Eritrean Electricity Corporation Establishment Proclamation, No. 142 of 2004

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Part II Objectives, Powers and Responsibilities Article 4: Objectives The purpose of the Corporation is to contribute to and enhance the socio-economic development of Eritrea by way of providing efficient, dependable, cost-effective and environmentally safe generation, transmission . , and distribution of electricity for sale to the Eritrean public. 29 Article 5: Powers ( 1) The Corporation is duly entrusted to assume, undertake and enhance the duties and public service responsibilities for and in the production, transmission. distribution and sale of electricity to the public in Eritrea. (2) For and in the effective implementation and realization of its given objectives and duties, the Corporation shall have the powers to: (a) sue and be sued in its own name: (b) apply and pursue cost-effective commercial standards upon electricity tariffs and related services: (c) open and maintain bank accounts within Eritrea or elsewhere· deposit money therein and withdraw the same therefrom; ( d) procure and or import required equipment, machineries and related spare parts and components as well as services for the sustenance of its proper operations; (e) secure and utilize development funds or grants, loans and financial facilities from financial institutions and governments within or outside Eritrea; and (f) perform appropriate and legitimate activities necessary and related to its mandate and said objectives. 30 Article 6: Responsibilities The responsibilities of the Corporation shall include inter-alia to: ~ (a) conduct its operations in accordance with the accepted standards applied in the power supply industry; (b) build, manage, maintain, operate, expand and enhance power plants, transmission and distribution lines and related facilities; (c) secure and ensure that the supply of electricity is regular, l. efficient and reliable; (d) take necessary measures to protect the public and the environment from any damages that may arise from its operations and related activities; and (e) ensure operational sustenance in its budgetary and financial requirements. Part 111 Organization of the Corporation Articles 7: Organs (1) The Corporation shall consist of: - a) A Board of Directors (hereinafter the Board); b) a general manger; and c) the necessary staff. (2) External auditors' professional role shall constitute a vital factor in the management and performance of the Corporation. 31 Article 8: Composition of the Board (1) The Board shall be composed of a minimum of five members to be appointed by the President of the State of Eritrea. (2) The Board shall have a chair-person appointed by the President of the State of Eritrea. (3) The General Manager of the Corporation, who shall also be appointed by the President of the State of Eritrea, shall have a non-voting membership at the Board. (4) The Board shall appoint its secretary. Article 9: Duties and Responsibilities of the Board

1.The Board is hereby entrusted with the full and ultimate responsibility for and in the administration, management and performance of the Corporation.

2. Without limiting the generality of the foregoing, the Board shall be responsible to: (a) formulate short and long term development work programmes and schedules for and in the realistic and result-oriented implementation and realization of the objectives of the Corporation; (b) propose or recommend electricity tariffs and related services charges for approval by the oertinent authority; 32 (c) initiate and implement internal regulations and guidelines in consonance with the provisions of this Proclamation; (d) ensure that the General Manager submits for the Board's consideration and approval operational budgets and reports as well as project budgets for each fiscal year; (e) conduct a regular quarterly review and evaluation of the activities and performance of the Corporation and take appropriate steps thereon; and (f) maintain sustainability and capability of the Corporation in all aspects of its operations. Article 10: Term of office (1) Subject to sub. Article (2) hereof. a Board member shall hold office for a period not exceeding five years and may upon the expiration of that period be eligible for re-appointment. (2) When the first Board is constituted in terms of this Proclamation, three of the members shall be appointed for a period of five years and the other two members for a period of three years, after which all appointments to the Board shall be for a period of five years. (3) Notwithstanding sub. Articles (1) and (2) hereof, if a Board member's term of office expires before a replacement is appointed, such member shall continue in office for a further ........ .) .) ' period not exceedir.g six months until a replacement is appointed. Article 11: Vacation of Office or Filling of Vacancies The office of a Board member becomes vacant if he or she: a) is absent for five consecutive meetings of the Board without the permission of the Board chair-person: or b) resigns by notice in writing to the Board chair-person or is removed from office due to incapacity resulting from physical or mental illness, or for any other cause which renders him unfit to discharge the functions of a Board member. ~rticle 12: Meetings (1) Within 4 months following the end of each Fiscal Year. annual meetings of the Board shall be convened for and in consideration of appropriate action on the annual report of the General Manager on: - (a) the performance and achievements of the Corporation: (b) the Balance Sheet, Profit & Loss Account and related Inventory of Assets; (c) recommendations of annual budgets and work plans; and (d) electricity consumption tariffs and related service charges. (2) The Board shall conduct regular quarterly meetings and such other meetings as it deems necessary, for which, the chair- person of the Board shall fix the time and place of the meetings of the Board. (3) While the quorum for a meeting of the Board shall require the presence of the majority of the members. any issue on which a 34 vote is required shall be determined by a majority of votes of those present and voting on the issue, it being understood that in case of a tie, the Chair-person shall have a casting vote. (4) The substance of the proceedings of Board meetings shall be recorded as minutes to be duly signed and authenticated by the chair-person and the secretary Article 13: Management Powers and Responsibilities of the General Manager (1) The routinely expected conduct of administration and day-to-day management of the activities of the Corporation for and in the actual implementation and realization of its objectives is vested in the General Manager. (2) Without prejudice to the provIsIons of Article 10 of this Proclamation. the General Manager shall manage all of the Corporation's affairs and activities and shall deal with third parties, whether physical persons or bodies corporate. on behalf of the Corporation and is hereby authorized to sign any document for and on its behalf. (3) Without limiting the generality of the foregoing, the General Manager shall in particular. have the power to: (a) represent the Corporation to all effects and purposes. before courts of justice, Government departments, municipal authorities, domestic and or foreign business organizations. agencies or entities and banks, other financial institutions or 35 any other person and or body in the interest of the Corporation: (b) open bank accounts in the name of the Corporation in Nakfa or in any foreign currency and to operate same and to draw, endorse and sign in the name of the Corporation all cheques. drafts, payment orders, transfers. assignments and any other instruments relating to activities of the Corporation: inclusive of establishment of letters of credit· (c) sign and execute necessary agreements or transactions related to services, purchases. procurements and or imports: initiate or implement loans and or credit facilities as well as financial grants for and on behalf of the Corporation from banks or other financial institutions and governments within or outside Eritrea: and to execute and implement contracts therefore. it being understood that ,n each and every of such event, the Board's prior written approval and authonzat1on 1s and shall be a paramount pre-cond1t1on; (d) employ and or dismiss personnel as required: (e) review the organization and administrative manuals of the Corporation; (f) carry out the decisions or directives of the Board: execute and follow up same; (g) keep and cause to be kept accounts. records. books and up- to-date inventories of the Corporation in accordance with the provisions of the Commercial Code of Eritrea dealing with share companies and the usual business practice applicable 36 to the industry; (h) prepare and submit to the Board detailed quarterly interim reports as well as a comprehensive annual reports relevant to each fiscal year on the activities of the Corporation; and (i) designate a person at the management level to act on his behalf in case of his absence or illness. Part IV Finance Articles 14: Revenue of the Corporation The Sources of revenue of the Corporation shall be: (a) the sale of electricity or the services or property of the Corporation; (b) any grant or contribution from any sources; and (c) Government allocation. Article 15: Fiscal Year The Fiscal Year of the Corporation shall be the same as that of the Government. Article16: External Auditors (1) Independent External Auditors shall be appointed by the Board which shall determine their service fees. (2) The External Auditors shall audit the financial books and records as well as the business performance of the Corporation, verify the correctness and accuracy of the Balance Sheet, Profit & Loss Accounts. Inventory of Assets records and certify their evaluation and submit their report along with their recommendations, if any. (3) The report of the audits shall be submitted to the Ministry of 37 Energy and Mines and Office of the Auditor General. Part V Miscellaneous Article 17: Transfer of Assets and Liabilities The assets and liabilities of the Eritrean Electric Authority are hereby transferred to the Corporation. Article 18: Lacunae Matters which are not covered under the provisions of this Proclamation shall be governed by the provisions of the Commercial Code of Eritrea dealing with share companies . Article 19: Entry into Force This Proclamation shall enter into force as of the date of its publication in the Gazette of Eritrean Laws. Done at Asmara this ih day of may 2004 The Government of Eritrea. 38