This article is written by Arun Nair, pursuing Diploma in Advanced Contract Drafting, Negotiation, and Dispute Resolution from LawSikho. The article has been edited by Ruchika Mohapatra (Associate, LawSikho) and Dipshi Swara (Senior Associate, LawSikho).
The global transportation sector accounts for nearly a quarter of global greenhouse gas emissions. This has led to an urgency to transition to electric mobility as a strategy for decarbonizing the transport sector all over the world. Few countries including India support campaigns like [email protected], that aim at having at least 30% new sales share for electric vehicles (EVs) by the year 2030.
This is quite an ambitious initiative for countries who are party to it since one of the biggest prerequisites for this strategy is to put forward an accessible network of EV charging infrastructure. Pursuant to this, the government has instituted various policies and schemes to promote the development of the EV ecosystem including charging infrastructure networks and thereby requiring the government agencies to enter an agreement with the suppliers of EV charging equipment to give effect to this.
This article provides a primer on the contractual clauses to be included in the agreement between the government agencies and the equipment suppliers for the installation of charge points at petrol pumps. Such an agreement lays out the governance structure and defines the roles of the parties involved.
The only impediment to this mission would be a lack of charging infrastructure. The government plans to set up at least one e-charging kiosk at every petrol pump across the country with an aim to accelerate the uptake of EVs by the people and for this, the battery charging ecosystem is very important to reduce range-anxiety. For instance, in India, there are approximately 70,000 petrol pumps and the government plans to set up at least one EV charging station at each of them to induce people to go for electric mobility.
This initiative by the government would lay impetus for the oil marketing companies (OMC’s) such as IOCL, HP, BPCL including private players like Shell, Essar Oil, Reliance etc. to enter into arrangements with EV charging equipment manufacturers like Tata Power, ABB India for erecting a network of charge points to cater to the needs of the EV owners and to promote EV in general.
Schemes, policies and guidelines overview : India
- Under the Central Ministry of Heavy Industries, the following schemes were launched namely:
FAME I – Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles in India (FAME-India) Scheme was launched. The scheme aims to encourage progressive induction of reliable, affordable and efficient electric and hybrid vehicles (xEV). The First Phase of the scheme was initially approved for a period of 2 years, commencing from 1st April 2015. The Scheme has been extended from time to time, with the last extension allowed for a period up to 31st March 2019.
FAME II – The government has approved Phase-II of the FAME Scheme with an outlay of Rs. 10,000 Crore for a period of 3 years commencing from 1st April 2019. Out of total budgetary support, about 86 percent of funds has been allocated for Demand Incentive so as to create demand for Electric Vehicles (xEVs) in the country. This phase aims to generate demand by way of supporting 7000 Electric Buses (e-bus), 5 lakh Electric Three Wheelers (e-3W), 55000 Electric Four Wheeler Passenger Cars (including Strong Hybrid) (e-4W)and 10 lakh Electric Two-Wheelers (e-2W).
- Ministry of Power has come up with the Charging Infrastructure for EV-Guidelines and Standards:
The said guidelines laid down the policy pertaining to the tariff to be charged for the supply of electricity to the EV public charging stations and also laid out directions for setting up of public charging stations (PCS), battery charging stations (BCS), captive charging stations (CCS) and battery swapping stations (BSS).
The policy was floated with the objective to kick-start the adoption of EV across vehicle segments especially the mass category of two-wheelers and shared public vehicles and goods carriers in the state of Delhi. It aimed at achieving this through purchase incentives, road tax and registration fee waivers, established charging networks and swappable battery stations, maintaining an ecosystem for recycling batteries and setting up a state EV fund.
In addition to Delhi, there are other state governments too who have issued EV policies in line with the FAME scheme of the GoI. Some of these states are Andhra Pradesh, Karnataka, Kerala, Tamil Nadu, Maharashtra.
Different levels of EV charging
Most drivers are familiar with different grades of gasoline, like regular, plus, or premium. EV chargers are characterized by “levels” rather than grades. The levels describe how quickly a charger will recharge an EV’s battery.
Level 1 Charging
L1 is the slowest type of charging equipment. L1 charging occurs primarily in residential settings. There are very few L1 chargers built for public use.
Level 2 Charging
L2 allows for medium-speed charging. It can occur in residential, public as well as work settings. These are found in many popular public locations for public use.
Level 3 Charging
L3 are the fastest chargers available. Due to their high cost and extremely high power draw, they are intended for commercial or industrial locations rather than residential areas.
Important provisions to be included in the contract
The agreement will be entered between the installer and provider of EV charging and support services (“Supplier”) and the oil marketing companies on whose properties the charging infrastructure will be installed (“OMC”). The purpose of this agreement is to describe the terms and conditions under which the parties will operate. The OMC would be interested to deploy and operate the equipment on their property, whereas the Supplier would install the charging station and be entitled to create access controls and set charging pricing.
This clause refers to the legal relationship between the parties and sets forth the scope, fees and responsibilities of the Supplier and the OMC. This clause can be drafted as:
The Supplier and OMC hereby engage in this exclusive EV charging supply and service agreement whereby the Supplier will supply, install, operate, and service the equipment on the property addresses under the terms and conditions throughout the term of this agreement.
Both the Supplier and the OMC can decide upon the terms of the agreement. They can further specify the initial term and thereafter decide on an extension for a certain period based on mutual agreement.
The initial term of the Agreement shall be years from the commencement date (the “Initial Term”). The parties may mutually elect to extend the Agreement for a period of the year (the “Extension” and together with the Initial Term, the “Term”). Any further renewals following the Extension will be subject to mutual agreement.
3. Supply and installation
This provision details the responsibilities of the Supplier to prepare the site and install the equipment at the locations within the property and update the equipment periodically during the term of the agreement.
“The Supplier shall supervise including the coordination of all work and conduct the construction required to install the equipment at the designated location(s) within the property as set forth/depicted by the OMC in layouts or diagrams annexed to the agreement. The Supplier shall connect the equipment to the electricity grid and bear the cost associated with the installation. The Supplier shall also obtain all necessary municipality and any other government licenses, permits, insurances and other permits required to carry out the installation.”
4. Maintenance and customer service
Once the equipment has been installed, the OMC would require the Supplier to ensure the proper functioning of the said equipment through timely repair, maintenance, and servicing.
“The Supplier, its approved subcontractors, affiliates, and/or agents will service, operate, and replace the equipment as necessary to keep it in proper working order. The Supplier shall also make available technical service support personnel to service the equipment. If the equipment requires maintenance or replacement due to vandalism, the OMC shall be responsible to carry the costs associated with such services.”
The parties would want indemnity from all claims, requests, complaints, accusations, suits, actions, proceedings of every kind arising out of the other party’s conduct. Therefore, such a clause is unavoidable.
“The OMC shall indemnify, the Supplier and any of its associates, harmless from and against any and all damages from third party claims arising out of or relating to the negligence, omissions of the OMC, conditions existing at the property, unless such damages arise out of or relate to the negligence of the Supplier. The Supplier shall indemnify the OMC from and against any and all damages from third-party claims that result from or arise out of the actual or alleged misappropriation or infringement of any intellectual property rights in connection with the equipment.
The agreement should explicitly state the ownership and title of the equipment supplied in case a subscription-based model is being executed.
“The equipment is and shall remain the personal property of the Supplier, regardless of the manner in which they may be attached to any part of the property. The OMC shall not permit any charge, lien or other legal processes to be attached to the equipment and shall immediately notify the Supplier if any of the foregoing shall occur.”
The Supplier shall have to provide training to the personnel of the OMC on the basic operation of the charging station.
“The Supplier will periodically train and retain its employees on the use and maintenance of the charging infrastructure at no cost to the OMC. Providing such support services is at the discretion of the Supplier.
8. Intellectual property rights
The agreement must mention that all the rights to IP of the charging infrastructure and technology used would belong to which party.
As used in this Agreement, “Intellectual Property” means all copyrights, patents, trademarks and service marks, names, logos, designs, trade secrets, know-how, and all unique concepts, information, data and knowledge that is eligible for legal protection under applicable laws as intellectual property. The parties agree that, as between them, the OMC shall retain ownership of its IP’s and the Supplier shall not obtain any right in any IP of the OMC. The parties agree that, as between them, the Supplier shall retain ownership of its IP’s and the OMC shall not obtain any right in any IP of the Supplier.
Thus, with the governments wanting to curb the global GHGs and to meet the sustainable development goals and to earn carbon credit among other things, they are encouraged to bring about further favourable policies in this area resulting in further such collaborations between the existing OMC’s, the Government and the suppliers of EV leading to engagement and entering into such contracts.
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