Title
ECOWAS ENERGY PROTOCOL A/P4/1/03
Preamble
THE HIGH CONTRACTING PARTIES MINDFUL of Articles 7, 8 and 9 of the ECOWAS Treaty establishing the Authority of Heads of State and Government and defining its composition and functions;
CONSIDERING the provisions of the Treaty of the Economic Community of West African States (hereinafter referred to as, the “ECOWAS Treaty”) relating to the promotion, cooperation, integration and development of the energy projects and sectors of Member States of the Community, with particular reference to Articles 3, 26, 28 and 55;
NOTING the decision A/DEC.3/5/82 of the Authority of the Heads of States and Governments of ECOWAS relating to the ECOWAS Energy Policy;
MINDFUL of the fact that the responsibility for the economic development of the West African region rests with the Member States themselves;
WANTING to secure regionally efficient and reliable supplies of electricity and other forms of energy;
CONSIDERING that the principles articulated and adopted by 51 nations of Europe and Asia, and memorialised in the document known as the Energy Charter Treaty which was signed in December, 1994, and which went into effect in April, 1998, represent the leading internationally accepted basis for the promotion, cooperation, integration and development of energy investment projects and energy trade among sovereign nations;
APPRECIATING the fact that the Energy Charter Treaty is the outcome of a thorough and thoughtful debate, deliberation and compromise among its signatory nations;
CONVINCED that adherence to the terms and principles of the Energy Charter Treaty by Member States of the Community will demonstrate to international investors and capital markets that the ECOWAS Region is a very attractive region for investing in energy projects and infrastructure;
WISHING to implement the basic concept of the Energy Charter initiative, which is to
catalyse economic growth in the ECOWAS region by means of measures to liberalize energy investment and trade in energy;
AFFIRMING that the Member States of ECOWAS attach the highest importance to implementing the most favoured nation treatment and that such commitments will make it possible to realize investments in accordance with this Protocol;
HAVING REGARD to the objective of progressive liberalization of international trade and to the principle of avoidance of discrimination in international trade as enunciated in the Agreement Establishing the World Trade Organization and as otherwise provided for in this Protocol;
DETERMINED to progressively remove technical, administrative and other barriers to trade in electricity, gas and other Energy Materials and Energy-Related Equipment, technologies and services;
MINDFUL of the rights and obligations of certain Contracting Parties which are also members of the World Trade Organisation;
HAVING REGARD to competition rules concerning mergers, monopolies, anti- competitive practices and abuse of dominant position;
RECOGNIZING the necessity for the most efficient exploration, production, conversion, storage, transport, distribution and use of energy;
UNDERSTANDING that sustaining the environment is an essential component of all phases of development and trade in the energy sector;
RECOGNIZING the vital role of the private sector in promoting and implementing energy investments, and intent on ensuring a favourable institutional framework for economically viable investment in energy infrastructure;
CONVINCED of the urgency of the need to promote energy sector investment and energy trade in West Africa; and
RECOGNIZING that adoption of the highest international trade standards is the most efficient course to pursue to attract energy sector investors to the ECOWAS Region
HAVE AGREED AS FOLLOWS:
Body
Chapter I. Definitions and Purpose
Article 1. Definitions
As used in this Protocol:
(1) "Area" means with respect to a state that is a Contracting Party:
(a) the territory under its sovereignty, it being understood that territory includes land, internal waters and the territorial sea; and
(b) subject to and in accordance with the international law of the sea: the sea, seabed and its subsoil with regard to which that Contracting Party exercises sovereign rights and jurisdiction.
(c) With respect to a Regional Economic Integration Organization which is a Contracting Party, Area means the Areas of the member states of such Organization, under the provisions contained in the agreement establishing that Organization.
(2) "Community" means the Economic Community of West African States established by Article 2 of the ECOWAS Treaty.
(3) "Contracting Party" means an ECOWAS Member State or Regional Economic Integration Organization which has consented to be bound by this Protocol and for which the Protocol is in force.
(4) "Cost-Effective" or Cost-Effectiveness means achievement of a defined objective at the lowest cost or to achieve the greatest benefit at a given cost.
(5) "Economic Activity in the Energy Sector" means an economic activity concerning the exploration, extraction, refining, production, storage, land transport, transmission, distribution, trade, marketing, or sale of Energy Materials and Products except those included in Annex B, or concerning the distribution of heat to multiple premises.
(6) "Energy Cycle" means the entire energy chain, including activities related to prospecting for, exploration, production, conversion, storage, transport, distribution and consumption of the various forms of energy, and the treatment and disposal of wastes, as well as the decommissioning, cessation or closure of these activities, minimizing harmful Environmental Impacts;
(7) "Energy Materials and Products", based on the Harmonized System of the World Customs Organization, means the items included in Annexes A.
(7bis) "Energy-Related Equipment", based on the Harmonised System of the World Customs Organization, means the items included in a list as adopted by the Meeting of Energy Ministers.
(8) "Environmental Impact" means any effect caused by a given activity on the environment, including human health and safety, flora, fauna, soil, air, water, climate, landscape and historical monuments or other physical structures or the interactions among these factors; it also includes effects on cultural heritage or socio-economic conditions resulting from alterations to those factors;
(9) "Executive Secretariat" means the Executive Secretariat established under Article 17 of the ECOWAS Treaty.
(10) "Freely Convertible Currency" means a currency which is widely traded in international foreign exchange markets and widely used in international transactions.
(11) "Improving Energy Efficiency" means acting to maintain the same unit of output (of goods or services) without reducing the quality or performance of the output, while reducing the amount of energy required to produce that output;
(12) "Intellectual Property" includes copyrights and related rights, trademarks, geographical indications, industrial designs, patents, layout designs of integrated circuits and the protection of undisclosed information.
(13) "Investment" means every kind of asset, owned or controlled directly or indirectly by an Investor and includes:
(a) tangible and intangible, and movable and immovable, property, and any property rights such as leases, mortgages, liens, and pledges;
(b) a company or business enterprise, or shares, stock, or other forms of equity participation in a company or business enterprise, and bonds and other debt of a company or business enterprise;
(c) claims to money and claims to performance pursuant to contract having an economic value and associated with an Investment;
(d) Intellectual Property;
(e) Returns;
(f) any right conferred by law or contract or by virtue of any licences and permits granted pursuant to law to undertake any Economic Activity in the Energy Sector.
A change in the form in which assets are invested does not affect their character as investments and the term "Investment" includes all investments, whether existing at or made after the later of the date of entry into force of this Protocol for the Contracting Party of the Investor making the investment and that for the Contracting Party in the Area of which the investment is made (hereinafter referred to as the "Effective Date") provided that this Protocol shall only apply to matters affecting such investments after the Effective Date.
"Investment" refers to any investment associated with an Economic Activity in the Energy Sector and to investments or classes of investments designated by a Contracting Party in its Area as "efficiency projects" and so notified to the Executive Secretariat of ECOWAS.
(14) "Investor" means:
(a) a natural person having the citizenship or nationality of, or who resides or establishes an office in the Area of, a Contracting Party in accordance with its applicable laws; or,
(b) a company or other organization organized, or registered, in accordance with the law applicable in that Contracting Party.
(15) "Make Investments" or "Making of Investments" means establishing new Investments, acquiring all or part of existing Investments or moving into different fields of Investment activity.
(16) "Meeting of Energy Ministers" means the meeting of the organ responsible for implementation of the present Protocol composed by the Energy Ministers of ECOWAS.
(17) "Regional Economic Integration Organization" means an organization constituted by Member States to which they have transferred competence over certain matters a
Number of which are governed by this Protocol, including the authority to take decisions binding on them in respect of those matters.
(18) "Returns" means the amounts derived from or associated with an Investment, irrespective of the form in which they are paid, including profits, dividends, interest, capital gains, royalty payments, management, technical assistance or other fees and payments in kind.
(19) (a) WTO means the World Trade Organization established by the Agreement
Establishing the World Trade Organization.
(b) WTO Agreement means the Agreement Establishing the World Trade Organization, its Annexes and the decisions, declarations and understandings related thereto, as subsequently rectified, amended and modified from time to time.
(c) "GATT 1994" means the General Agreement on Tariffs and Trade as specified in Annex 1A of the Agreement Establishing the World Trade Organization, as subsequently rectified, amended or modified from time to time.
A party to the Agreement Establishing the World Trade Organization is considered to be a party to GATT 1994.
(d) "Related Instruments" means, the Agreement Establishing the World Trade Organization including its Annex 1 (except GATT 1994), its Annexes 2, 3 and 4, and the decisions, declarations and understandings related thereto, as subsequently rectified, amended or modified.
Article 2. Purpose of the Protocol
This Protocol establishes a legal framework in order to promote long-term co-operation in the energy field, based on complementarities and mutual benefits, with a view to achieving increased investment in the energy sector, and increased energy trade in the West Africa region.
Chapter II. COMMERCE
Article 3. International Markets
The Contracting Parties shall work to promote access to international markets relating to Energy Materials and Products and Energy-Related Equipment on commercial terms, and generally to develop an open and competitive energy market.
Article 4. Non-derogation from Wto Agreement
Nothing in this Protocol shall derogate, as between particular Contracting Parties which are members of the WTO, from the provisions of the WTO Agreement as they are applied between those Contracting Parties.
Article 5. Trade-related Investment Measures
(1) A Contracting Party shall not apply any trade-related investment measure that is inconsistent with the provisions of article III or XI of the GATT 1994; this shall be without prejudice to the Contracting Party's rights and obligations under the WTO Agreement and Article 29 of this Protocol.
(2) Such measures include any investment measure which is mandatory or enforceable under domestic law or under any administrative ruling, or compliance with which is necessary to obtain an advantage, and which requires:
(a) the purchase or use by an enterprise of products of domestic origin or from any domestic source, whether specified in terms of particular products, in terms of volume or value of products, or in terms of a proportion of volume or value of its local production; or
(b) that an enterprise's purchase or use of imported products be limited to an amount related to the volume or value of local products that it exports;
Or which restricts:
(c) the importation by an enterprise of products used in or related to its local production, generally or to an amount related to the volume or value of local production that it exports;
(d) the importation by an enterprise of products used in or related to its local production by restricting its access to foreign exchange to an amount related to the foreign exchange inflows attributable to the enterprise; or
(e) the exportation or sale for export by an enterprise of products, whether specified in terms of particular products, in terms of volume or value of products, or in terms of a proportion of volume or value of its local production.
(3) Nothing in paragraph (1) shall be construed to prevent a Contracting Party from applying the trade-related investment measures described in subparagraphs (2)(a) and
(c) as a condition of eligibility for export promotion, foreign aid, government procurement or preferential tariff or quota programmes.
(4) Notwithstanding paragraph (1), a Contracting Party may temporarily continue to maintain trade-related investment measures which were in effect more than 180 days before its signature of this Protocol, subject to the notification and phase-out provisions set out in Annex C.
Article 6. Competition
(1) Each Contracting Party shall work to alleviate market distortions and barriers to competition in Economic Activity in the Energy Sector.
(2) Each Contracting Party shall ensure that within its jurisdiction it has and enforces such laws as are necessary and appropriate to address unilateral and concerted anticompetitive conduct in Economic Activity in the Energy Sector.
(3) Contracting Parties with experience in applying competition rules shall give full consideration to providing, upon request and within available resources, technical assistance on the development and implementation of competition rules to other Contracting Parties.
(4) Contracting Parties may co-operate in the enforcement of their competition rules by consulting and exchanging information.
(5) If a Contracting Party considers that any specified anti-competitive conduct carried out within the Area of another Contracting Party is adversely affecting an important interest relevant to the purposes identified in this Article, the Contracting Party may notify the other Contracting Party and may request that its competition authorities initiate appropriate enforcement action. The notifying Contracting Party shall include in such notification sufficient information to permit the notified Contracting Party to identify the anti-competitive conduct that is the subject of the notification and shall include an offer of such further information and co-operation as the notifying Contracting Party is able to provide. The notified Contracting Party or, as the case may be, the relevant competition authorities may consult with the competition authorities of the notifying Contracting Party and shall accord full consideration to the request of the notifying Contracting Party in deciding whether or not to initiate enforcement action with respect to the alleged anti-competitive conduct identified in the notification. The notified Contracting Party shall inform the notifying Contracting Party of its decision or the decision of the relevant competition authorities and may if it wishes inform the notifying Contracting Party of the grounds for the decision. If enforcement action is initiated, the notified Contracting Party shall advise the notifying Contracting Party of its outcome and, to the extent possible, of any significant interim development.
(6) Any information provided under the terms of this Article shall be made only with due regard for internal laws of a Contracting Party regarding disclosure of information, confidentiality or business secrecy.
(7) The procedures set forth in paragraph (5) and Article 27(1) shall be the exclusive means within this Protocol of resolving any disputes that may arise over the implementation or interpretation of this Article.
(8) Contracting Parties agree that open and non-discriminatory access to power generation sources and transmission facilities encourages investment in generation and distribution facilities, and thereby increases competition in such sub-sectors of the power industry, in turn leading to reduced cost for power. Contracting Parties agrees therefore to make accessible for all other Contracting Parties and Investors, without any discrimination, power generation sources and transmission facilities sited within their Areas.
Article 7. Transit
(1) Each Contracting Party shall take the necessary measures to facilitate the Transit of Energy Materials and Products consistent with the principle of freedom of transit and without distinction as to the origin, destination or ownership of such Energy Materials and Products or discrimination as to pricing on the basis of such distinctions, and without imposing any unreasonable delays, restrictions or charges.
(2) Contracting Parties shall encourage relevant entities to co-operate in:
(a) modernising Energy Transport Facilities necessary to the Transit of Energy Materials and Products;
(b) the development and operation of Energy Transport Facilities serving the Areas of more than one Contracting Party;
(c) measures to mitigate the effects of interruptions in the supply of Energy Materials and Products;
(d) facilitating the interconnection of Energy Transport Facilities.
(3) Each Contracting Party undertakes that its provisions relating to transport of Energy Materials and Products and the use of Energy Transport Facilities shall treat Energy Materials and Products in Transit in no less favourable a manner than its provisions treat such materials and products originating in or destined for its own Area, unless an existing international agreement provides otherwise. Contracting Parties shall, subject to paragraphs (6) and (7), secure established flows of Energy Materials and Products to, from or between the Areas of other Contracting Parties.
(4) In the event that Transit of Energy Materials and Products cannot be achieved by means of existing Energy Transport Facilities consistent with paragraph (1), the Contracting Parties shall not place obstacles in the way of new capacity being established, except in the case where a Contracting Party can prove that the new capacity or the building of new capacities would endanger the security or efficiency of the existing energy system, including supply security, except as may be otherwise provided in applicable legislation which is consistent with paragraph (1).
(5) A Contracting Party through whose Area Energy Materials and Products may transit shall not be obliged to
(a) permit the construction or modification of Energy Transport Facilities; or
(b) permit new or additional Transit through existing Energy Transport Facilities,
Which it demonstrates to the other Contracting Parties concerned would endanger the security or efficiency of its energy systems, including the security of supply.
(6) A Contracting Party through whose Area Energy Materials and Products transit shall not, in the event of a dispute over any matter arising from that Transit, interrupt or reduce, permit any entity subject to its control to interrupt or reduce, or require any entity subject to its jurisdiction to interrupt or reduce the existing flow of Energy Materials and Products prior to the conclusion of the dispute resolution procedures set out in paragraph (7), except where this is specifically provided for in a contract or other agreement governing such Transit or permitted in accordance with the conciliator's decision.
(7) The following provisions shall apply to a dispute envisioned by paragraph (6), but only following the exhaustion of all relevant contractual or other dispute resolution remedies previously agreed between the Contracting Parties party to the dispute or between any entity referred to in paragraph (6) and an entity of another Contracting Party to the dispute:
(a) A Contracting Party to the dispute may refer it to the Executive Secretariat of ECOWAS by a notification summarizing the matters in dispute. The Executive Secretariat of ECOWAS shall notify all Contracting Parties of any such referral.
(b) Within 30 days of receipt of such a notification, the Executive Secretariat of ECOWAS, in consultation with the parties to the dispute and the other Contracting Parties concerned, shall appoint a conciliator. Such a conciliator shall have experience in the matters subject to dispute and shall not be a national or citizen of or permanently resident in the Area of a party to the dispute or one of the other Contracting Parties concerned.
(c) The conciliator shall seek the agreement of the parties to the dispute to a resolution thereof or upon a procedure to achieve such resolution. If within 90 days of his appointment he has failed to secure such agreement, he shall recommend a resolution to the dispute or a procedure to achieve such resolution and shall decide the interim tariffs and other terms and conditions to be observed for Transit from a date which he shall specify for 12 months or until the dispute is resolved, whichever is earlier.
(d) The Contracting Parties undertake to observe and ensure that the entities under their control or jurisdiction observe any interim decision under subparagraph (c)
On tariffs, terms and conditions for 12 months following the conciliator's decision or until resolution of the dispute, whichever is earlier.
(e) Notwithstanding subparagraph (b) the ECOWAS Executive Secretariat may elect not to appoint a conciliator if in its judgement the dispute concerns Transit that is or has been the subject of the dispute resolution procedures set out in subparagraphs (a) to (d) and those proceedings have not resulted in a resolution of the dispute.
(f) The Meeting of Energy Ministers shall adopt standard provisions concerning the conduct of conciliation and the compensation of conciliators.
(8) Nothing in this Article shall derogate from a Contracting Party's rights and obligations under international law including customary international law, existing bilateral or multilateral agreements, including rules concerning submarine cables and pipelines.
(9) This Article shall not be so interpreted as to oblige any Contracting Party which does not have a certain type of Energy Transport Facilities used for Transit to take any measure under this Article with respect to that type of Energy Transport Facilities. Such a Contracting Party is, however, obliged to comply with paragraph (4).
(10) For the purposes of this Article:
(a) "Transit" means
(i) the carriage through the Area of a Contracting Party, or to or from port facilities in its Area for loading or unloading, of Energy Materials and Products originating in the Area of another state and destined for the Area of a third state, so long as either the other state or the third state is a Contracting Party; or
(ii) the carriage through the Area of a Contracting Party of Energy Materials and Products originating in the Area of another Contracting Party and destined for the Area of that other Contracting Party.
(b) ' 'Energy Transport Facilities" consist of high-pressure gas transmission pipelines, high-voltage electricity transmission grids and lines, and other fixed facilities specifically for handling Energy Materials and Products.
Article 8. Transfer of Technology
(1) The Contracting Parties agree to promote access to and transfer of energy technology on a commercial and non-discriminatory basis to assist effective trade in Energy Materials and Products and Investment and to implement the objectives of this Protocol subject to their laws and regulations, and to the protection of Intellectual Property rights.
(2) Accordingly, to the extent necessary to give effect to paragraph (1) the Contracting Parties shall eliminate existing obstacles and create no new ones to the transfer of technology in the field of Energy Materials and Products and related equipment and services, subject to non-proliferation and other international obligations.
Article 9. Access to Capital
(1) The Contracting Parties acknowledge the importance of open capital markets in encouraging the flow of capital to finance trade in Energy Materials and Products and for the making of and assisting with regard to Investments in Economic Activity in the Energy Sector in the Areas of other Contracting Parties. Each Contracting Party shall accordingly endeavour to promote conditions for access to its capital market by companies and nationals of other Contracting Parties, or, any other third state, for the purpose of financing trade in Energy Materials and Products and for the purpose of Investment in Economic Activity in the Energy Sector in the Areas of those other Contracting Parties, on a basis no less favourable than that which it accords in like circumstances to its own companies and nationals or companies and nationals of any other Contracting Party or any third state, whichever is the most favourable.
(2) A Contracting Party may adopt and maintain programmes providing for access to their Investors to public loans, grants, guarantees or insurance for facilitating trade or Investment within the Area of other Contracting Parties. It shall make such facilities available, consistent with the objectives, constraints and criteria of such programmes (including any objectives, constraints or criteria relating to the place of business of an applicant for any such facility or the place of delivery of goods or services supplied with the support of any such facility) for Investments in the Economic Activity in the Energy Sector of other Contracting Parties or for financing trade in Energy Materials and Products with other Contracting Parties.
(3) Contracting Parties shall, in implementing programmes in Economic Activity in the Energy Sector to improve the economic stability and investment climates of the Contracting Parties, seek as appropriate to encourage the operations and take advantage of the expertise of relevant international financial institutions.
(4) Nothing in this Article shall prevent:
(a) financial institutions from applying their own lending or underwriting practices based on market principles and prudential considerations; or
(b) a Contracting Party from taking prudent measures, including:
(i) steps to protect its investors, consumers, depositors, insured or persons to whom a fiduciary duty is owed by a financial service supplier; or
(ii) steps to ensure the integrity and stability of its financial system and capital markets.
Chapter III. Investment Promotion and Protection
Article 10. Promotion, Protection and Treatment of Investments
(1) Each Contracting Party shall, in accordance with the provisions of this Protocol, encourage and create stable, equitable, favourable and transparent conditions for Investors to make Investments in its Area. Such conditions shall include a commitment to accord at all times to Investments of Investors fair and equitable treatment. Such Investments shall also enjoy the most constant protection and security and no Contracting Party shall in any way impair by unreasonable or discriminatory measures their management, maintenance, use, enjoyment or disposal. In no case shall such Investments be accorded treatment less favourable than that required by international law, including treaty obligations. Each Contracting Party shall observe any obligations it has entered into with an Investor or with respect to an Investment.
(2) Each Contracting Party shall endeavour to accord to Investors, as regards the Making of Investments in its Area, the Treatment described in paragraph (3).
(3) For the purposes of this Article, "Treatment" means treatment accorded by a Contracting Party which is no less favourable than that which it accords to its own Investors or to Investors of any other Contracting Party or, indeed, of any third state, whichever is the most favourable.
(4) Each Contracting Party shall, as regards the Making of Investments in its Area, endeavour to:
(a) limit to the minimum the exceptions to the Treatment described in paragraph (3);
(b) progressively remove existing restrictions affecting Investors.
(5) (a) A Contracting Party may, as regards the Making of Investments in its Area, at any
Time declare voluntarily to the Meeting of Energy Ministers, through the Executive Secretariat of ECOWAS, its intention not to introduce new exceptions to the Treatment described in paragraph (3).
(b) A Contracting Party may, furthermore, at any time make a voluntary commitment to accord to Investors, as regards the Making of Investments in some or all Economic Activities in the Energy Sector in its Area, the Treatment described in paragraph (3). Such commitments shall be notified to the Executive Secretariat of ECOWAS and shall be binding under this Protocol.
(6) Each Contracting Party shall, in its Area, accord to Investments of Investors and their related activities including management, maintenance, use, enjoyment or disposal, treatment no less favourable than that which it accords to its own Investors or of the Investors of any third state and their related activities including management, maintenance, use, enjoyment or disposal, whichever is the most favourable.
(7) The modalities of application of paragraph (6) may exclude programmes under which a Contracting Party provides to its own national investors grants or other financial assistance, or enters into contracts, for energy technology research and development. Each Contracting Party shall through the Executive Secretariat of ECOWAS keep the Meeting of Energy Ministers informed of the modalities it applies to the programmes described in this paragraph.
(8) Each state or Regional Economic Integration Organization which signs or accedes to this Protocol shall, on the date it signs the Protocol or deposits its instrument of accession, submit to the Executive Secretariat of ECOWAS a report summarizing all laws, regulations or other measures relevant to: