Tanzania - Petroleum Sector Technical Assistance Project : Credit 1604 - Project Agreement - Conformed

0IFFI CIAL CREDIT NUMBER 1604 TA Project Agreement (Petroleum Sector Technical Assistance Project) between INTERNATIONAL DEVELOPMENT ASSOCIATION and TANZANIA PETROLEUM DEVELOPMENT CORPORATION Dated , 1985 CREDIT NUMBER 1604 TA PROJECT AGREEMENT AGREEMENT, dated , 1985, between INTERNATIONAL DEVELOPMENT ASSOCIATION (the Association) and TANZANIA PETROLEUM DEVELOPMENT CORPORATION (TPDC). WHEREAS by the Development Credit Agreement of even date herewith between United Republic of Tanzania (the Borrower) and the Association, the Association has agreed to make avail- able to the Borrower an amount in various currencies equivalent to eight million one hundred thousand Special Drawing Rights (SDR 8,100,000), on the terms and conditions set forth in the Development Credit Agreement, but only on condition that TPDC agree to undertake such obligations toward the Association as are set forth in this Agreement; WHEREAS TPDC in consideration of the Association's entering into the Development Credit Agreement with the Borrower, has agreed to undertake the obligations set forth in this Agreement; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I Definitions Section 1.01. Unless the context otherwise requires, the several terms defined in the Development Credit Agreement, the Preamble to this Agreement and in the General Conditions (as so defined) have the respective meanings therein set forth. ARTICLE II Execution of the Project Section 2.01. (a) TPDC declares its commitment to the objectives of the Project as set forth in Schedule 2 to the Development Credit Agreement, and, to this end, shall carry out Parts A, B.1, 2 and 4, C, and D.2 of the Project, with due diligence and efficiency and in conformity with appropriate administrative, financial, petroleum engineering and distribution practices, and shall provide, or cause to be provided, promptly as needed, the funds, facilities, services and other resources required for the Project. -2- (b) Without limitation upon the provisions of paragraph (a) of this Section, TPDC shall carry out the Project in accordance with the Implementation Program set forth in Schedule 2 to this Agreement, as such Schedule may be amended from time to time by agreement between the Association and TPDC. Section 2.02. Except as the Association shall otherwise agree, procurement of the goods, works and consultants' services required for the Project and to be financed out of the proceeds of the Credit shall be governed by the provisions of Schedule 1 to this Agreement. Section 2.03. TPDC shall carry out the obligations set forth in Sections .9.03, 9.04, 9.05, 9.06, 9.07 and 9.08 of the General Conditions (relating to insurance, use of goods and services, plans and schedules, records and reports, mintenance and land acquisition, respectively) in respect of the Project Agreement. Section 2.04. (a) TPDC shall, at the request of the Asso- ciation, exchange views with the Association with regard to the progress of the Project, the performance of its obligations under this Agreement, and other matters relating to the purposes of the Credit. (b) TPDC shall promptly inform the Borrower and the Asso- ciation of any condition wiich interferes or threatens to inter- fere with the progress of the Project, the accomplishment of the purposes of the Credit, or the performance by TPDC of its obligations under this Agreement. Section 2.05. TPDC shall open an account (hereinafter called the Project Account), with a commercial bank, and shall deposit in such Project Account, in accordance with appropriate financial procedures, the local currency proceeds received by it with respect to expenditures for Part A.1 of the Project. TPDC shall utilize the funds in such account for purposes of the Project. ARTICLE III Management and Operations of TPDC Section 3.01. TPDC shall carry on its operations and conduct its affairs in accordance with sound administrative, financial, petroleum engineering and distribution practices under the supervision of qualified and experienced management assisted by competent staff in adequate numbers. -3- Section 3.02. TPDC shall at all times operate and maintain its plant, machinery, equipment and other property, and from time to time, promptly as needed, make all necessary repairs and renewals thereof, all in accordance with sound engineering, financial, petroleum engineering and distribution practices. Section 3.03. TPDC shall take out and maintain with respon- sible insurers, or make other provision satisfactory to the Association for, insurance against such risks and in such amounts as shall be consistent with appropriate practice. Section 3.04. TPDC shall at regular intervals inspect and maintain in a safe operating condition all Songo Songo wells and related facilities, in accordance with petroleum industry standards. ARTICLE IV Financial Covenants Section 4.01. (a) TPDC shall maintain records and accounts adequate to reflect in accordance with sound accounting practices its operations and financial condition. (b) TPDC shall: have its accounts and financial statements (balance sheets, statements of income and expenses and related statements), the Special Account and the Project Account for each fiscal year audited, in accordance with appropriate auditing principles consistently applied, by independent auditors acceptable to the Association; (ii) furnish to the Association as soon as available, but in any case not later than nine months after the end of each such year, (A) certified copies of its financial statements for such year as so audited and (B) the report of such audit by said auditors, of such scope and in such detail as the Association shall have reasonably requested; and (iii) furnish to the Association such other information concerning said accounts and financial statements as well as the audit thereof and said records, as the Association shall from time to time reasonably request. 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 Development Credit Agreement becomes effective. Section 5.02. (a) This Agreement and all obligations of the Association and of TPDC thereunder shall terminate on the earlier of the following two dates: (i) the date on which the Development Credit Agreement shall terminate in accordance with its terms; or (ii) the date 15 years after the date of this Agree- ment. (b) If the Development Credit Agreement terminates in accordance with its terms before the date specified in paragraph (a) (ii) of this Section, the Association shall promptly notify TPDC of this event. 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: -5- For the Association: International Development Association 1818 H Street, N.W. Vashington, D.C. 20433 United States of America Cable address: Telex: INDEVAS 440098 (ITT) Washington, D.C. 248423 (RCA) or 64145 (WUI) For TPDC: Tanzania Petroleum Development Corporation P. 0. Box 2774 Dar es Salaam United Republic of Tanzania Cable address: Telex: TPDC 41219 Dar es Salaam 41293 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 TPDC, or by TPDC on behalf of the Borrower under the Development Credit Agreement may be taken or executed by the Managing Director of TPDC or by such other person or persons as the Managing Director of TPDC shall designate in writing, and TPDC shall furnish to the Association sufficient evidence of the authority and the authenticated 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 duly authorized representatives, 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. INTERNATIONAL DEVELOPMENT ASSOCIATION By Regional Vice President Eastern and Southern Africa TANZANIA PETROLEUM DEVELOPMENT CORPORATION By Authorized Representative -7- SCHEDULE 1 Procurement and Consultants' Services Section I. Procurement of Goods and Works Part A. International Competitive Bidding Except as provided in Part B hereof, goods and works shall be procured under contracts awarded in accordance with procedures consistent with those set forth in Sections I and II of the "Guidelines for Procurement under IBRD Loans and IDA Credits" published by the Bank in August 1984 (the Guidelines). Part B. Other Procurement Procedures 1. Civil works under Parts B.1 and 2, and goods under Part B.4 of the Project, may be procured under contracts awarded through limited international bidding procedures on the basis of evalua- tion and comparison of bids invited from a list of at least three qualified suppliers eligible under the Guidelines and in accor- dance with the procedures set forth in Section I and II of the Guidelines (excluding paragraphs 2.8, 2.9, 2.55 and 2.56 thereof). 2. Goods under Part A.1 of the Project, may be procured under contracts awarded on the basis of evaluation and comparison of bids invited from a list of at least three suppliers eligible under the Guidelines, in accordance with procedures acceptable to the Association. Part C. Review by the Association of Procurement Decisions 1. Review of invitations to bid and of proposed awards and final contracts: (a) With respect to all contracts for civil works, and each contract for goods estimated to cost the equivalent of $100,000 or more, the procedures set forth in paragraphs 2 and 4 of Appen- dix 1 to the Guidelines shall apply. Where payments for such con- tract are to be made out of the Special Account, such procedures shall be modified to ensure that the two conformed copies of the contract required to be furnished to the Association pursuant to said paragraph 2 (d) shall be furnished to the Association prior to the making of the first payment out of the Special Account in respect of such contract. -8- (b) With respect to each contract not governed by the pre- ceding paragraph, the procedures set forth in paragraphs 3 and 4 of Appendix 1 to the Guidelines shall apply. Where payments for such contract are to be made out of the Special Account, such procedures shall be modified to ensure that the two conformed copies of the contract together with the other information required to be furnished to the Association pursuant to said paragraph 3 shall be furnished to the Association as part of the evidence to be furnished pursuant to paragraph 4 of Schedule 3 (the Special Account Schedule) to the Development Credit Agree- ment. 2. The figure of 15% is hereby specified for purposes of para- graph 4 of Appendix 1 to the Guidelines. Section II. Employment of Consultants In order to assist the Borrower and TPDC in carrying out the Project, the Borrower and TPDC shall employ consultants whose qualifications, experience and terms and conditions of employment shall be satisfactory to the Association. Such consultants shall be selected in accordance with principles and procedures satis- factory to the Association on the basis of 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. -9- SCHEDULE 2 Implementation Program 1. TPDC shall, subject to the provisions of the Development Credit and this Agreement, be responsible for the overall coordination, monitoring and supervision of activities under Parts A, B.1, 2 and 4, C and D.2 of the Project. In order to assist TPDC in performing its duties, it shall appoint, and at all times during the implementation of the Project maintain, a Project Coordinator, whose qualifications, experience and terms of reference shall be satisfactory to the Association. TPDC shall at the time of the appointment of the Project Coordinator assign three qualified professional staff (in petroleum marketing, operations and finance) to work with him in overall project coordination. TPDC shall, at the end of each month, submit a progress report to the Association with regard to Project implementation, and at the end of each calendar quarter a more detailed written progress report. 2. Part A of the Project (a) In carrying out Part A.1 of the Project, TPDC shall enter into implementation arrangements with the oil marketing companies, with respect to the distribution of the tires, pumps, LPG bottles and related items, and with TRC and TIPER with respect to the mobile radio equipment. TPDC shall submit by September 30, 1985, detailed proposals to the Borrower and the Association, for their approval with a view to the commencement of implementation by November 1, 1985, in the case of tires over two six month periods starting November 1, 1985 and November 1, 1986. Such proposals shall include provision for the procure- ment, installation, and operation of equipment by the oil market- ing companies, TRC and TIPER, the projected costs and benefits, and the reporting requirements. Such equipment shall be procured by the companies, TRC or TIPER on behalf of TPDC, which shall thereupon sell the equipment to the oil marketing company con- cerned, TRC or TIPER at an agreed price payable in local cur- rency. The sale proceeds will be deposited by TPDC in the Project Account. (b) To assist TPDC in carrying out the Product Distri- bution Study under Part A.2 of the Project, TPDC shall, by November 1, 1985 employ consultants as specified in Schedule 1 - 10 - Section II. By not later than April 30, 1986, TPDC shall furnish the results of the study to the Borrower and the Association for their review and comments, with a view to reaching agreement with them for the implementation of the recommendations of the study. 3. Part B of the Project (a) TPDC shall by October 1, 1985, appoint contractors to carry out the protection of the Songo Songo Wells Nos. SS-5, SS-7 and SS-9, under Part B.2 of the Project. (b) To assist TPDC in carrying out phase two of the gas utilization study, it shall employ consultants as specified in Schedule 1 Section II. (c) TPDC shall carry out the CNG demonstration scheme in accordance with the recommendations as approved by the Borrower and the Association. Such recommendations shall include specific provisions for the production, transportation and utilization of CNG by TPDC, NTC and such other public or private sector agencies as may be provided for under the Gas Utilization Study. 4. Part C of the Project (a) To assist TPDC in carrying out exploration promotion under Part C.1 of the Project, it shall employ exploration promotion consultants by November 1, 1985. TPDC shall complete the preparation of the exploration promotion package relating to the Coastal Basin by April 30, 1986 and carry out active promotion of the Coastal Basin over the following six months. (b) In order to facilitate the carrying out by seismic acquisition and exploration companies of speculative programs of seismic acquisition and geochemical study under Part C.2 of the Project, TPDC shall by September 30, 1985, request from such companies detailed proposals for TPDC's participation, to be furnished to the Borrower and the Association for their review, and approval. TPDC shall implement its obligations under such proposals as shall have been approved by the Borrower and the Association and incorporate the results of the programs in the Coastal Basin exploration promotion package provided for under the Project. - 11 - 5. Part D.2 of the Project (a) TPDC shall ensure that the consultants retained to carry out the Product Distribution Study referred to in para- graph 2 (b) of this Schedule, shall make recommendations relating to the establishment and operation of a product marketing and distribution data system, including provision for the training of TPDC staff and the procurement of necessary equipment and mate- rials. Upon their approval by the Borrower, the Association and TPDC, TPDC shall implement those recommendations, with the assistance of such consultants, by August 31, 1986. (b) TPDC shall ensure that the exploration promotion con- sultants referred to in para 4 (c) of this Schedule shall, in consultation 4ith Statoil, make recommendations by April 30, 1986 for the establishment and operation of an exploration expen- ditures monitoring system, including provision for the training of TPDC staff and the procurement of necessary equipment and materials. Upon their approval by the Borrower, the Association and TPDC, TPDC shall implement those recommendations, with the assistance of such consultants, by August 31, 1986. 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 u-1 FOR SECRETARY