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Nombre del Proceso GESTIÓN DE BIENES Y SERVICIOS Código: BS-FT-002 Versión: 3 Nombre del Formato TÉRMINOS DE REFERENCIA Fecha última revisión: 13/12/2012 Páginas: 1 de 24 Código: BS-FT-002 Página: 1 de 24 Versión: 1 Fecha última revisión: 7/04/2014. (Unofficial translation) SELECTION PROCESS 026 SELECTION PROCESS FOR THE HIRING OF A NATURAL PERSON OR LEGAL ENTITY TO PROVIDE A TRAINING SERVICE ABOUT THE CONCEPT OF OPEN SEASONS AND ITS APPLICATION IN THE CONSTRUCTION OF NATURAL GAS TRANSPORT INFRASTRUCTURE 1 BACKGROUND 1.1 Natural gas market description Natural gas in Colombia is the source of primary energy for the industry, trade, power generation plants, vehicles and residential users 1 . In 2013, this demand implied an average consumption of 1,048 giga BTU per day, GBTUD, or nearly 985 million cubic feet per day, MCFD. This gas market is mainly covered by the production fields of La Guajira in the Atlantic Coast, which injects gas to the Ballena, and to the Cusiana and Cupiagua points in the inner part of the country (see Figure 1). Estimates indicate that the country has proven reserves of 5.7 trillion cubic feet. Since the end of 2007 until now, Colombia has exported to Venezuela natural gas from the La Guajira fields 2 . Likewise, in the mid-term, imports of liquefied natural gas are expected in order to meet the gas demand of thermo-electric plants during the dry seasons, and for safe generation required to ensure continuous power energy service provision 3 . 1.2 Description of the transport system The natural gas transport activity in Colombia is performed through the gas line network that connects the gas production centers to the distribution systems, and to the connections of the users that directly connect to the transport system. 1 By 2013, nearly seven million residential users or approximately thirty million inhabitants, and four hundred and seventy thousand vehicles consumed natural gas. 2 In 2013, 203 GBTUD in average were exported to Venezuela. 3 The power generation system in Colombia is mainly hydraulic and, therefore, during low hydrology periods, like the one caused by the El Niño phenomenon, it requires the support of thermal generation.

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Page 1: TÉRMINOS DE REFERENCIA Páginasapolo.creg.gov.co/MILLENNIUM/sl.requerimientos.nsf...TÉRMINOS DE REFERENCIA Fecha última revisión: Páginas: 7 de 24 Código: BS-FT-002 Página:

Nombre del Proceso

GESTIÓN DE BIENES Y SERVICIOS

Código: BS-FT-002

Versión: 3

Nombre del Formato

TÉRMINOS DE REFERENCIA

Fecha última revisión: 13/12/2012

Páginas: 1 de 24

Código: BS-FT-002 Página: 1 de 24

Versión: 1 Fecha última revisión: 7/04/2014.

(Unofficial translation)

SELECTION PROCESS 026

SELECTION PROCESS FOR THE HIRING OF A NATURAL PERSON OR LEGAL ENTITY TO PROVIDE A TRAINING SERVICE ABOUT THE CONCEPT OF OPEN SEASONS AND ITS APPLICATION IN THE CONSTRUCTION OF NATURAL GAS TRANSPORT INFRASTRUCTURE

1 BACKGROUND

1.1 Natural gas market description

Natural gas in Colombia is the source of primary energy for the industry, trade, power generation plants, vehicles and residential users1. In 2013, this demand implied an average consumption of 1,048 giga BTU per day, GBTUD, or nearly 985 million cubic feet per day, MCFD. This gas market is mainly covered by the production fields of La Guajira in the Atlantic Coast, which injects gas to the Ballena, and to the Cusiana and Cupiagua points in the inner part of the country (see Figure 1). Estimates indicate that the country has proven reserves of 5.7 trillion cubic feet. Since the end of 2007 until now, Colombia has exported to Venezuela natural gas from the La Guajira fields2. Likewise, in the mid-term, imports of liquefied natural gas are expected in order to meet the gas demand of thermo-electric plants during the dry seasons, and for safe generation required to ensure continuous power energy service provision3.

1.2 Description of the transport system

The natural gas transport activity in Colombia is performed through the gas line network that connects the gas production centers to the distribution systems, and to the connections of the users that directly connect to the transport system.

1 By 2013, nearly seven million residential users or approximately thirty million inhabitants, and four hundred and seventy thousand

vehicles consumed natural gas. 2 In 2013, 203 GBTUD in average were exported to Venezuela.

3 The power generation system in Colombia is mainly hydraulic and, therefore, during low hydrology periods, like the one caused by

the El Niño phenomenon, it requires the support of thermal generation.

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Nombre del Proceso

GESTIÓN DE BIENES Y SERVICIOS

Código: BS-FT-002

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To date, seven companies carry out this activity in Colombia4. To such end, they use nearly 6,300 km of gas lines, 2-32 inch diameter, and 195,000 hp installed in 18 compression stations5. This infrastructure comprises the national natural gas transport system, SNT (for its acronym in Spanish). Figure 1 shows the approximate stretch scheme of the main gas lines of the SNT. It also shows the location of the main gas production sources. With this infrastructure and according to the location of the production sources and demands nearly 1,220 MCFD could be transported.

Figure 1. Scheme of the main SNT gas lines and production sources

4 Two companies stand out for their size: one in the Atlantic Coast, which transport system interconnects the points in Ballena,

Barranquilla and Cartagena, and another on the inner part of the country, which interconnects the points of Ballena, Barrancabermeja, Cusiana, Cali and Neiva (See figure 1). 5 The compression stations allow increasing the transport capacity of a gas line.

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GESTIÓN DE BIENES Y SERVICIOS

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1.3 Economic regulation

The Colombian Energy and Gas Regulatory Commission (CREG, Comisión de Regulación de Energía y Gas) is the entity responsible for establishing the economic regulations applicable to the activities related to the provision of natural gas service in Colombia. In accordance with the functions assigned by Law 142 of 1994, CREG must promote competition to the extent possible, and regulate the exercise of some activities of the service provision chain, as required. In furtherance of its functions, CREG has adopted the regulation applicable to the natural gas production-trading, transport, distribution and marketing activities to the final user.

Gibraltar

Popayán

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GESTIÓN DE BIENES Y SERVICIOS

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The relevant regulation for the production- trading activity is set out in resolutions CREG 088 and 089 of 2013.6 In general, based on this regulation, natural gas is traded in a free-price environment and market participants must adhere to the trading mechanisms and to the contract modalities established by CREG. It is also worth mentioning that the production- trading activity is vertically independent from other gas service supply chain activities in Colombia. Included below is a description of the regulation applicable to the transport activity. There is no mention of other activities, as this is not relevant for the purpose of this document.

1.3.1 Economic regulation applicable to transport

CREG sets out the regulation related to access to the SNT and to the remuneration of the activity. The regulation applicable to the access is provided for in CREG Resolution 071 of 1999 and that applicable to remuneration in CREG Resolution 126 of 2010. For purposes of this document, mention shall only be made of the regulation of activity remuneration. In CREG Resolution 126 of 2010, CREG established the methodology to calculate the regulated transport charges that may apply to each transporter. This is a general methodology, and the application thereof generates a particular resolution for each SNT transporter, which provides for the respective regulated charges. The CREG Resolution 126 of 2010 methodology is based on the following main elements: 1. Contracted carrier: The carrier ensures the transport service to those clients who agree firm

transport contracts.

2. De-centralized operation: Each carrier operates its transport system and delivers based on its contractual obligations.

3. Price cap: The methodology is based on an incentives scheme through price caps, which are reviewed every five years, based on the rate methodology defined by CREG. In accordance with this scheme, the carrier assumes the demand risk.

4. Remuneration period: The methodology sets out a 20-year period for investor to recover the

investor value acknowledged and the expected profitability on the capital invested. In any event,

6The CREG regulation applies to the production - trading activity, it being understood as the gas production traded for domiciliary

public utilities. In other words, it does not involve activities prior to the production or that production that is not targeted to domiciliary public service (e.g. gas production reinjected to the hydrocarbon production fields).

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since this is an incentive methodology at the end of the period, the investor may obtain a value higher or lower than expected.

After year 20, the investor decides whether to continue with the asset operation, or if it is replaced by a new one. This implies CREG's review of the rates to include: i) 100% of the new asset value in case it is replaced; or ii) 60% of the value if new, if the asset remains in operation. In any of these two cases, the investor shall have another 20-year period to recover the investment value and the expected profitability on the capital invested.

5. Average mid-term cost calculation: For the charge calculation, the existing investment value, plus

the investment value that the carrier plans to execute in the following five years. The charge results from the ratio between the investment and demand value, at a 20-year term.

6. Distance and stamp charge combination: Each transport system is divided into sections, and CREG sets out charges for each section. The stamp charge is established for minor gas lines derived from main lines.

Some charge items approved by CREG include: - Sets of capacity and variable charges: CREG calculates capacity rate sets and variables that

consider investment, expressed in US Dollars for every thousand cubic feet per day-year, kpcd-year, and one thousand cubic feet per year, kpc-year, respectively. Sets are established based on investment proportions, i.e. in the 80 capacity 20 variable set, CREG uses 80% of the investment value to calculate the capacity charge, and 20% to calculate the variable charge.

- Fixed charge that pays for administration, operation and maintenance (AOM) expenses: This

charge is expressed in Colombian pesos for every thousand cube feet per day-year, kpcd-year. - Charge negotiation scheme: The transporter and its clients may negotiate charge sets approved

by CREG. The purpose of this negotiation is to ensure that the parties establish the set of charges that equitably distribute the risks faced by each party.

The methodology of CREG Resolution 126 of 2010 foresees the following with respect to the construction of a new gas transport infrastructure: 1. The expansion of the existing system through compression or gas line "loop" stations is made by

the existing carrier or incumbent.

2. The transport infrastructure construction to take gas from one new production field to the existing SNT is the responsibility of the producer- trader. In other words, the producer - trader is

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GESTIÓN DE BIENES Y SERVICIOS

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responsible for delivering gas to the existing SNT. If transport infrastructure is to be built for the purpose, the producer- trader may contract a carrier or build the project directly.

3. The extension of the main SNT gas lines, denominated type-1 gas lines, may be made by a carrier.

4. The extension of the main SNT gas lines to new regional markets, denominated type-II gas lines, may be made by a carrier or a distributor7.

Pursuant to provisions from law 142 of 1994, compensation methodologies are to be reviewed every five years. In that light, the commission started an analysis aiming to establish the new compensation methodology for the transportation activity. CREG identified the need to study open season mechanisms which are used in the construction of infrastructure for natural gas transportation.

2 CONTRACT OBJECTIVE

To provide a training service about the concept of open seasons and its application in the construction of natural gas transport infrastructure.

3 SCOPE OF THE CONTRACT

At least the activities set out below shall be conducted to achieve the proposed object:

7 From the regulatory standpoint, no vertical integration is allowed between transporter and distributor. However, the regulation

allows distributor to conduct the transport activity when this agent builds type II gas lines.

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GESTIÓN DE BIENES Y SERVICIOS

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3.1 Deliver a document on magnetic media that contains the material to be used in the training and the references used to prepare this material. This document may be in the form of slide presentations (e.g. Power Point) and is to be submitted within three weeks following the signing of the start record.

3.2 Conduct training on the process of open seasons for a maximum group of 15 employees from the CREG. This training will be carried out in Bogotá, for two days in a single week, within two months following the signing of the start record and at the place agreed with the contractor. The training shall:

a) Describe in detail the process of open seasons and illustrate it with three relevant examples or case studies, for the natural gas transport activity.

b) Generally identify the institutional and regulatory elements required to implement a process of open seasons in the natural gas transport activity.

c) Present the conclusions and recommendations it deems necessary to implement an open seasons framework in the natural gas transport activity.

d) Address concerns from participants during the training.

4 LEGAL FRAMEWORK

The Energy and Gas Regulatory Commission, CREG (its Colombian acronym), is a Special Administrative Unit part of the Mining and Energy Ministry, created as a result of law 142 of 1994, which for all contracting purposes is regulated by private law standards. Budget resources are managed through a trust agreement authorized by the Mining and Energy Ministry.

Therefore, the following regulations shall NOT be applicable to the process described herein: all regulations established within the Law 80 of 1993, decree 1150 of 2007, decree 734 of 2012 and decreased 1510 of 2013, the procedural and substantial regulations that will govern this selection shall be the ones established through the contracting and applicable private law standards.

5 WHO CAN PARTICIPATE

Natural persons or legal entities with more than ten years of experience in technical and economic aspects of the natural gas industry in the international arena.

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6 BUDGET

The official budget for of this contract amounts to FORTY MILLION COLOMBIAN PESOS (COP $40.000.000). These costs do not include the amount of taxes to be incurred in Colombia, as well as the value of administrative expenses and transfers for purposes of payment of these costs may be generated. These values are calculated by the CREG and will be added to the value of the selected at the time of signing the contract proposal. The total budget for this procurement is covered with budget availability certificate No. 13914 2014, issued by the Deputy Director of Administration and Finance Authority.

The CREG shall bear the costs of the room where the presentation is made and the translation costs, if applicable.

7 PAYMENT CONDITIONS

The payment of the costs of this contract shall be as follows: a. 25% upon satisfactory receipt of the document referred to in section 3.1 of these Terms of Reference.

b. 75% upon the completion of training referred to in section 3.2 of these Terms.

Contractual payments will be made within fifteen days of presentation of a bill meeting the requirements of law at the offices of CREG. Payments will be by electronic transfer direct credit to the account of the contractor. Payments will be made by the Fiduciaria de Occidente. S.A.

8 SUPERVISION AND COORDINATION

The supervision for the fulfillment of all contract obligations will be held by one of the CREG Commissioners, who will have the following obligations: • To supervise the proper execution of the obligations derived from the contract. • To approve the products delivered by the expert according to the obligations derived from the contract. There will be a Technical Support Committee, comprised of advisors nominated by the Committee of Experts of the CREG. They will support the commissioner in its oversight. The contract supervisor will coordinate with the contractor on the date on which the training will take place.

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9 CONTRACT TERM

The contract will have a term of 2 months, starting with the signature of the Certificate of Commencement. The Certificate of Commencement will be signed within the 5 days following the contract legalization. This term can be extended by CREG if delays, other caused by the contractor arise. Nonetheless, it will not change the economic conditions of the contract..

10 BID EVALUATION FACTORS

Bids will be evaluated based on the following equation:

Equation 1

Where:

: Economic proposal from bidder X

: Experience of bidder X

: Proposed methodology from bidder X

10.1 Economic proposal, 𝑷𝑬 , from bidder X (maximum 300 points)

Equation 2

Where: : Corresponds to the points to be awarded to bidder X

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: Price of the financial proposal with the lowest price

Price of the financial proposal from bidder X The bidder submitting the financial proposal with the lowest price, , will receive the maximum score of 300 points.

10.2 Experience, 𝑷𝑻 , of bidder X (maximum 400 points)

For each of the technical proposals evaluated, each of the three (3) evaluators must complete Table 1 considering the first 10 experience areas set out in Annex 2 of these Terms of Reference:

Table 1

Experience Rating Result

Experience 1 β x 40

Experience 2 β x 40

Experience 3 β x 40

Experience 4 β x 40

Experience 5 β x 40

Experience 6 β x 40

Experience 7 β x 40

Experience 8 β x 40

Experience 9 β x 40

Experience 10 β x 40

Experience Score

The values of β shall be determined as follows:

If the experience 8 is very relevant to the object of the contract: 1.0

If the experience 9 is average with regard to the object of the contract: 0.5

8 According to section 5

9 Ibídem

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If the experience 10 is not relevant to the object of the contract: 0.0

The value of for bidder X will be the average score of the three (3) evaluations resulting from the completion of Table 1.

10.3 Proposed methodology, 𝑷𝑴 , from bidder X (maximum 300 points)

The proposed methodology shall correspond to the proposed agenda to be carried out in the training. This agenda shall indicate the case studies to be undertaken in the training. For each proposed methodology that is evaluated, each of the three (3) evaluators must complete Table 2:

Table 2

Methodology Rating Result

The proposed agenda and case studies that the bidder will use meet the object and scope of the Terms of Reference

α x 300

Total score

The values of α shall be determined as follows:

If the proposed agenda is very relevant to the object of the contract: 1.0

If the proposed agenda is average with regard to the object of the contract: 0.5

If the proposed agenda is relevant to the object of the contract: 0.0

The value of for bidder X will be the average score of the three (3) evaluations resulting from the completion of Table 2.

10

Ibídem

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11 PROPOSAL ASSESSMENT METHODOLOGY

The following is the bid assessment methodology:

11.1 Proposal delivery

Proposals shall be sent to the following email address in separate PDF forms: [email protected], as follows:

First form: It shall contain documentation required in items a) and b) and c) of section 20 of these Terms of Reference.

Second form: It shall contain the economic proposal required in item d) of section 20 of these Terms of Reference.

Proponents shall send their bid pursuant to the process schedule defined in section 15 of these Terms of Reference.

CREG, in its discretion, could expand the bid delivery terms by producing an addendum, in which case all CREG and bidders' rights and obligations, from that point onwards, shall be subject to the new timeframe for bid submittal.

All bids received by CREG after the time or terms set forth in these Terms of Reference shall not be considered and returned unopened.

11.2 Assessment Committee

An assessment committee shall be formed to evaluate bids. The committee shall comprise (3) CREG advisors, who shall be designated by the Experts Committee.

11.3 Proposal assessment procedure

The following procedure shall be employed to assess bids, following the sequence below:

1) Requirements fulfillment verification: requirement fulfillment and submittal of necessary documentation shall be verified pursuant to provisions from items a), b) and c) of section 20 of these Terms of Reference. The Assessment Committee could require clarification or amendments on information, as described in items a) and b) of section 20 of these Terms of Reference. In such cases, the bidders shall have 24 hours to submit requested information.

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2) Verification of experience: based on the experience set out in Annex 2 of these Terms of Reference, the Evaluation Committee will verify that the bidder has the required ten years of experience in technical and economical aspects of the natural gas industry in the international arena..

For the purpose of this verification, only one experience shall be taken into consideration for a single reported month. If for a given month more than one experience is reported, only one experience shall be considered for that timeframe. The total experience shall be the summation of all months for which at least one experience has been submitted.

3) Evaluation of the bid: for bidders that have the required ten years of experience, the Evaluation Committee will conduct a financial evaluation using Equation 1, from section 10 of these Terms of Reference.

The assessment committee shall produce a table with the following information, once the equation

above has been applied to the bids that fulfill the required experience:

Eligibility order Bidder name Score

First place Bidder name Value of the highest score

Second place Bidder name Value of the second highest score

(...) (...) (…)

Nth place Bidder name Value of the lowest score

12 CONTRACT EXECUTION METHODOLOGY

The contract execution methodology shall be the one deemed appropriate by the contractor in order to fulfill contract obligations and scope. The contractor shall be held accountable for the accuracy and objectivity of its reports, as well as for the confidentiality of the information provided in order to perform the assessment. Payments shall take place in accordance to criteria set forth in section 7 of these Terms of Reference. Supervision and coordination shall be carried out in accordance to section 8.

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13 TIE BREAKERS

In case of a tie involving two or more tenders, the evaluation committee will observe the years of experience submitted by the bidders and will give priority to the bidder with the highest number of years of experience.

14 TECHNICAL REQUIREMENTS

Experience of over 10 years in technical and economic aspects of the natural gas industry in the international arena.

15 BIDDING PROCESS SCHEDULE

STAGE PROCESS DEADLINE

Terms of Reference (TOR) publication June 18, 2014

Receipt of requests for clarification of TOR June 24, 2014

Responses to requests for clarification of TOR June 26, 2014

Modification of TOR (Addendum) if necessary June 26, 2014

Receipt of bids July 9, 2014, until 5:00 p.m. (Colombian time)

Evaluation of results and reports to participants July 14, 2014

Comments on the evaluations July 15, 2014, until 11:00 a.m. (Colombian time)

Responses to comments on evaluations July 16, 2014, until 5:00 p.m. (Colombian time)

Contract award July 16, 2014

Contract legalization Within the 10 Colombian working days following contract award date

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GESTIÓN DE BIENES Y SERVICIOS

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In the event that no proposals are submitted, the act declaring the tender request void will be issued on the closing day for tenders.

16 WARRANTY

A contract guarantee (Contract Performance Bond) of contract performance of, and compliance with, the Contractor’s obligations under the contract shall remain in effect during the life of the contract until six months following contract settlement. The contract guarantee shall conform to the limits, the existence and extent of risk covered. In cases of individual persons or legal entities domiciled in Colombia or which have branch offices in Colombia, the contract guarantee will be an insurance policy or bank guarantee (letters of credit) obtained by THE CONTRACTOR which names the ENERGY AND GAS REGULATORY COMMISSION (CREG) as the beneficiary of the policy and which is issued by a duly established bank or insurance company in Colombia. In cases of foreign individuals or legal entities without an office or branch in Colombia, guarantees may consist of standby letters of credit issued outside of Colombia. In cases of guarantees issued by foreign financial institutions, the original standby letter of credit document must be presented as proof of the guarantee. Said letter of credit must be signed by the legal representative of the issuer or by a person with power of attorney. It must contain the name of the contracting entity and the beneficiary of the stand by letter of credit. It must be enforceable in accordance with Uniform Customs and Practice for Documentary Credits 600 (UCP 600) rules of the International Chamber of Commerce or modifications of those rules that may be made and/or the laws of the state of New York in the United States of America. Guarantees shall provide for speedy and effective mechanisms to finally resolve any disputes that may arise between the Beneficiary and policy holder pursuant to the laws governing their enforcement. Such mechanisms shall include binding arbitration under the rules of Conciliation and Arbitration by one or more arbitrators as provided for by the ICC rules mentioned above, or by judges of the courts of the State of New York. The value of the guarantee shall be calculated in US dollars at the official Colombian exchange rate estimated at $ 2000 pesos per 1 USD dollar. This policy or bank guarantee will provide the following coverage related to contract performance:

Type of Risk % Value Covered

Term of Coverage

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Contract Performance 20 Contract Value

8 months counted at warranty expedition

17 INTELLECTUALL PROPERTY RIGHTS

All property rights for products developed during the contract will be owned by CREG. All issues related to copyright shall be subject to the provisions of Law 23 of 1982 and to any other supplementary regulations. If required, prior to final payment the contractor shall sign a documenting transferring copyright to CREG. Similarly the contractor shall release CREG of all liability for third party actions initiated because of copyright infringements and/or violations of trademark or patent rights that result from products and/or services purchased and used by the contractor for performance of the object of this contract. In the course of this contract CREG will give confidential information to the contractor. Therefore, by signing this contract, the contractor agrees to: i) confidentially handle information provided by CREG and information produced as a result of the provision of the contractor’s services; ii) keep such information confidential and not use it to benefit the contractor or any other party while maintaining its confidential character; and iii) request prior written permission for any publication related to the subject matter of these Terms of Reference. Authorization must be requested from the Commission in a timely fashion. Ignorance of the commitments made by the contractor may result in civil lawsuits and criminal charges in accordance with Colombian law, in particular the provisions of Article 308 of Law 599 of 2000; Act 256 of 1996; Decision 486 of the CAN, Tit. XVI and other applicable regulations.

18 INDEMNITY

The contractor shall hold CREG harmless against any claim, demand, legal action and costs that may proceed or result from any type of responsibility, caused by the Contractor, its subcontractors (group of professionals or its suppliers), during the execution of the services stipulated in the contract.

19 NELIGIBILITIES AND INCOMPATIBILITIES

Bidders may not currently have, or have had in the past year, any contractual relationship or link with natural gas transport companies in Colombia.

20 DOCUMENTATION TO BE ATTACHED TO BID

The following documents shall be attached to the bid:

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GESTIÓN DE BIENES Y SERVICIOS

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a) Bid's presentation letter (Annex 1 filled in with appropriate information), with attention to CREG's Executive Director, signed by the individual or company representative without touristy to bind the bidding company (this letter's form is available from Annex No. 1). NOTE: Submittal of the said letter shall be interpreted as the bidder knowing and accepting all conditions set forth in these Terms of Reference for all legal purposes. Therefore the bidder is unconditionally obliged to enter a contract with CREG in the event its bid is selected.

b) Processed form from Annex No. 2. This form is to be used by bidder to provide information about a maximum of 15 experiences that it may consider relevant pursuant to the subject matter and the scope of these Terms of Reference.

c) Presentation on the bidder's proposed methodology over a maximum two pages, in accordance with

section 10.3 of these Terms.

d) Economic proposal: For the submittal of the economic proposal, the form of Annex No. 3 shall be used. The value shall include all direct and indirect expenses, such as personnel, subcontract, travel costs, information costs and fees, among others, for total compliance of the contract objectives and scope. The value of the economic proposal must include all the costs that may be generated by the contracted services. However, this value must exclude the value of taxes to be paid in Colombia, as well as the cost of administrative expenses and transfer that could be incurred in for purposes of payment of costs of this contracting. These values shall be calculated by CREG and shall be added to the value of the selected proposal upon contract signing.

21 VALIDITY OF BIDS

The proposals shall remain valid for a period of thirty (30) working days, starting from submission of proposals date.

22 CONTRACT EXECUTION

The parties will proceed to sign and legally register the contract within ten (10) business days from the date that CREG communicates its decision to contract the natural or legal person. In order to sign the respective service orders, the legal representative of the legal entity or the individual person shall send CREG the required documentation listed below:

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Legal entities established in the Republic of Colombia must provide a certificate issued by an Auditor and/or an accountant and/or its legal representative, as the case may be, which certifies that the entity is up to date in the payment of its obligations and payroll taxes. This requirement does not apply to individual persons.

Foreign legal entities without a branch in the country must present accreditation of the person with their power of attorney who will represent them in Colombia.

In case the selected bidder fails to sign the contract CREG will call the next bidder in order of eligibility to initiate the necessary procedures.

23 GROUNDS OF REJECTION OF BIDS

1) When the value of the proposal exceeds the official budget of this process.

2) When it is proven that a bidder has deduced, influenced or received internal mailing, concept projects of assessment or answers to the observations, not officially sent.

3) When it is proven that there is conspiracy among bidders that alters the application of the objective selection principle.

4) When the bidder incurs with ineligibility or incompatibility grounds fixed by the Constitution and the Law.

5) If the bidder does not meet the experience requirements set out in these Terms of Reference.

24 TENDER VOID

When reasons or causes that impede the objective selection process present themselves, CREG may declare the bidding process void. Such reasons or causes include:

When there is evidence of collusion or fraud.

When none of the proposals meet the requirements set out on these Terms of Reference.

When all technically acceptable of the offers present unacceptable costs for CREG.

CREG will inform bidders of its decision.

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GESTIÓN DE BIENES Y SERVICIOS

Código: BS-FT-002

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Elaborado por: Jorge Eliécer Durán Fandiño

Revisado por: Luis Fernando León Granados

Aprobado por: Carlos Fernando Eraso

Visto bueno Subdirección Administrativa y Financiera:

SIGNED

SIGNED

SIGNED

SIGNED

Fecha: (18/06/2014) Fecha: (18/06/2014) Fecha: (18/06/2014) Fecha: (18/06/2014)

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GESTIÓN DE BIENES Y SERVICIOS

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Appendix No. 1

Cover Letter for Proposals

Dr. CARLOS FERNANDO ERASO CALERO Executive Director COMISIÓN DE REGULACIÓN DE ENERGÍA Y GAS – CREG. City I ____________________________________________, an adult of legal age residing in ____________ and with identification number ___________ issued in ______________, acting in my capacity as Legal Representative or as the person granted power of attorney by the legal representative of ____________________________(Name of company, temporary partnership, consortium, etc.) which is legally constituted and domiciled in ____________________ , in conformity with the conditions stipulated in the Terms of Reference, present the following proposal for the selection process for the hiring of a natural person or legal entity to provide a training service about the concept of open seasons and its application in the construction of natural gas transport infrastructure. In case this proposal is accepted, I promise that the bidder will sign the resulting contract. I declare that

I (we) have the legal right to sign and to present the proposal which commits only the bidder.

No person or entity other than the signers have any commercial interest in this proposal nor in

the contract which may result.

I (we) am/are not disqualified on grounds of incapacity or incompatibility from signing the

contract nor are we disqualified on by special prohibitions.

I (we) know the technical specifications and guarantee that the services offered meet the

requirements demanded of them.

I (we) know the terms of reference and its appendices and accept their conditions.

I (we) agree to provide a training service on the concept of open seasons and its application in

the construction of natural gas transport infrastructure.

I (we) accept to submit the required warranties if the contract is awarded to me (us), and I

(we) will sing the contract within the five days following the award date.

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The undersigned (s) certifies that the business address, telephone number and fax numbers for communications, email and notifications relating to this proposal are the following: Company Name: _____________________________________ Business address: ________________________________________ Phone: _____________________________ Fax: _________________________ City: ____________________________ Email: _____________________________ Sincerely, ______________________________________ Name of bidder or Legal Representative ______________________________________ Signature of bidder or Legal Representative

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GESTIÓN DE BIENES Y SERVICIOS

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Appendix No. 2

Experiences

Experience [1] Experience

name Description(maximum

500 words) [2]

Start date

(month – year)

Ending date

(month – year)

Duration

(number of

months)

Experience 1

Experience 2

Experience 3

Experience 4

Experience 5

Experience 6

Experience 7

Experience 8

Experience 9

Experience 10

Experience 11

Experiencia 12

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GESTIÓN DE BIENES Y SERVICIOS

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Experience 13

Experience 14

Experience 15

[1] The bidder may present maximum 15 experiences.

[2] The description must indicate the country where the project was developed. The respective experience shall not be considered to establish total experience if the bidder, even after having the opportunity to clarify or correct the information, does not establish the country where the project was carried out.

_______________________________________

Name of bidder or Legal Representative

_______________________________________

Signature of bidder or Legal Representative

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Appendix No. 3

Financial proposal

Item Value in Colombian Pesos

Services to provide a training about the concept of open seasons and its application in the construction of natural gas transport infrastructure.

$ (COP) ________________________

The financial proposal includes all costs that can generate the contracted services. However, this does not include the value of taxes to be incurred in Colombia, as well as the value of administrative expenses and transfers expenses. _________________________________________________ Signature of bidder or Legal Representative