Conformed Copy - L3023 - Petroleum Exploration Promotion Project - Loan Agreement

Page 1 CONFORMED COPY LOAN NUMBER 3023 TUN (Petroleum Exploration Promotion Project) between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT and ENTREPRISE TUNISIENNE D'ACTIVITES PETROLIERES Dated May 10, 1989 LOAN NUMBER 3023 TUN LOAN AGREEMENT AGREEMENT, dated May 10, 1989 between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (the Bank) and ENTREPRISE TUNISIENNE D'ACTIVITES PETROLIERES (the Borrower). WHEREAS (A) Republic of Tunisia (the Guarantor) and the Borrower, having been satisfied as to the feasibility and priority of the Project described in Schedule 2 to this Agreement, have requested the Bank to assist in the financing of the Project; (B) by an agreement (the Guarantee Agreement) of even date herewith between the Guarantor and the Bank, the Guarantor has agreed to guarantee the obligations of the Borrower in respect of the Loan and to undertake such other obligations as set forth in the Guarantee Agreement; and WHEREAS the Bank has agreed, on the basis, inter alia, of the foregoing, to extend the Loan to the Borrower upon the terms and conditions set forth in this Agreement; Page 2 NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I General Conditions; Definitions Section 1.01. The "General Conditions Applicable to Loan and Guarantee Agreements" of the Bank, dated January 1, 1985, with the last sentence of Section 3.02 deleted (the General Conditions) constitute an integral part of this Agreement. Section 1.02. Unless the context otherwise requires, the several terms defined in the General Conditions have the respec- tive meanings therein set forth and the following additional terms have the following meanings: (a) "The Project Unit" means the unit established by the Borrower pursuant to its internal rules and procedures to be main- tained in accordance with the provisions of Section 3.01 (b) of this Agreement; and (b) "Statutes" means Law 72-22 of March 10, 1972, comple- mented by Decree 73-173 of April 16, 1973, under which the Borrower was established. ARTICLE II The Loan Section 2.01. The Bank agrees to lend to the Borrower, on the terms and conditions set forth or referred to in the Loan Agreement, an amount in various currencies equivalent to five million five hundred thousand dollars ($5,500,000). Section 2.02. The amount of the Loan may be withdrawn from the Loan Account in accordance with the provisions of Schedule 1 to this Agreement for expenditures made (or, if the Bank shall so agree, to be made) in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 Loan. Section 2.03. The Closing Date shall be June 30, 1993 or such later date as the Bank shall establish. The Bank shall promptly notify the Borrower and the Guarantor of such later date. Section 2.04. The Borrower shall pay to the Bank a commitment charge at the rate of three-fourths of one per cent (3/4 of 1%) per annum on the principal amount of the Loan not withdrawn from time to time. Section 2.05. (a) The Borrower shall pay interest on the principal amount of the Loan withdrawn and outstanding from time to time at a rate per annum for each Interest Period equal to one-half of one percent per annum above the Cost of Qualified Borrowings for the last Semester ending prior to the commencement of such Interest Period. (b) As soon as practicable after the end of each Semester, the Bank shall notify the Guarantor and the Borrower of the Cost of Qualified Borrowings for such Semester. (c) For purposes of this Section: (i) "Interest Period" means the six-month period com- mencing on each date specified in Section 2.06 of this Agreement, including the Interest Period in which this Agreement is signed. (ii) "Cost of Qualified Borrowings" means the cost of the outstanding borrowings of the Bank drawn down after June 30, 1982, expressed as a percentage per annum, as reasonably determined by the Bank. Page 3 (iii) "Semester" means the first six months or the second six months of a calendar year. Section 2.06. Interest and other charges shall be payable semiannually on April 1 and October 1 in each year. Section 2.07. The Borrower shall repay the principal amount of the Loan in accordance with the amortization schedule set forth in Schedule 3 to this Agreement. ARTICLE III Execution of the Project Section 3.01. (a) The Borrower declares its commitment to the objectives of the Project as set forth in Schedule 2 to this Agreement, and, to this end, shall carry out the Project with due diligence and efficiency and in conformity with appropriate admin- istrative, financial, engineering, commercial and petroleum indus- try practices, and shall provide, promptly as needed, the funds, facilities, services and other resources required for the Project. (b) In order to facilitate the carrying out of the Project and without limitation on the generality of paragraph (a) of this Section, the Borrower shall maintain The Project Unit, with staff and resources and under terms of reference satisfactory to the Bank and to the Guarantor, to act as the implementation unit under the Project. Section 3.02. Except as the Bank shall otherwise agree, pro- curement of the goods, works and consultants' services required for the Project and to be financed out of the proceeds of the Loan shall be governed by the provisions of Schedule 4 to this Agreement. ARTICLE IV Management and Operations of the Borrower Section 4.01. The Borrower shall carry out its operations and conduct its affairs in accordance with sound administrative, financial, commercial, engineering and petroleum industry prac- tices under the supervision of qualified and experienced manage- ment assisted by competent staff in adequate numbers. Section 4.02. The Borrower shall at all times operate and maintain its plants, 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, commercial and petroleum industry practices. Section 4.03. The Borrower shall take out and maintain with responsible insurers or make other provision, satisfactory to the Bank, for insurance against such risks and in such amounts as shall be consistent with appropriate practice. Section 4.04. The Borrower shall at all times take all such action within its powers to maintain its corporate existence and right to carry on its operations, and take all steps necessary to acquire, maintain and renew all rights, powers, privileges and franchises which are necessary or useful in the conduct of its business and for the execution of the Project. ARTICLE V Financial Covenants Section 5.01. (a) The Borrower shall maintain records and accounts adequate to reflect in accordance with sound accounting practices its operations and financial condition. Page 4 (b) The Borrower shall: (i) have its records, 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; (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 copies of its finan- cial 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 Bank shall have reasonably requested; and (iii) furnish to the Bank such other information concern- ing said records, accounts and financial statements as well as the audit thereof as the Bank shall from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Loan Account were made on the basis of statements of expenditure, the Borrower shall: (i) maintain, in accordance with paragraph (a) of this Section, records and accounts reflecting such expenditures; (ii) retain, until at least one year after the Bank has received the audit report for the fiscal year in which the last withdrawal from the Loan Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (iii) enable the Bank's representatives to examine such records; and (iv) ensure that such records and accounts are included in the annual audit referred to in paragraph (b) of this Section and that the report of such audit contains a separate opinion by said auditors as to whether the statements of expenditure submitted during such fiscal year, together with the proce- dures and internal controls involved in their preparation, can be relied upon to support the related withdrawals. ARTICLE VI Remedies of the Bank Section 6.01. Pursuant to Section 6.02 (k) of the General Conditions, the following additional event is specified, namely, that the Statutes shall have been amended, suspended, abrogated, repealed or waived so as to affect materially and adversely the ability of the Borrower to perform any of its obligations under the Loan Agreement. Section 6.02. Pursuant to Section 7.01 (h) of the General Conditions, the following additional event is specified, namely, that the event specified in Section 6.01 of this Agreement shall occur. ARTICLE VII Termination Section 7.01. The date ninety (90) days after the date of this Agreement is hereby specified for the purposes of Section Page 5 12.04 of the General Conditions. ARTICLE VIII Representative of the Borrower; Addresses Section 8.01. The President Directeur General of the Borrower is designated as representative of the Borrower for the purposes of Section 11.03 of the General Conditions. Section 8.02. The following addresses are specified for the purposes of Section 11.01 of the General Conditions: 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 Borrower: Entreprise Tunisienne d'Activites Petrolieres 27 bis Avenue Khereddine Pacha 1002 le Belvedere Tunis, Republic of Tunisia Cable address: Telex: ETAPETROL 15128 13877 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 BANK FOR RECONSTRUCTION AND DEVELOPMENT By /s/ Kemal Dervis Acting Regional Vice President Europe, Middle East and North Africa ENTERPRISE TUNISIENNE D'ACTIVITES PETROLIERES By /s/ Abdelaziz Hamzaoui Authorized Representative SCHEDULE 1 Withdrawal of the Proceeds of the Loan 1. The table below sets forth the Categories of items to be financed out of the proceeds of the Loan, the allocation of the Page 6 amounts of the 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) Equipment and 1,300,000 100% of foreign materials expenditures (excluding Part D and 90% of local of the Project) expenditures (2) Consultants' 3,300,000 100% of foreign services, expenditures and training and 80% of local specialized expenditures services (3) Unallocated 900,000 TOTAL 5,500,000 2. For the purposes of this Schedule: (a) the term "foreign expenditures" means expenditures in the currency of any country other than that of the Borrower for goods or services supplied from the territory of any country other than that of 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. Notwithstanding the provisions of paragraph 1 above, no with- drawals 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 $500,000, may be made on account of payments made for expenditures before that date but after November 30, 1988. SCHEDULE 2 Description of the Project The objective of the Project is to provide a basis for increasing the opportunities for discovery and development of the Guarantor's hydrocarbon resources by: (i) attracting international oil industry participation in exploration for hydrocarbons on the Guarantor's prospective open acreage; and (ii) strengthening of the Borrower's technical capabilities to manage the Guarantor's petroleum sector activities. The Project consists of the following parts, subject to such modifications thereof as the Borrower and the Bank may agree upon from time to time, to achieve such objectives: Part A: Exploration Promotion Technical Assistance and Training 1. Evaluation of the hydrocarbon potential of the Guarantor's territory through compilation and analysis of both existing rele- vant data and such new data as is to be acquired under Part B of the Project. 2. Preparation of detailed promotional studies and reports on such hydrocarbon potential in form and content sufficient to be presented to the international oil industry to attract its invest- ment in exploration. 3. Carrying out of a program to: (i) organize promotional meetings in Tunis and in major international oil centers; and Page 7 (ii) arrange suitable contacts with interested investors from the international petroleum industry. Part B: Data Acquisition, Processing and Reprocessing 1. Acquisition, processing and reprocessing of geophysical data through the use of seismic and other state-of-the-art techniques. 2. Acquisition, necessary processing and interpretation of geo- physical data obtained through conducting gravity and airmag surveys in locations in the Guarantor's northern region. Part C: Procurement of Laboratory Equipment and Material; Training 1. Acquisition of geochemistry laboratory equipment and computer hardware and software for use in seismic, geological, geophysical and log processing. 2. Training of the Borrower's staff in the use of newly-procured items identified in paragraph 1 above. Part D: Procurement of Other Equipment and Materials Acquisition of sedimentology laboratory equipment and compu- ter hardware and software for use in reservoir engineering studies. * * * * * The Project is expected to be completed by December 31, 1992. SCHEDULE 3 Amortization Schedule Payment of Principal Date Payment Due (Expressed in Dollars)* On each April 1 and October 1 beginning October 1, 1994 through October 1, 2005 230,000 On April 1, 2006 210,000 * The figures in this column represent dollar equivalents determined as of the respective dates of withdrawal. See General Conditions, Sections 3.04 and 4.03. Premiums on Prepayment The following premiums are specified for the purposes of Section 3.O4 (b) of the General Conditions: Time of Prepayment Premium The interest rate (ex- pressed as a percentage per annum) applicable to the balance outstanding on the Loan on the day of prepayment multiplied by: Not more than three years .18 before maturity More than three years but .35 not more than six years before maturity Page 8 More than six years but .65 not more than eleven years before maturity More than eleven years but .88 not more than fifteen years before maturity More than fifteen years before 1.00 maturity SCHEDULE 4 Procurement and Consultants' Services Section I: Procurement of Goods and Services Part A: International Competitive Bidding Except as provided in Part C hereof, goods and services 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 May 1985 (the Guidelines). Part B: Preference for Domestic Manufacturers In the procurement of goods in accordance with the procedures described in Part A hereof, goods manufactured in the Republic of Tunisia may be granted a margin of preference in accordance with, and subject to, the provisions of paragraphs 2.55 and 2.56 of the Guidelines and paragraphs 1 through 4 of Appendix 2 thereto. Part C: Other Procurement Procedures 1. Specialized computer packages, laboratory and computer facilities may be procured under contracts awarded through limited international bidding procedures on the basis of evaluation and comparison of bids invited from a list of at least three qualified suppliers eligible under the Guidelines and in accordance with procedures set forth in Sections I and II of the Guidelines (excluding paragraphs 2.8, 2.9, 2.55 and 2.56 thereof). 2. Specialized geological, geophysical and computer services may be procured under contracts awarded on the basis of comparison of price quotations solicited from a list of at least three suppliers from at least two different countries eligible under the Guide- lines, in accordance with procedures acceptable to the Bank. Part D: Review by the Bank of Procurement Decisions 1. Review of invitations to bid and of proposed awards and final contracts: (a) With respect to each contract estimated to cost the equivalent of $100,000 or more, the procedures set forth in para- graphs 2 and 4 of Appendix 1 to the Guidelines shall apply. (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. (c) The provisions of the preceding subparagraphs (a) and (b) shall not apply to contracts on account of which the Bank has authorized withdrawals from the Loan Account on the basis of statements of expenditure. Such contracts shall be retained in accordance with Section 4.01 (a) (ii) of the Loan Agreement. 2. The figure of 10% is hereby specified for purposes of para- graph 4 of Appendix 1 to the Guidelines. Page 9 Section II: Employment of Consultants In order to assist the Borrower in the execution of the Project, the Borrower shall employ consultants whose qualifica- tions, experience and terms and conditions of employment shall be satisfactory to the Bank to assist: (i) in developing of promo- tional studies and reports and in organizing promotional meetings and international petroleum industry contacts under Part A of the Project; (ii) in organizing and in interpreting results of an airmag survey of Guarantor's northern territory; (iii) in the preparation of documentation and technical specifications for computer hardware and software to be acquired under the Project; and (iv) in the training of the Borrower's staff in the use of computer hardware and software to be procured under Part C of the Project. Such consultants shall be selected in accordance with principles and procedures satisfactory to the Bank 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.