Section 6: Security

(1) Notwithstanding section 74 and 34 (6) of the Public Finance Management Act, 2015, security of any description, including charges or other encumbrances over the shares in the project company and any shares owned by the Ugandan state participant, over the EACOP system or any other project related assets may be granted to, registered, perfected and enforced by the finance parties or any agent or trustee on their behalf. (2) The project company and each key project party may- (a) secure in favour of any finance party or any agent or trustee of the finance party, including by way of assignment, all or any of its rights under the Host Government Agreement and the finance party or any agent or trustee of the finance party may enforce that security, provided that- (i) the Minister has granted his or her consent, which shall not be unreasonably withheld or delayed, to a security in favour of the finance party or any agent or trustee of the finance parties over the licence to construct or operate the EACOP system; or (ii) if no security has been given over the licence to construct or operate the EACOP system, the Minister has granted consent, which shall not be unreasonably withheld or delayed to the security over the rights under the Host Government Agreement; (b) agree with any finance party or any agent or trustee of the finance parties that in case of a default under the finance agreement, its rights and obligations under the Host Government Agreement may be novated to a finance party or any agent or trustee of the finance parties or to a third party, in all cases acceptable to the State pursuant to the direct agreements to be concluded between the State or the relevant state authority, as applicable, the finance parties and the project company or the project participant, as applicable. (3) Where the shares or assets of the Ugandan state participant are used as security of any description under sub sections (1) or (2) by the Project Company, the Ugandan State Participant shall submit a report to Parliament in relation to the security within 30 days from the date of acquisition of the security. (4) Where the project company or any key project party requires a consent or other project authorisation from the State or any state authority to grant to the finance parties or any agent or trustee of the finance parties, in relation to limited or non-recourse project finance debt or bond financing for the EACOP project, security with respect to the EACOP system or the rights and interests of the project Company or any project participant in relation to the EACOP project including rights arising under any state agreement or project authorisation- (a) the required consent or other project authorisation shall not be unreasonably withheld or delayed; and (b) if security in favour of the finance parties or any agent or trustee of the finance parties over- (i) the licence to construct or operate the EACOP system has been consented to by the relevant state authority, which consent shall not be unreasonably withheld or delayed; or (ii) the Host Government Agreement has been consented to by the State which consent shall not be unreasonably withheld or delayed, then no further consent or project authorisation shall be required in relation to the granting of any other security in favour of the finance parties or any agent or trustee of the finance parties with respect to the EACOP system or the rights and interests of the project company or any project participant in relation to the EACOP project, including rights arising under any state agreement or project authorisation. (5) Any finance party or any agent or trustee of the finance parties shall have the right to enforce the security, where applicable upon the terms and conditions set out in any direct agreements to be concluded among the State or the relevant State authority as applicable, the finance parties and the project company or the project participant, as applicable. (6) Section 50 of the Petroleum (Refining, Conversion, Transmission and Midstream Storage) Act, 2013 shall not apply to the EACOP Project.