending upon the requirement of Assisted Company and available facilities of Assisting Company as per mutual agreement. The party extending the assistance is referred to as "Assisting Company" and party availing of the assistance is referred to as "Assisted Company".

A. Arrangement

i. Extending assistance at Depots and Installations in hinterland of AssistingCompany for handling product of Assisted Company.

ii. Receipt of product may be by tankwagon/tanklorry.

iii. Delivery of product may be by tanklorry/tankwagon/local pipeline transfer.

iv. Assisting Company shall carry out all operations and documentation.

B. Receipt formalities

i. Planning of receipt by Assisted Company shall be made in close coordination with Assisting Company so that there is no over-shipment to the location. The quantity stored of both the parties at any point in time shall be approximately in proportion to the throughput of the parties at the location.

ii. Assisted Company shall be registered with local Sales Tax for receiving product from the source of supply.

iii. In case of bonded receipts, both Assisting Company and Assisted Company shall complete all Excise/Customs documentation and allied formalities as per prevailing law inforced.

C. Determination of Receipt Quantity

i) Quantity received by tank wagons
Quantity received by tank wagons shall be determined on the basis of applicable CTCC Chart and for road receipt, on the basis of valid tanklorry calibration chart as mentioned in the stock transfer document after adjusting loss norm at natural temperature as per item "F" below, and accounted at 15deg. C and Metric Tonne (MT) by application of relevant ASTM tables.

ii) Quantity received thru pipeline

Quantity received thru’ pipeline shall be based on receipt tank dips (daughter tank dip) if the transfer is from Refinery to Marketing Terminal or from cross-country pipeline and received quantity shall be based on dispatch tank dip (mother tank dip) if transfer is from one marketing terminal to another.

D. Determination of Delivered Quantity;Quantity delivered in tanklorry shall be determined at 15 deg. C./MT, as per valid calibration chart of the tanklorry/flowmeter, as the case may be at the despatch location.

E. Quantity delivered in tankwagons shall be determined on the basis of dip mentioned in the applicable CTCC chart/flowmeter as the case may be at the location.

F Quantity delivered by local pipeline transfer shall be based on issuing tank dips as determined by joint gauging, before and after transfer PLT operation

G. Delivery formalities

Assisting Company shall make duty payment in case of deliveries from bonded stocks of Assisted Company on deposit basis.

In case of bonded deliveries, both Assisting Company and Assisted Company shall complete all Excise/Customs documentation formalities including declaration of Assessable Value as per prevailing law.

Assisted Company shall make all arrangement for positioning of fit tanklorries as per Petroleum Rules, 2002 & Motor Vehicles Act, 1988 for loading.

Company owned tanklorries of both parties shall be given top most priority in filling as compared to contractor tanklorries of both parties.

Assisting Company shall endeavour to meet eqitable prorata requirements of both parties on daily basis as per allocation made.

Assisting Company shall handle sealing of tanklorries for Assisted Company as per Industry Report on Mechanical Sealing of Tanklorries. However, Assisted Company has to make all necessary arrangements including deployment of required manpower for tank lorry security locking system for smooth and timely delivery of product.

8.1.2 Product Loss Norm

i. Product loss norm shall be as under:

Class "A" products (e.g. MS,Naphtha) -0.7% at natural temperature.

Class "B" products (e.g. SKO, HSD, ATF,) - 0.4% at natural temperature. Class "C" products (e.g. LDO, FO) - 0.2% at natural temperature.

The loss quantity worked out for the above percentages on the stock transfer (dispatched) quantity shall be debited to Assisted Company.

ii. Product loss norm is towards transit and handling loss.

iii. Product loss certified by Railways as per joint dip certificate shall be debited to Assisted Company in addition to above product loss norm, provided such joint certificate is submitted to Assisted Company to enable timely lodgment of claim.
iv. In case of undelivered tankwagons, Assisting Company shall be responsible to obtain non-delivery certificate from Railways and submit to Assisted Company to enable timely lodgment of claims.

v. In case of road receipts, quantity topped up in tanklorry is comprised of two elements - product loss due to temperature variation (as determined by the standard coefficient of expansion/ contraction factors) and the balance as loss due to other causes. Thus quantity debited to the Assisted Company shall be product loss norm plus loss due to other causes, provided Assisting Company obtains acknowledgement of the driver on the documents to enable Assisted Company to recover the loss due to other causes from the erring transporter.

G. Charges

i. Charges for services rendered under Hospitality Arrangement and settlement of the same shall be as per terms covered in Bilateral Agreement for product-sale and purchase between IOC & HPC effective 01.04.04 as applicable for rail/road despatches.

ii. If the quantity received is not evacuated for 30 days from the date of receipt, then additional charges at the highest rate as "i" above (as per rate applicable for rail/road dispatches) shall be recovered on the entire balance quantity for another cycle period of 30 days or part thereof unless it is established that the delay in the evacuation is attributed to Assisting Company.

iii. Charges shall be billed on the basis of Receipt & Issue Statement and other expense statement prepared on the monthly basis by the location.

H. Local dues

i. All dues such as taxes, duty, octroi, tank wagon siding/shunting charges etc. on product of Assisted Company shall be paid by Assisting Company on deposit basis. Assisted Company to make the payment to Assisting Company as per the payment terms agreed in Bilateral Agreement of product sale and purchase. Assisted Company shall follow up for refund, if any, from statutory authorities.

8.1.3 General

i. Both parties shall abide by Oil Industry product handling and operating manuals.

ii. Assisting Company shall ensure that bank remittances are promptly lodged in the bank nominated by Assisted Company.

iii Assisting Company’s laid down operating and accounting procedures shall be followed for assisted Co. too.

iv. Assisted Company shall be responsible for the quality of product to be delivered to the Assisting Company at destination as per Industry Quality Control Manuals for Aviation and Non Aviation products, and the Industry Manual on Acceptance of Products by Marketing Companies & Related Issues. Assisting Company shall not unload any off-spec product, responsibility for disposal of which shall be of Assisted Company.

v. Assisting Company shall maintain quality of products during receipt, storage and ) delivery as per Industry Quality Control Manuals for Aviation and Non Aviation Products, and Industry Manual on Acceptance of Products by Marketing Companies & Related Issues.

vi. Despatches of products by tanklorry shall be guided by Industry Guidelines on Transport Discipline.

vii. Demurrage, if any, on tankwagons paid by Assisting Company for any reason shall be shared between Assisting Company and Assisted Company in proportion to their number of tankwagons in the rake.

viii. All deposits maintained by Assisted Company with Assisting Company shall be as covered in Bilateral Agreement for Product Sale and Purchase dated 31.3.2004

ix. Assisting Company shall be responsible for safe custody of Assisted Company’s products.

x. Assisting Company shall be responsible for safe and proper storage of records of Assisted Company.

xi. Assisted Company shall provide required printed stationery, details on instructions, procedures & guidelines to Assisting Company from time to time.

xii. Assisted Company shall obtain necessary insurance coverage for their product stored In Assisting Company’s tanks.

NOTE : THE ABOVE ARE GENERAL GUIDELINES FOLLOWED IN FINALISATION OF HOSPITALITY ARRANGEMENT,HOWEVER SPECIFIC AGREEMENT IN VOGUE SHOULD BE REFERRED TO .