Burundi - Nickel Exploration Engineering Project : Credit 1154 - Credit Agreement - Conformed

CREDIT NUMBER 1154 BU Development Credit Agreement (Nickel Exploration Engineering Project) between REPUBLIC OF BURUNDI and INTERNATIONAL DEVELOPMENT ASSOCIATION Dated ,\1981 CREDIT NUMBER 1154 BU DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated , 1981, between REPUBLIC OF BURUNDI (hereinafter called the Borrower) and INTERNA- TIONAL DEVELOPMENT ASSOCIATION (hereinafter called the Associa- tion). WHEREAS (A) the Borrower has requested the Association to assist in the financing of the foreign exchange cost of the Project described in Schedule 2 to this Agreement by extending the Credit as hereinafter provided; (B) the Borrower intends to contract from the Republic of Finland a grant (hereinafter called the Finnish Grant) in an amount of about one million eight hundred thousard dollars ($1,800,000) equivalent to assist in financing Part B of the Project on the terms and conditions set forth in an agreement (hereinafter called the Finnish Grant Agreement) to be entered into between the Borrower and the Republic of Finland; and (C) the Borrower intends to contract from the Kingdom of Denmark a grant (hereinafter called the Danish Grant) in an aggregate principal amount of about nine hundred thousand dollars ($900,000) equivalent to assist in financing Part B cf the Project on the terms and conditions set forth in an agreement (hereinafter called the Danish Grant Agreement) to be entered into between the Borrower and the Kingdom of Denmark; and WHEREAS the Association has agreed, on the basis inter alia of the foregoing, to extend the Credit to the Borrower upon the terms and conditions hereinafter set forth; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I General Conditions; Definitions Section 1.01. The parties to this Agreement accept all the provisions of the General Conditions Applicable to Development Credit Agreements of the Association, dated June 30, 1980, with the same force and effect as if they were fully set forth herein (said General Conditions Applicable to Development Credit Agreements of the Association being hereinafter called the General Conditions). -2- Section 1.02. Wherever used in this Agreement, unless the context otherwise requires, the several terms defined in the General Conditions and ir the Preamble to this Agreement have the respective meanings therein set forth and the term "Musongati Project" means the planned project to implement the commercial exploitation of the Musongati nickel deposits. ARTICLE II The Credit Section 2.01. The Association agrees to lend to the Borrower, on the terms and conditions in the Development Credit Agreement set forth or referred to, an amount in various currencies equiva- lent to three million three hundred thousand Special Drawing Rights (SDR 3,300,000). Section 2.02. The amount of the Credit may be withdrawn from the Credit Account in accordance with the provisions of Schedule 1 to this Agreement, as such Schedule may be amended from time to time by agreement between the Borrower and the Association, for expenditures made (or, if the Association shall so agree, to be made) in respect of the reasonable cost of goods and services required for the Project and to be financed out of the proceeds of the Credit. Section 2.03. (a) Except as the Association shall otherwise agree, procurement of the goods and exploration services to be financed out of the proceeds of the Credit shall be governed by the provisions of Schedule 3 to this Agreement. (b) The Borrower shall cause its consultants for the manage- m.2nt of Parts A and C through G of the Project to subcontract for exploration services in accordance with the provisions for such services in Schedule 3 hereof. Section 2.04. The Closing Date shall be June 30, 1984 or such later date as the Association shall establish. The Association shall promptly notify the Borrower of such later date. Section 2.05. The Borrower shall pay to the Association a service charge at the rate of three-fourths of one per cent (3/4 of 1%) per annum on the principal amount of the Credit withdrawn and outstanding from time to time. -3- Section 2.06. Service charges shall be payable semiannually on March 15 and September 15 in each year. Section 2.07. The Borrower shall repay the principal amount of the Credit in semiannual installments payable on each March 15 and September 15 commencing September 15, 1991, and ending March 15, 2031, each installment to and including the installment payable on March 15, 2001, to be one-half of one per cent (1/2 of 1%) of such principal amount, and each installment thereafter to be one and one-half per cent (1-1/2%) of such principal amount. Section 2.08. The currency of the United States of America is hereby specified for the purposes of Section 4.02 of the General Conditions. ARTICLE III Execution of the Project Section 3.01. (a) The Borrower shall carry out the Project through its Ministry of Energy and Mines with due diligence and efficiency and in conformity with appropriate financial, engineer- ing and administrative practices, and shall provide, promptly as needed, the funds, facilities, services and other resources required for the purpose. (b) The Borrower shall assign to its Ministry of Energy and Mines such number of Burundian professionals as shall be deemed necessary in consultation with the Association, to assist in carrying out the Project. Section 3.02. In order to assist the Borrower in the carrying out of Parts A through G of the Project as well as to coordinate the carrying out,of the Project, the Borrower shall employ consul- tants whose' qualifications, experience and terms and conditions of employment shall be satisfactory to the Borrower and the Associa- tion. Section 3.03. (a) The Borrower undertakes to insure, or make adequate provision for the insurance of, the imported goods to be financed out of the proceeds of the Credit against hazards incident to the acquisition, transportation and delivery thereof to the place of use or installation, and for such insurance any -4- indemnity shall be payable in a currency freely usable by the Borrower to replace or repair such goods. (b) Except as the Association shall otherwise agree, the Borrower shall cause all goods and services financed out of the proceeds of the Credit to be used exclusively for the Project. Section 3.04. (a) The Borrower shall furnish to the Associa- tion, promptly upon their preparation, the plans, specifications, reports, contract documents and procurement schedules for the Project, and any material modifications thereof or additions thereto, in such detail as the Association shall reasonably request. (b) The Borrower shall: (i) maintain records and procedures adequate to record and monitor the progress of the Project (including its cost and the benefits to be derived from it), to identify the goods and services financed out of the proceeds of the Credit, and to disclose their use in the Project; (ii) enable the Association's accredited representatives to visit the facilities and construction sites included in the Project and to examine the goods financed out of the proceeds of the Credit and any relevant records and documents; and (iii) furnish to the Association at regular intervals all such information as the Association shall reasonably request concerning the Project, its cost and, where appropriate, the benefits to be derived from it, the expenditure of the proceeds of the Credit and the goods and services financed out of such proceeds. (c) Promptly after completion of the Project, but in any event not later than six months after the Closing Date or such later date as may be agreed for this purpose between the Borrower and the Association, the Borrower shall prepare and furnish to the Association a report, of such scope and in such detail as the Association shall reasonably request, on the execution and results of the Project, its cost and the benefits derived and to be derived from it, the performance by the Borrower and the Associa- tion of their respective obligations under the Development Credit Agreement and the accomplishment of the purposes of the Credit. (d) Upon the award by the Borrower of any contract for goods or services to be financed out of the proceeds of the Credit, the Association may publish a description thereof, the name and nationality of the party to whom the contract was awarded and the contract price. -5- Section 3.05. Upon completion of the drilling and sampling of fifty holes under Part A of the Project, the Borrower shall (a) suspend drilling of further holes until the average nickel content of the ore recovered from the first forty holes drilled under the Project and the ten holes drilled previously in the same area has been determined; and (b) not resume the carrying out of Part A of the Project unless the Borrower and the Association agree that the average nickel content of the ore recovered from said ten plus forty holes exceeds 1.6 percent. Section 3.06. (a) Upon completion of the survey to be carried out under Part B.1 of the Project, the Borrower shall exchange views with the Association, on the feasibility of the harvesting method, recommended in such survey, and on any adverse environ- mental or ecological effects which could result from the carrying out of the peat production in accordance with such harvesting method. (b) Part B.2 of the Project shall only be carried out if the results of the survey under Part B.1 of the Project establish an economical and technical feasible level of peat production satisfactory to the Borrower and the Association. Section 3.07. Notwithstanding the provisions of Section 3.01 of this Agreement, the Borrower shall not carry out Parts C through G of the Project unless the Borrower and the Association agreed that the execution of Parts C through G is justified by both: (i) the results of the analysis made pursuant to Section 3.05 of this Agreement or a later analysis under Part A of the Project show a nickel content of the ore of the Buhinda Plateau sufficient to carry out Parts C through G of the Project; and (ii) the economical level of peat production that can be achieved under the production method by the survey made under Part B.1 of the Project. Section 3.08. The Borrower shall take or cause to be taken all such action as shall be necessary to acquire as and when needed all such land and rights in respect of land as shall be required for carrying out the Project. Section 3.09. The Borrower shall, at all times, during execution of the Project, employ a Project Coordinator within its Ministry responsible for mining, whose powers, responsibilities, experience and qualification shall be satisfactory to the Association. -6- ARTICLE IV Other Covenants Section 4.01. The Borrower shall maintain or cause to be maintained records adequate to reflect in accordance with consistently maintained appropriate accounting practices the operations, resources and expenditures, in respect of the Project, of the departments or agencies of the Borrower responsible for carrying out the Project or any part thereof. ARTICLE V Remedies of the Association Section 5.01. (a) For the purposes of Section 6.02 of the General Conditions, the following additional events are specified pursuant to paragraph (h) thereof, namely, that subject to para- graph (b) of this Section the right of the Borrower to withdraw the proceeds of the Finnish Grant or the Danish Grant made to the Borrower for the financing of the Project shall have been suspended, cancelled or terminated in whole or in part, pursuant to the terms of the Finnish Grant Agreement or Danish Grant Agreement. (b) Paragraph (a) of this Section shall not apply if: (i) such suspension, cancellation or termination is not caused by the failure of the Borrower to perform any of its obligations under such agreement; and (ii) adequate funds for the Project are available to the Borrower from other sources on terms and condi- tions consistent with the obligations of the Borrower under this Agreement. ARTICLE VI Effective Date; Termination Section 6.01. The following events are specified as additional conditions to the effectiveness of the Development Credit Agreement within the meaning of Section 12.01 (b) of the General Conditions: (a) the Association has been notified by the Republic of Finland and the Kingdom of Denmark that all conditions precedent -7- to the initial disbursements of the Finnish Grant and the Danish Grant, respectively, other than the effectiveness of this Agree- ment, have been fulfilled; (b) the consultants have been appointed by the Borrower to carry out Part B.1 of the Project; and (c) the Association has been furnished by the Borrower with a copy of its contract with the consultants employed pursuant to Section 3.02 of this Agreement to coordinate the carrying out of the Project. Section 6.02. The date OCY- W 131 rlis hereby specified for the purposes of Section 12.04 of the General Conditions. ARTICLE VII Representatives of the Borrower; Addresses Section 7.01. The Minister of the Borrower responsible for Mines is designated as representative of the Borrower for the purposes of Section 11.03 of the General Conditions. Section 7.02. The following addresses are specified for the purposes of Section 11.01 of the General Conditions: For the Borrower: The Minister of Energy and Mines B.P. 745 Bujumbura, Burundi Cable address: Telex: Geomines, Bujumbura 48 BDI Burundi For the Association: International Development Association 1818 H Street, N.W. Washington, D.C. 20433 United States of America -8- Cable address: Telex: INDEVAS 440098 (ITT) Washington, D.C. 248423 (RCA) or 64145 (WUI) IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, have caused this Agreement to be signed in their respective names in the District of Columbia, United States of America, as of the day and year first above written. REPUBLIC OF BURUNDI By Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION By f Regional Vice President Eastern Africa -9- SCHEDULE 1 Withdrawal of the Proceeds of the Credit 1. The table below sets forth the Categories of foreign exchange costs to be financed out of the proceeds of the Credit and the allocation of amounts of the Credit to each Category: Amount of the Credit Allocated (Expressed in Category SDR Equivalent) (1) Consultants services to manage 290,000 Parts A, C, D, E, F and G of the Project (2) Exploration services and equipment 1,310,000 to carry out Part A of the Project (3) Consultants Services to carry out 620,000 Parts C, D, E, F and G of the Project (4) Consultants services to carry out 130,000 Part B.2 of the Project (5) Equipment needed to carry out 370,000 Part B.2 of the Project (6) Unallocated 580,000 TOTAL 3,300,000 2. For the purposes of this Schedule the term "foreign expendi- tures" means for the purposes of this Schedule expenditures in the currency of any country other than the Borrower and for goods or services supplied from the territory of any country other than the Borrower. 3. The disbursement percentages have been calculated in com- pliance with the policy of the Association that no proceeds of the Credit shall be disbursed on account of payments for taxes levied - 10 - by, or in the territory of, the Borrower on goods or services, or on the importation, manufacture, procurement or supply thereof; to that end, if the amount of any such taxes levied on or in respect of any item to be financed out of the proceeds of the Credit decreases or increases, the Association may, by notice to the Borrower, increase or decrease the disbursement percentage then applicable to such item as required to be consistent with the aforementioned policy of the Association. 4. Notwithstanding the provisions of paragraph I above, no withdrawals shall be made in respect of: (a) payments made for expenditures prior to ; and (b) payments made for expenditures under Category (3) unless agreement has been reached between the Borrower and the Association pursuant to Section 3.07 of the Development Credit Agreement. 5. Notwithstanding the allocation of an amount of the Credit or the disbursement percentages set forth in the table in para- graph 1 above, if the. Association has reasonably estimated that the amount of the Credit then allocated to any Category will be insufficient to finance the agreed percentage of all expenditures in that Category, the Association may, by notice to the Borrower reallocate to such Category, to the extent required to meet the estimated shortfall, proceeds of the Credit which are then allocated to another Category and which in the opinion of the Association are not needed to meet other expenditures. 6. If the Association shall have reasonably determined that the procurement of any item in any Category is inconsistent with the procedures set forth or referred to in this Agreement, no expenditures for such item shall be financed out of the proceeds of the Credit and the Association may, without in any way restricting or limiting any other right, power or remedy of the Association under the Development Credit Agreement, by notice to the Borrower, cancel such amount of the Credit as, in the Associa- tion's reasonable opinion, represents the amount of such expendi- tures which would otherwise have been eligible for financing out of the proceeds of the Credit. -- - 11 - SCHEDULE 2 Description of the Project The Project consists of the following Parts: Part A: Nickel Expl6ration Drilling and sampling of about 150 holes on the Buhinda Plateau to analyse the tonnage and composition of the ore reserves, in particular of the nickel, copper, cobalt and platinum group metals content of such ore. Part B: Trial Peat Production 1. A survey of the Buyongwe and Ndurumu bogs to determine their peat content, the economically and technically optimum harvesting method and the cost thereof. 2. Carrying out trials to determine the feasibility of peat production in the Buyongwe and Ndurumu bogs. Part C: Highgrade Mineability Study A study to analyze the mineability of high grade ore and estimate the capital and operating cost of mining such ore on the Buhinda Plateau. Part D: Hydroelectric Site Study A study: 1. to examine the electric power requirements of the Musongati Project; 2. to examine new sites for the generation of electricity near Musongati; and 3. to estimate, on a preliminary basis, the generating potential and cost of each site, and to prepare a plan for their development. Part E: Sources of Sulfur 1. A preliminary study to determine the possibility of locating sulfide or sulfate minerals and make recom- mendations on obtaining sulfur: (a) as a mineral in - 12 - Burundi; (b) as a mineral or a by-product of mining operations in neighboring countries; and (c) as elemental sulfur, imported into Burundi. 2. If the Borrower and the Association shall so agree, a study to prepare a sulfur exploration programme, based upon the results of Part E.1 (a) hereof. 3. If the Borrower and the Association shall so agree based upon the results of Part E.1 (b) and (c) hereof, a study to estimate the cost of transporting of any sulfur bearing material from neighboring countries for use in the Musongati Project. Part F: Process Selection Study: A study to analyse the results of bench scale metallurgical tests and the process design parameters obtained from firms marketing each process and, thereafter, to compare objectively the processes based on the bench results, design parameters, costs of peat, power and sulfur and the confirmed ore compositions. Part G: Review of the viability of the Musongati Project A study to assess the overall technical, financial and economic viability of the Musongati Project. The Project is expected to be completed by December 31, 1983. - 13 - SCHEDULE 3 Procurement A. International Competitive Bidding 1. Except as provided in Part B hereof, goods shall be procured under contracts awarded in accordance with procedures consistent with those set forth in the "Guidelines for Procurement under World Bank Loans and IDA Credits" published by the Bank in March 1977 (hereinafter called the Guidelines), on the basis of international competitive bidding as described in Part A of the Guidelines. 2. For goods to be procured on the basis of international competitive bidding, in addition to the requirements of paragraph 1.2 of the Guidelines, the Borrower shall prepare and forward to the Bank as soon as possible, and in any event not later than 60 days prior to the date of availability to the public of the first tender or prequalification documents relating thereto, as the case may be, a general procurement notice, in such form and detail and containing such information as the Bank shall reasonably request; the Bank will arrange for the publication of such notice in order to provide timely notification to prospective bidders of the opportunity to bid for the goods in question. The Borrower shall provide the necessary information to update such notice annually so long as any goods remain to be procured on the basis of inter- national competitive bidding. 3. For the purpose of evaluation and comparison of bids for the supply of goods to be procured on the basis of international competitive bidding: (i) bidders shall be required to state in their bid the c.i.f. (port of entry) price for the imported goods, or the ex-factory price or off-the-shelf price of other goods, offered in such bid; and (ii) customs duties and other import taxes levied in connection with the importation, or the sales and similar taxes levied in connection with the sale or delivery, pursuant to the bid, of the goods shall not be taken into account in the evaluation of the bids. B. Other Procurement Procedures Contracts for the supply of goods estimated to cost less than the equivalent of $300,000 each and contracts for exploration services shall be procured through limited international tendering - 14 - on the basis of at least four responsive quotations from suppliers of at least three countries, members of the Association, Switzer- land or Taiwan. C. Review of Procurement Decisions by the Association 1. Review of invitations to bid and of proposed awards and final contracts with respect to all contracts estimated to cost the equivalent of $100,000 or more: (a) Before bids are invited, the Borrower shall furnish to the Association, for its comments, the text of the invitations to bid and the specifications and other bidding documents, together with a description of the advertising procedures to be followed for the bidding, and shall make such modifications in the said documents or procedures as the Association shall reasonably request. Any further modification to the bidding documents shall require the Association's concurrence before it is issued to the prospective bidders. (b) After bids have been received and evaluated, the Bor- rower shall, before a final decision on the award is made, inform the Association of the name of the bidder to which it intends to award the contract and shall furnish to the Association, in sufficient time for its review, a detailed report on the evalua- tion and comparison of the bids received, and such other inform- ation as the Association shall reasonably request. The Association shall, if it determines that the intended award would be inconsis- tent with the Guidelines or this Schedule, promptly inform the Borrower and state the reasons for such determination. (c) The terms and conditions of the contract shall not, without the Association's concurrence, materially differ from those on which bids were asked or prequalification invited. (d) Two conformed copies of the contract shall be furnished to the Association promptly after its execution and prior to the submission to the Association of the first application for withdrawal of funds from the Credit Account in respect of such contract. 2. With respect to each contract not governed by the preceding paragraph, the Borrower shall furnish to the Association, promptly after its execution and prior to the submission to the Association of the first application for withdrawal of funds from the Credit -15 - Account in respect of such contract, two conformed copies of such contract, together with the analysis of the respective bids, recommendations for award and such other information as the Association shall reasonably request. The Association shall, if it determines that the award of the contract was not consistent with the Guidelines or this Schedule, promptly inform the Borrower and state the reasons for such determination. 3. Before agreeing to any material modification or waiver of the terms and conditions of a contract, or granting an extension of the stipulated time for performance of such contract, or issuing any change order under such contract (except in cases of extreme urgency) which would increase the cost of the contract by more than 15% of the original price, the Borrower shall inform the Association of the proposed modification, waiver, .extension or change order and the reasons therefor. The Association, if it determines that the proposal would be inconsistent with the provisions of this Agreement, shall promptly inform the Borrower and state the reasons for its determination. INTERNATIONAL DEVELOPMENT ASSOCIATION CERTIFICATE I hereby certify that the foregoing is a true copy of the original in the archives of the Interna- tional Development Association. In witness whereof I have signed this Certifi- cate and affixed the Seal of the Association thereunto the day of 198 / FOR SECRETARY