India - South Bassein Offshore Gas Development Project : Loan 2241 - Project Agreement - Conformed

OFR JCIAL LOAN NUMBER 2241 IN DOCM EN TS Project Agreement (South Bassein Offshore Gas Development Project) between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT and OIL AND NATURAL GAS COMMISSION Dated , 1983 LOAN NUMBER 2241 IN PROJECT AGREEMENT AGREEMENT, dated /All-- 3/ , 1983, between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (herein- after called the Bank) and OIL AND NATURAL GAS COMMISSION (hereinafter called the Commission). WHEREAS (A) by the Loan Agreement of even date herewith between India, acting by its President (hereinafter called the Borrower) and the Bank, the Bank has agreed to make available to the Borrower an amount in various currencies equivalent to two hundred twenty-two million three hundred thousand dollars ($222,300,000), on the terms and conditions st forth in the Loan Agreement, but only on condition that the Commission agree to undertake such obligations toward the Bank as are hereinafter set forth; (B) by a subsidiary loan agreement to be entered into between the Borrower and thr, Commission,.the proceeds of the loan provided for under the Loan Agreement will be made available to the Commission on the terms and conditions therein set forth; and WHEREAS the Commission, in consideration of the Bank's entering into the Loan Agreement with the Borrower, has agreed to undertake the obligations hereinafter set forth; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I Definitions Section 1.01. Wherever used in this Agreement, unless the context shall otherwise require, the several terms defined in the Loan Agreement, the Preamble to this Agreement and the General Conditions (as so defined) have the respective meanings therein set forth. ARTICLE II Execution of the Project Section 2.01. The Commission shall carry out the Project, described in Schedule 2 to the Loan Agreement, with due diligence and efficiency and in conformity with appropriate administrative, financial and engineering practices. -2- Section 2.02. In order to assist the Commission in carrying out Part I of the Project, the Commission shall, as and when required, employ consultants whose qualifications, experience and terms of reference shall be satisfactory to the Bank. Section 2.03. Except as the Bank shall otherwise agree, procurement of the joods and civil works required for the Project and to be financed out of the proceeds of the Loan shall be governed by the provisions of the Schedule to this Agreement. Section 2.04. (a) The Commission undertakes to insure, or make adequate provision for the insurance of, the imported goods to be financed out of the proceeds of the Loan relent to it by the Borrower against hazards incident to the acquisition, trans- portation and delivery thereof to the place of use or installa- tion, and for such insurance any indemnity shall be payable in a currency freely usable by the Commission to replace or repair such goods. (b) Except as the Bank may otherwise agree, the Commission shall cause all goods and services financed out of the proceeds of the Loan relent to it by the Borrower to be used exclusively for the purposes of the Project. Section 2.05. (a) The Commission shall furnish to the Bank, promptly upon their preparation, the plans, specifications, reports, contract documents and construction and procurement schedules for the Project, .and any material modifications thereof or additions thereto, in such detail as the Bank shall reasonably request. (b) The Commission 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 Loan, and to disclose their use in the Project; (ii) enable the Bank's representatives to visit the facilities and construction sites included in the Project and to examine the goods financed out of the proceeds of the Loan and any relevant records and documents; and (iii) furnish to the Bank at regular intervals all such information as the Bank 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 Loan and the goods and services financed out of such proceeds. -3- (c) Upon the award by the Commission of any contract for goods, works or services to be financed out of the proceeds of the 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. (d) 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 Commission and the Bank, the Commission 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 and initial operation of the Project, its cost and the benefits derived and to be derived from it, the performance by the Commission and the Bank of their respective obligations under the Project Agreement and the accomplishment of the purposes of the Loan. (e) The Commission shall enable the Bank's representatives to examine all plants, installations, sites, works, buildings, property and equipment of the Commission relating to the Project and any records and documents relevant to the performance of the Commission's obligations under this Agreement. Section 2.06. The Commission shall duly perform all its obligations under the Subsidiary Loan Agreement. Except as the Bank shall otherwise agree, the Commission shall not take or concur in any action which would have the effect of amending, abrogating, assigning or waiving the Susidiary Loan Agreement or any provision thereof. Section 2.07. (a) The Commission shall, at the request of the Bank, exchange views with the Bank with regard to the progress of the Project, the performance of its obligations under this Agreement and under the Subsidiary Loan Agreement, and other matters relating to the purposes of the Loan. (b) The Commission shall promptly inform the Bank of any condition which interferes or threatens to interfere with the progress of the Project, the accomplishment of the purposes of the Loan, or the performance by the Commission of its obligations under this Agreement and under the Subsidiary Loan Agreement. Section 2.08. The Commission shall take all necessary measures to ensure that the construction, drilling and pipe- line installation under the Project and the operation of the -4- facilities included therein are carried out with due regard to appropriate norms and adequate standards for the protection of the workers and the environment. ARTICLE III Management and Operations of the Commission Section 3.01. The Commission shall at all times manage its affairs, maintain its financial position and carry on its operations, all in accordance with sound business, financial, administrative and petroleum engineering practices and under the supervision of experienced and competent management assisted by adequate and competent staff. Section 3.02. (a) The Commission shall at all times take all steps necessary to maintain its corporate existence and the right to carry on its operations, and shall take all action necessary to acquire and to retain such land, interests in land and properties, and to acquire, maintain and renew such powers, privileges, licenses, franchises or other rights as may be necessary or useful for the conduct of its business and the execution of the Project. (b) The Commission shall at all times operate and maintain its projects, machinery, equipment and other property, and make all necessary repairs and renewals thereof, in accordance with sound engineering practices. (c) Except as the Bank shall otherwise agree, the Commis- sion shall not sell, lease, transfer or otherwise dispose of any of its property or assets required for the efficient operation of the Project, except in the normal course of business. Section 3.03. The Commission shall take out and maintain or cause its contractors to take out and maintain, with respon- sible insurers, or make other provisions satisfactory to the Bank for, insurance of the offshore facilities included in the Project against such risks and in such amounts as shall be consistent with appropriate practice. -5- ARTICLE IV Financial Covenants Section 4.01. The Commission shall maintain records adequate to reflect in accordance with consistently maintained appropriate accounting practices its operations and financial condition. Section 4.02. The Commission shall: (a) furnish to the Bank as soon as available, but in any case not later than forty-five days after the end of the first and the second half of each fiscal year, its unaudited semi- annual financial statements for such period; (b) have its accounts and financial statements (balance sheets, statements of income and expenses and related statements) for each fiscal year audited, in accordance with appropriate auditing principles consistently applied, by independent auditors acceptable to the Bank; (c) furnish to the Bank as soon as available, but in any case not later than twelve months after the end of each such year: (i) certified copies of its financial statements for such year as so audited; and (ii) the report of such audit by said auditors of such scope and in such detail as the Bank shall have reasonably requested; and (d) furnish to the Bank such other information concerning said accounts, financial statements, records and expenditures, as well as the audit thereof, as the Bank shall from time to time reasonably request. Section 4.03. (a) The Commission shall carry out and furnish to the Borrower not later than December 31, in each year, a report presenting economic and financial evaluation of the Project and of any other major development undertaken after the date of this Agreement and an analysis of the financial situation and prospects of the Commission as a whole, for the purpose of providing information to be considered by the Borrower in carrying out review of the price of oil and gas produced by the Commission. The said report shall indicate, inter-alia, the price level required to permit the Commission, under conditions of efficient operation, to achieve a net of taxes discounted cash flow for the Project and for any such major development of not -6- less than 15%. The said report shall also contain information on the Commission's rate of return on invested capital, debt service coverage and working capital position and the availability of funds to the Commission to finance its proposed capital investments. (b) For the purposes of this Section, the term "major development" means the development of an oil or gas field having proven recoverable reserve of a 100 million barrels of oil or more, or of 15 billion cubic meters of gas or more. ARTICLE V Effective Date; Termination; Cancellation and Suspension Section 5.01. This Agreement shall come into force and effect on the- date upon which the Loan Agreement becomes effective. Section 5.02. This Agreement and all obligations of the Bank and of the Commission thereunder shall terminate on the date on which the Loan Agreement shall terminate in accordance with its terms, and the Bank shall promptly notify the Commission thereof. Section 5.03. All the provisions of this Agreement shall continue in full force and effect notwithstanding any cancella- tion or suspension under the General Conditions. ARTICLE VI Miscellaneous Provisions Section 6.01. Any notice or request required or permitted to be given or made under this Agreement and any agreement between the parties contemplated by this Agreement shall be in writing. Such notice or request shall be deemed to have been duly given or made when it shall be delivered by hand or by mail, telegram, cable, telex or radiogram to the party to which it is required or permitted to be given or made at such party's address hereinafter specified or at such other address as such party shall have designated by notice to the party giving such notice or making such request. The addresses so specified are: -7- 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) For the Commission: The Secretary Oil and Natural Gas Commission Tel Bhavan Dehra Dun, U.P. India Cable Address: Telex: COMONG 206 or Dehra Dun 207 Section 6.02. Any action required or permitted to be taken, and any document required or permitted to be executed, under this Agreement on behalf of the Commission, may be taken or executed by its Chairman or such other person or persons as the Commission shall designate in writing, and the Commission shall furnish to the Bank sufficient evidence of the authority and the authen- ticated specimen signature of each such person. Section 6.03. This Agreement may be executed in several counterparts, each of which shall be an original, and all collectively but one instrument. IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, have caused this -8- 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. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By/I / -Regional Vice President South Asia OIL AND NATURAL GAS COMMISSION By Authorized Representative -9- SCHEDULE Procurement A. International Competitive Bidding 1. Goods and civil works 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 works to be procured on the basis of inter- national competitive bidding, in addition to the requirements of paragraph 1.2 of the Guidelines, the Commission 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 publica- tion of such notice in order to provide timely notification to prospective bidders of the opportunity to bid for the goods and works in question. The Commission shall provide the necessary information to update such notice annually so long as any goods or works 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 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; (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 expenditures incidental to the delivery of goods to the place of their use or installation shall be included. - 10 - B. 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: (a) Before bids are invited, the Commission 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 Commission 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 Commission and state the reasons for such determination. (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 submis- sion to the Bank of the first application for withdrawal of funds from the Loan Account in respect of such contract. 2. Before agreeing to any material modification or waiver of the terms and conditions of a contract, or granting a major extension of the stipulated time for performance of such con- tract, 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 Commission shall inform the Bank of the proposed modification, waiver, extension or change order and the reasons therefor. The Bank, if - 11 - it determines that the proposal would be inconsistent with the provisions of this Agreement, shall promptly inform the Commis- sion 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 3/ d day of,Af L 198 3 FOR SECRETARY