Philippines - Petroleum Exploration Promotion Project : Loan 2201 - Loan Agreement - Conformed

LOAN NUMBER 2201 PH Loan Agreement (Petroleum Exploration Promotion Project) between REPUBLIC OF THE PHILIPPINES and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Dated 2 , 1982 LOAN NUMBER 2201 PH LOAN AGREEMENT AGREEMENT, dated 6& " t)' 01 , 1982 (herein- after called the BED Loan Agreement), between the REPUBLIC OF THE PHILIPPINES (hereinafter called the Borrower) and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (hereinafter called the Bank). WHEREAS (A) the Borrower has requested the Bank to assist in the financing of Part A of the Project (described in Schedule 2 to this Agreement) which will be carried out by the Borrower through its Bureau of Energy Development (hereinafter called BED), by making the Loan (hereinafter called the BED Loan) as hereinafter provided; and (B) Part B of the Project will be carried out by PNOC Exploration Corporation (hereinafter called PNOC-EC), a subsidiary of the Philippine National Oil Company (hereinafter called PNOC), with the assistance of PNOC and the Bank and, as part of such assistance, the Bank has agreed to make a loan (hereinafter called the PNOC Loan) under a Loan Agreement of even date herewith between the Bank and PNOC (hereinafter called the PNOC Loan Agreement) under the terms and conditions therein set forth; WHEREAS the Bank is willing, on the basis inter alia of the foregoing, to make a loan to the Borrower on the terms and conditions set forth herein; 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 Loan and Guara"tee Agreements of the Bank, dated October 27, 1980, with the same force and effect as if they were fully set forth herein (said General Conditions Applicable to Loan and Guarantee Agreements of the Bank being hereinafter called the General Conditions). Section 1.02. Wherever used in this Agreement, unless the context otherwise requires, the several terms defined in the -2- General Conditions and in the Preamble to this Agreement have the respective meanings therein set forth, and the following addi- tional terms have the following meanings: (a) "Consultants' Guidelines" means the "Guidelines for the Use of Consultants by World Bank Borrowers and by the World Bank as Executing Agency" published by the Bank in August 1981. (b) "BED Special Fund" means the fund established by the Borrower pursuant to Presidential Decree No. 910 of March 22, 1976, for the purposes of financing energy resource development and exploitation programs and projects of the Borrower and for such other purposes as may be directed by the President of the Philippines. (c) "BED" means the Bureau of Energy Development of the Borrower established within the Ministry of Energy pursuant to Presidential Decree No. 1206 of October 6, 1977, as amended to the date of this Agreement. (d) "Consultants' Services" means the services to be pro- vided by consultants and experts to BED pursuant to Section 3.02 of the BED Loan Agreement. (e) "Specialized Services" means the geological, geophy- sical and geochemical services required to carry out the explora- tion activities under Part A of the Project. (f) "Local currency" means the currency of the Borrower. ARTICLE II The BED Loan Section 2.01. The Bank agrees to lend to the Borrower, on the terms and conditions set forth or referred to in this Agree- ment, an amount in various currencies equivalent to thirteen million five hundred thousand dollars ($13,500,000). Section 2.02. The amount of the BED Loan may be withdrawn from the BED Loan 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 Bank, for expenditures made (or, if the Bank shall so agree, to be made) in respect of the reasonable cost of goods and Specialized - 3 - Services and Consultants' Services required for Part A of the Project described in Schedule 2 to this Agreement and to be financed out of the proceeds of the BED Loan. Section 2.03. Except as the Bank shall otherwise agree, procurement of the goods and Specialized Services required for Part A of the Project and to be financed out of the proceeds of the BED Loan shall be governed by the provisions of Schedule 4 to this Agreement. Section 2.04. The Closing Date shall be December 31, 1986 or such later date as the Bank shall establish. The Bank shall promptly notify the Borrower of such later date. Section 2.05. Not later than the Effective Date, the Borrower shall pay to the Bank a fee equivalent to one hundred ninety-nine thousand five hundred seven dollars ($199,507). The fee shall be payable in such currency or currencies as the Bank shall specify. In the event that the Bank shall not have received full payment of the fee by the Effective Date, the Bank shall, on behalf of the Borrower, withdraw the amount allocated to Category (6) of the table set forth in paragraph 1 of Schedule 1 to this Agreement, and pay to itself such amount required for the full payment of the fee in the currency or currencies specified for the purpose. Section 2.06. The Borrower shall pay to the Bank a commit- ment charge at the rate of three-fourths of one per cent (3/4 of 1%) per annum on the principal amount of the BED Loan not with- drawn from time to time. Section 2.07. The Borrower shall pay interest at the rate of eleven and three-fifths per cent (11-3/5%) per annum on the principal amount of the BED Loan withdrawn and outstanding from time to time. Section 2.08. Interest and other charges shall be payable semiannually on June 1 and December 1 in each year. Section 2.09. The Borrower shall repay the principal amount of the BED Loan in accordance with the amortization schedule set forth in Schedule 3 to this Agreement. -4- ARTICLE III Execution of Part A of the Project Section 3.01. (a) The Borrower shall carry out Part A of the Project through BED with due diligence and efficiency and in conformity with appropriate administrative, financial, engineer- ing and petroleum practices, and shall provide, promptly as needed, the funds, facilities, services and other resources required for the purpose. (b) Without limitation or restriction upon the generality of Section 3.0' (a) of this Agreement, the Borrower shall allo- cate budgetary or other funds (including funds accrued to the BED Special Fund) estimated to amount to the equivalent of two mil- lion five hundred thousand dollars ($2,500,000) for the local currency expenditures required under Part A of the Project, and, as and when needed, any other funds which may be required for the timely completion of Part A of the Project. (c) Thp Borrower shall carry out and coordinate the activities under Part A of the Project, through the Oil and Gas Division of BED under the direction of the Chief of such Division, or other duly qualified Project Manager acceptable to the Bank, and assisted by competent staff in adequate numbers. (d) Without limitation or restriction upon Sections 3.01 (a), (b) and (c) of this Agreement, the Borrower shall, through BED, assign or employ such additional staff and experts as may be required for the timely completion of Part A of the Project. Section 3.02. (a) In order to assist BED in carrying out Part A of the Project and ensure its timely completion, the Borrower- shall employ consultants and experts, as and when required, in petroleum geology, geophysics and geochemistry,whose selection, qualifications, experience and terms and conditions of employment shall be satisfactory to the Bank, in accordance with the principles and procedures described in the Consultants' Guidelines. (b) Without limitation or restriction upon the generality of Section 3.02 (a) of this Agreement, the Borrower shall employ the consultants required to assist the Borrower in carrying out the basin evaluation program and preparing the reports under Parts A.4 and A.5 of the Project by such date as shall ensure that their services are provided not later than January 1, 1983. - 5 - 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 BED Loan against hazards incident to the acquisition, transportation and delivery thereof to the place of use or installation, and for such insurance any indemnity shall be payable in a currency freely usable by the Borrower to replace or repair such goods. (b) Except as the Bank may otherwise agree, the Borrower shall cause all goods, Specialized Services and Consultants' Services financed out of the proceeds of the BED Loan to be used exclusively for the purposes of Part A of the Project until the completion thereof. Section 3.04. (a) The Borrower shall furnish to the Bank, promptly upon their preparation, the plans, specifications, reports, contract documents and work and' procurement schedules for Part A of the Project, and any material modifications thereof or additions thereto, in such detail as the Bank shall reasonably request. (b) The Borrower shall: (i) maintain records and procedures a6equate to record and monitor on a regular basis the progress of Part A 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 BED Loan, and to disclose their use in Part A of the Project; (ii) exert its best efforts to enable the Bank's representatives to visit the facilities and exploration sites included in said Part of the Project and to examine the goods financed out of the proceeds of the BED Loan and any rele- vant records and documents; (iii) furnish to the Bank monthly reports on the progress of Part A of the Project; and (iv) fur- nish to the Bank at regular intervals all such other information as the Bank shall reasonably request concerning Part A of the Project, its cost and, where appropriate, the benefits to be derived from it, the expenditure of the proceeds of the BED Loan and the goods, Specialized Services and Consultants' Services financed out of such proceeds. (c) Upon the award by the Borrower of any contract for goods, Specialized Services and Consultants' Services to be financed out of the proceeds of the BED Loan, the Bank may publish a description thereof, the name and nationality of the party to whom the contract was awarded and the contract price. - 6 - (d) Promptly after completion of Part A 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 Bank, the Borrower shall prepare and furnish to the Bank a report, of such scope and in such detail as the Bank shall reasonably request, on the execution of Part A of the Project, its cost and the benefits derived and to be derived from iz (including an evaluation of the results of Part A of the Project in relation to future petroleum exploration and develop- ment operations in the Philippines), the performance by the Borrower and the Bank of their respective obligations under this Agreement and the accomplishment of the purposes of the BED Loan. Section 3.05. The Borrower shall through BED take all such action as shall be necessary to acquire all such rights enabling it to use all geological information necessary to carry out Part A of the Project. Section 3.06. (a) Not later than December 31, 1983, the Borrower shall through BED submit to the Bank for its review and comment, a preliminary plan and timetable, based on the results of the petroleum exploration and geological evaluation activities carried out by that date, for promoting private sector invest- ments to further explore and develop petroleum resources in the Borrower's territory, such plan and timetable to be thereafter updated at regular intervals and in consultation with the Bank as and when results of further exploration and evaluation activities are made available. (b) Promptly upon the completion of Part A.5 of the Project, and taking into account the Bank's comments on the plan referred to above, the Borrower shall through BED take all such measures necessary to implement said plan and, as part of such plan, the Borrower shall, through BED, sell or otherwise make available to private sector entities all such geological data and reports pertaining to areas evaluated under Part A of the Project as shall be deemed appropriate to induce investments by said private sector entities. Section 3.07. The Borrower shall deposit into the BED Special Fund any proceeds arising from any sale of geological data acquired and processed, and geological reports prepared, under Part A of the Project, and ensure that such proceeds are used to finance energy exploration or development activities. - 7 - ARTICLE IV Other Covenants Section 4.01. (a) It is the policy of the Bank, in making loans to, or with the guarantee of, its members not to seek, in normal circumstances, special security from the member concerned but to ensure that no other external debt shall have priority over its loans in the allocation, realization or distribution of foreign exchange held under the control or for the benefit of such member. To that end, if any lien shall be created on any public assets (as hereinafter defined), as security for any external debt, which will or might result in a priority for the benefit of the creditor of such external debt in the allocation, realization or distribution of foreign exchange, such lien shall, unless the Bank shall otherwise agree, ipso facto and at no cost to the Bank, equally and ratably secure the principal of, and interest and other charges on, the BED Loan, and the Borrower, in creating or permitting the creation of such lien, shall make express provision to that Effect; provided, however, that, if for any constitutional or other legal reason such provision cannot be made with respect to any lien created on assets of any of its political or administrative subdivisions, the Borrower shall promptly and at no cost to the Bank secure the principal of, and interest and other charges on, the BED Loan by an equivalent lien on other public assets satisfactory to the Bank. (b) The foregoing undertaking shall not apply to: (i) any lien created on property, at the time of purchase thereof, solely as security for payment of the purchase price of such property or as security for the payment of debt incurred for the purpose of financing the purchase of such property; and (ii) any lien arising in the ordinary course of banking transactions and securing a debt maturing not more than one year after its date. (c) As used in this Section, the term "public assets" means assets of the Borrower, of any political or administrative subsidivision thereof and of any entity owned or controlled by, or operating for the account or benefit of, the Borrower or any such subdivision, including gold and foreign exchange assets held by any institution performing the functions of a central bank or exchange stabilization fund, or similar functions, for the Borrower. -8- (d) The Borrower further undertakes that, within the limits of the laws in force in its territories, it will make the f ore- going undertaking effective with respect to liens on public assets, and to the extent that the Borrower is unable within the limits of the laws in force in its territories to make this undertaking effective, the Borrower will give to the Bank an equivalent lien satisfactory to the Bank. Section 4.02. (a) The Borrower shall through BED maintain separate records and accounts adequate to reflect in accordance with consistently maintained sound accounting practices the operations, resources and expenditures, in respect of Part A of the Project. (b) The Borrower shall (i) have the separate accounts referred to in paragraph (a) of this Section for each fiscal year audited, in accordance with appropriate auditing principles con- sistently applied, by independent auditors acceptable to the Bank; (ii) furnish to the Bank as soon as available, but in any case not later than six months after the end of each such year, a certified copy of the report of such audit by said auditors, of such scope and in such detail as the Bank shall have reasonably requested; and (iii) furnish to the Bank such other information concerning said separate accounts, records and expenditures and the audit thereof as the Bank shall from time to time reasonably request. ARTICLE V Effective Date; Termination Section 5.01. The following event is specified as an additional condition to the effectiveness of the BED Loan Agreement within the meaning of Section 12.01 (c) of the General Conditions, namely that the PNOC Loan Agreement has been duly executed and delivered on behalf of PNOC, and authorized or ratified by all necessary governmental or corporate action, and that all conditions precedent to the effectiveness of the PNOC Loan Agreement (other than the effectiveness of this Agreement) have been fulfilled. Section 5.02. The following is specified as an additional matter, within the meaning of Section 12.02 (c) of the General Conditions, to be included in the opinion or opinions to be furnished to the Bank, namely that the PNOC Loan Agreement has - 9 - been duly executed, authorized or ratified by PNOC and is legally binding and enforceable upon PNOC in accordance with its terms. Section 5.03. The date Iavoi{ 4 / '3 is hereby specified for the purposes of Section 12.04 of tht Gen% al Conditions. ARTICLE VI Representative of the Borrower; Addresses Section 6.01. The Minister of Finance of the Borrower is designated as representative of the Borrower for the purposes of Section 11.03 of the General Conditions. Section 6.02. The following addresses are specified for the purposes of Section 11.01 of the General Conditions: For the Borrower: Minister of Finance Ministry of Finance Manila Philippines Cable address: Telex: MINFIN 7550 CPB-PH Manila 40268 CB-CONF For the Bank: International Bank for Reconstruction and Development 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: Telex: INTBAFRAD 440098 (ITT) Washington, D.C. 248423 (RCA) or 64145 (WUI) - 10 - 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 THE PHILIPPINES By 01A,t- Authorized Representative INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By ByLj Regional Vice President East Asia and Pacific - 11 - SCHEDULE I Withdrawal of the Proceeds of the BED Loan 1. The table below sets forth the Categories of items to be financed out of the proceeds of the BED Loan, the allocation of the amounts of the BED Loan to each Category and the percentage of expenditures for items so to be financed in each Category: Amount of the Loan Allocated % of (Expressed in Expenditures Category Dollar Equivalent) to be Financed (1) Specialized 3,800,000 100% of foreign Services for expenditures aeromagnetic surveys (2) Equipment and 6,100,000 100% of foreign Specialized expenditures Services for offshore seismic surveys (3) Goods and 200,000 100% of foreign Specialized expenditures; Services for the 100% of local basin evaluation expenditures program and geo- (ex-factory); logical reports and 80% of local expenditures for imported items locally procured (4) Consultants' 1,000,000 100% of foreign Services expenditures (5) Training 100,000 100% of foreign expenditures (6) Fee 199,507 Amount due (7) Unallocated 2,100,493 TOTAL 13,500,000 - 12 - 2. For the purposes of this Schedule: (a) the term "foreign expenditures" means 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; and (b) the term "local expenditures" means expenditures in the currency of the Borrower or for goods or services supplied from the territory of the Borrower. 3. The disbursement percentages have been calculated in com- pliance with the policy of the Bank that no proceeds of the BED Loan shall be disbursed on account of payments for taxes levied 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 BED Loan decreases or increases, the Bank 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 Bank. 4. Notwithstanding the provisions of paragraph 1 above, no withdrawals shall be made in respect of payments made for expenditures prior to the date of this Agreement, except that withdrawals, in an aggregate amount not exceeding the equivalent of $1,300,000, may be made in respect of Categories (1) and (4) on account of payments made for aeromagnetic surveys before that date but after July 1, 1982. 5. Notwithstanding the allocation of an amount of the BED Loan or the disbursement percentages set forth in the table in paragraph 1 above, if the Bank has reasonably estimated that the amount of the BED Loan then allocated to any Category will be insufficient to finance the agreed percentage of all expenditures in that Category, the Bank may, by notice to the Borrower: (i) reallocate to such Category, to the extent required to meet the estimated shortfall, proceeds of the BED Loan which are then allocated to another Category and which in the opinion of the Bank are not needed to meet other expenditures; and (ii) if such reallocation cannot fully meet the estimated shortfall, reduce the disbursement percentage then applicable to such expenditures in order that further withdrawals under such Category may continue until all expenditures thereunder shall have been made. - 13 - 6. If the Bank shall have reasonably determined that the procurement of any item in any Category is inc -istent with the procedures set forth or referred to in th,s Agreement, no expenditures for such item shall be financed out of the proceeds of the BED Loan and the Bank may, without in any way restricting or limiting any other right, power or remedy of the Bank under the BED Loan Agreement, by notice to the Borrower, cancel such amount of the BED Loan as, in the Bank's reasonable opinion, represents the amount of such expenditures which would otherwise have been eligible for financing out of the proceeds of the BED Loan. - 14 - SCHEDULE 2 Description of the Project The purpose of the Project is to accelerate the exploration for petroleum resources in the territory of the Philippines with a view to promoting private sector investments in the petroleum sector and strengthening the technical capabilities of BED and PNOC-EC in petroleum exploration operations through: (i) a countrywide qualitative and quantitative assessment of petroleum prospects (Part A of the Project); and (ii) an exploration program to be carried out in various onshore regions of Mindoro, Cebu and the Cotabato area of Mindanao, or in other onshore regions agreed to between the Bank, PNOC and PNOC-EC (Part B of the Project). Part A: Countrywide Assessment of Petroleum Prospects to be carried out by BED 1. A detailed aeromagnetic survey of about 8 areas and comprising a total of about 168,000 line kilometers to define the extent and potential prospectiveness of geological basins. 2. Offshore seismic surveys of about 13 areas and com- prising the shooting of a total of about 8,400 line kilometers. 3. The compilation, processing and interpretation of all relevant geological data acquired under, or pertaining to, Parts A.1 and A.2 of the Project. 4. A regional basin evaluation program covering a total of about 15 onshore and offshore sedimentary areas, comprising inter alia stratigraphical studies, geochemical investigations and the analysis of other geological data, including the data acquired under Part A.3 of the Project. 5. The preparation of petroleum geology evaluation reports, including maps and integrating all pertinent geological data, on each area which has been assessed as having a reasonable potential for petroleum development in commercial quantities oA the basis of - 15 - the foregoing sub-Parts A.1 through A.4 of the Project. 6. Training for BED staff in activities related to aeromagnetic and seismic surveys and basin evaluation. Part B: Onshore Petroleum Exploration Program to be carried out by PNOC-EC in Mindoro, Cebu and the Cotabato area of Mindanao or in other onshore areas 1. Preliminary investigations, including mapping, geological studies, and gravity surveys and related processing. 2. Shooting of a total of about 4,400 lines kilometers of land seismic as follows: (a) reconnaissance seismic surveys and the processing and interpretation of the geophysical data so acquired; and (b) detailed seismic surveys in areas selected on the basis of the data acquired under Parts B.1 and B.2 (a) of the Project and other relevant data, and the processing and interpretation of the new seismic data so acquired. 3. Exploratory drilling of about 6 wells, as may be warranted and in such locations as may be identi- fied as having a reasonable potential for petro- leum development on the basis of the data acquired under the foregoing Part B.2 (b) of the Project and other relevant data. 4. Training for PNOC-EC staff, including, inter alia, specialized courses in geophysics, production geology, reservoir engineering and logging services. 5. Reprocessing of about 440 line kilometers of existing seismic and related gravity data. Part A of the Project is expected to be completed by June 30, 1985 and Part B of the Project is expected to be completed by June 30, 1986. - 16 - SCHEDULE 3 Amortization Schedule Payment of Principal Date Payment Due (expressed in dollars)* On each June 1 and December 1 beginning June 1, 1988 through December 1, 2002 450,000 * The figures in this column represent dollar equivalents determined as of the respective dates of withdrawal; see General Conditions, Section 3.04. - 17 - Premiums on Prepayment The following percentages are specified as the premiums payable on repayment in advance of maturity of any portion of the principal amount of the BED Loan pursuant to Section 3.04 (b) of the General Conditions: Time of Prepayment Premium Not more than three years 1.75% before maturity More than three years but not 3.50% more than six years before maturity More than six years but not 6.40% more than eleven years before maturity More than eleven years but not 9.30% more than sixteen years before maturity More than sixteen years but not 10.45% more than eighteen years before maturity More than eighteen years 11.60% before maturity - 18 - SCHEDULE 4 Procurement A. International Competitive Bidding 1. Except as provided in Part C hereunder, goods and Special- ized Services required for Part A of the Project shall be procured under contracts awarded in accordance with procedures consistent with those set forth in the current edition of 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 and Specialized Services 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 availabi- lity to the public of the first tender or prequalification documents relating thereto, as the case may be, a general pro- curement 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 and Specialized Services in question. The Borrower shall provide the necessary information to update such notice annually so long as any goods or Specialized Services remain to be procured on the basis of international 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 com- petitive biddiDg: (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; (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; and (iii) the cost of inland freight and other expenditares incidental to the delivery of the goods to the place of their use or installation shall be included. - 19 - B. Preference for Domestic Manufacturers In the procurement of goods in accordance with the proce- dures described in Part A of this Schedule, goods manufactured in the Philippines may be granted a margin of preference in accord- ance with, and subject to, the following provisions: 1. All bidding documents for the procurement of goods shall clearly indicate any preference which will be granted, the information required to establish the eligibility of a bid for such preference and the following methods and stages that will be followed in the evaluation and comparison of bids. 2. After evaluation, responsive bids will be classified in one of the following three groups: (1) Group A: bids offering goods manufactured in the Philippines if the bidder shall have established to the satisfaction of the Borrower and the Bank that the manufacturing cost of such goods includes a value added in the Philippines equal to at least 20% of the ex-factory bid price of such goods. (2) Group B: all other domestic bids. (3) Group C: bids offering any other goods. 3. In order to determine the lowest evaluated bid of each group, all evaluated bids in each group shall first be compared among themselves, without taking into account customs duties and other import taxes levied in connection with the importation, and sales and similar taxes levied in connection with the sale or delivery, pursuant to the bids, of the goods. Such lowest evaluated bids shall then be compared with each other, and if, as a result of this comparison, a bid from group A or group B is the lowest, it shall be selected for the award. 4. If, as a result of the comparison under paragraph 3 above, the lowest bid is a bid from group C, all group C bids shall be further compared with the lowest evaluated bid from group A after adding to the evaluated bid price of the imported goods offered in each group C bid, for the purpose of this further comparison only, an amount equal to: (i) the amount of customs duties and other import taxes which a non-exempt importer would have to pay for the importation of the goods offered in - 20 - such group C bid; or (ii) 15% of the c.i.f. bid price of such goods if said customs duties and taxes exceed 15% of such price. If the group A bid in such further comparison is the lowest, it shall be selected for the award; if not, the bid from Group C which as a result of the comparison under paragraph 3 is the lowest evaluated bid shall be selected. C. Other Procurement Procedures Contracts for goods and Specialized Services, which do not exceed the equivalent of $150,000 each, and which do not exceed in the aggregate the equivalent of $500,000, may be awarded: (i) in accordance with local competitive bidding procedures acceptable to the Bank; (ii) on the basis of negotiated contracts, on terms and conditions acceptable to the Bank, in cases where less than 3 suppliers are prepared to bid. D. Review of Procurement Decisions by the Bank 1. Review of invitations to bid and of proposed awards and final contracts: With respect to all contracts estimated to cost the equivalent of $150,000 or more: (a) Before bids are invited, the Borrower shall furnish to the Bank, 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 docu- ments or procedures as the Bank shall reasonably request. Any further modification to the bidding documents shall require the Bank's concurrence before it is issued to the prospective bidders. (b) After bids have been received and evaluated, the Borrower shall, before a final decision on the award is made, inform the Bank of the name of the bidder to which it intends to award the contract and shall furnish to the Bank, in sufficient time for its review, a detailed report on the evaluation and comparison of the bids received, and such other information as the Bank shall reasonably request. The Bank shall, if it determines that the intended award would be inconsistent with the Guidelines or this Schedule, promptly inform the Borrower and state the reasons for such determination. - 21 - (c) The terms and conditions of the contract shall not, without the Bank's concurrence, materially differ from those on which bids were asked or prequalification was invited. (d) Two conformed copies of the contract shall be furnished to the Bank promptly after its execution and prior to the submission to the Bank of tha first application for withdrawal of funds from the BED Loan Account in respect of such contract. 2. With respect to each contract not governed by the preceding paragraph, the Borrower shall furnish to the Bank, promptly after its execution and prior to the submission to the Bank of the first application for withdrawal of funds from the BED Loan 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 Bank shall reasonably request. The Bank 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 20% of the original price, the Borrower shall inform the Bank of the proposed modification, waiver, extension or change order and the reasons therefor. The Bank, 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 BANK FOR RECONSTRUCTION AND DEVELOPMENT CERTIFICATE I hereby certify that the foregoing is a true copy of the original in the archives of the Interna- tional Bank for Reconstruction and Develop- ment. In witness whereof I have signed this Certifi- cate and affixed the Seal of the Bank thereunto this KL day of e! 198 Z. FOR SECRETARY