Liberia - Petroleum Exploration Promotion Project : Loan 1907 - Loan Agreement - Conformed

OCUMENTS LOAN NUMBER 1907 LBR Loan Agreement (Petroleum Exploration Promotion Project) between REPUBLIC OF LIBERIA and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Dated Afrvmb-< J , 1980 LOAN NUMBER 1907 LBR LOAN AGREEMENT AGREEMENT, dated AwU(, 1980, between the REPUBLIC OF LIBERIA (hereinafter called the Borrower) and the INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (hereinafter called the Bank). WHEREAS (A) the Borrower has requested the Bank to assist in the financing of the Project described in Schedule 2 to this Agreement by making the Loan as hereinafter provided; (B) by letters addressed by the Bank to the Minister of Finance of the Borrower dated June 1, 1979, February 14, 1980, and July 18, 1980, the Bank granted an advance to the Borrower in the amount of nine hundred thousand dollars ($900,000) for the preparation of the Project; (C) pursuant to the terms and conditions of said advance, the amount thereof is to be refunded to the Bank out of the proceeds of the Loan provided for in this Agreement; and WHEREAS the Bank has agreed, on the basis, inter alia, of the foregoing, to make the Loan to the Borrower upon the terms and conditions hereinafter set forth; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I General Conditions Section 1.01. The parties to this Agreement accept all the provisions of the General Conditions Applicable to Loan and Guarantee Agreements of the Bank, dated March 15, 1974, 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). ARTICLE II The Loan Section 2.01. The Bank agrees to lend to the Borrower, on the terms and conditions in the Loan Agreement set forth -2- or referred to, an amount in various currencies equivalent to five million dollars ($5,000,000). Section 2.02. (a) The amount of the Loan may be withdrawn from the Loan Account in accordance with the provisions of this Section and of Schedule 1 to this Agreement, as such Schedule may be amended from time to time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 ser- vices required for the Project described in Schedule 2 to this Agreement and to be financed out of the proceeds of the Loan. (b) Promptly after the Effective Date, the Bank shall, on behalf of the Borrower, withdraw from the Loan Account and pay to itself the amount required to repay the principal amount of the advance referred to in the preamble to this Agreement withdrawn and outstanding as of such date and to pay any unpaid interest and charges thereon. Any unwithdrawn balance of the authorized amount of such advance shall automatically be cancelled on the same date. Section 2.03. Except as the Bank shall otherwise agree, procurement of the goods to be financed out of the proceeds of the Loan shall be governed by the provisions of Schedule 4 to this Agreement. Section 2.04. The Closing Date shall be December 31, 1983 or such later date as the Bank shall establish. The Bank shall promptly notify the Borrower of such later date. Section 2.05. 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 2.06. The Borrower shall pay interest at the rate of nine and one-fourth percent (9.25%) per annum on the principal amount of the Loan withdrawn and outstanding from time to time. Section 2.07. Interest and other charges shall be payable semiannually on March 1 and September 1 in each year. Section 2.08. The Borrower shall repay the principal amount of the Loan in accordance with the amortization schedule set forth in Schedule 3 to this Agreement. -3- ARTICLE III Execution of the Project Section 3.01. The Borrower shall carry out the Project with due diligence and efficiency and in conformity with appro- priate administrative, financial, engineering and petroleum exploration practices, and shall provide, promptly as needed, the funds, facilities, services and other resources required for the purpose. Section 3.02. In order to assist the Borrower in carrying out the Project, the Borrower shall employ appropriate consultants and/or experts whose qualifications, experience and terms and conditions of employment shall be satisfactory to the Bank. Section 3.03. (a) Except as the Bank shall otherwise agree, all goods and services financed out of the proceeds of the Loan shall be used exclusively for the Project until its completion. (b) In the use of the proceeds obtained from the sale of the reports and studies financed under Part B of the Project, due consideration shall be given by the Borrower to its needs for funds for strengthening the Bureau of Hydrocarbons in the Bor- rower's Ministry of Lands and Mines and for the exploration for hydrocarbon resources in Liberia. 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 the Project, and any material modifications thereof or additions thereto, in such detail as the Bank shall reasonably request. (b) The Borrower: (i) shall maintain records and procedures adequate to record and monitor the progress of the Project (in- cluding 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) shall enable the Bank's accredited representatives to visit the facili- ties and construction sites included in the Project and to examine the goods financed out of the proceeds of the Loan and any rele- vant records and documents; and (iii) shall furnish to the Bank at regular intervals all such information as the Bank shall reason- ably request concerning the Project, its cost and, where appro- priate, the benefits to be derived from it, the expenditure -4- of the proceeds of the Loan 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 Bank, the Borrower shall prepare and furnish to the Bank a report, of such scope and in such detail as the Bank shall reason- ably 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 Borrower and the Bank of their respec- tive obligations under the Loan Agreement and the accomplishment of the purposes of the Loan. (d) The Borrower shall enable the Bank's representatives to examine all plants, installations, sites, works, buildings, property and equipment of the Borrower necessary for the Project and any relevant studies, records and documents. 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 allo- cation, 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 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 Loan by an equivalent lien on other public assets satisfactory to the Bank. -3- ARTICLE III Execution of the Project Section 3.01. The Borrower shall carry out the Project with due diligence and efficiency and in conformity with appro- priate administrative, financial, engineering and petroleum exploration practices, and shall provide, promptly as needed, the funds, facilities, services and other resources required for the purpose. Section 3.02. In order to assist the Borrower in carrying out the Project, the Borrower shall employ appropriate consultants and/or experts whose qualifications, experience and terms and conditions of employment shall be satisfactory to the Bank. Section 3.03. (a) Except as the Bank shall otherwise agree, all goods and services financed out of the proceeds of the Loan shall be used exclusively for the Project until its completion. (b) In the use of the proceeds obtained from the sale of the reports and studies financed under Part B of the Project, due consideration shall be given by the Borrower to its needs for funds for strengthening the Bureau of Hydrocarbons in the Bor- rower's Ministry of Lands and Mines and for the exploration for hydrocarbon resources in Liberia. 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 the Project, and any material modifications thereof or additions thereto, in such detail as the Bank shall reasonably request. (b) The Borrower: (i) shall maintain records and procedures adequate to record and monitor the progress of the Project (in- cluding 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) shall enable the Bank's accredited representatives to visit the facili- ties and construction sites included in the Project and to examine the goods financed out of the proceeds of the Loan and any rele- vant records and documents; and (iii) shall furnish to the Bank at regular intervals all such information as the Bank shall reason- ably request concerning the Project, its cost and, where appro- priate, the benefits to be derived from it, the expenditure -4- of the proceeds of the Loan 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 Bank, the Borrower shall prepare and furnish to the Bank a report, of such scope and in such detail as the Bank shall reason- ably 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 Borrower and the Bank of their respec- tive obligations under the Loan Agreement and the accomplishment of the purposes of the Loan. (d) The Borrower shall enable the Bank's representatives to examine all plants, installations, sites, works, buildings, property and equipment of the Borrower necessary for the Project and any relevant studies, records and documents. 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 allo- cation, 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 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 Loan by an equivalent lien on other public assets satisfactory to the Bank. -5- (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; 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 subdivision 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. Section 4.02. The Borrower shall maintain or cause to be maintained records adequate to reflect in accordance with consis- tently maintained sound 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 Termination Section 5.01. The date JAAAkal Q-, / , is hereby specified for the purposes of Section IT.04 of the General Condi- tions. 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: Ministry of Finance Monrovia Liberia -6- Cable address: Telex: MINFIN 4221 Monrovia 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) 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 LIBERIA By 6 H&ULL Authorized Representative INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By )s/ 3dJ AlaboA- Aehvrt Regional Vice President Western Africa -7- SCHEDULE 1 Withdrawal of the Proceeds of the Loan 1. The table below sets forth the Categories of imported items to be financed out of the proceeds of the Loan and the allocation of amounts of the Loan to each Category: Amount of the Loan Allocated % of (Expressed in Expenditures Category Dollar Equivalent) to be Financed (1) Seismic survey, 2,500,000 80% computer pro- cessing, data interpretation and report preparation (Part B) (2) Promotion, 340,000 80% auction and negotiation of bids (Part C) (3) Monitoring of 780,000 80% oil companies, energy planning, and training (Part D) (4) Library equipment 80,000 80% and microfilm facilities (Part E) (5) Refunding of 900,000 100% of amount principal amount outstanding at of advance for Effective Date project pre- paration (Part A) (6) Unallocated 400,000 TOTAL 5,000,000 -8- 2. Any unpaid charges on the advance for the preparation of the Project withdrawn pursuant to Section 2.02 (b) of this Agree- ment will be taken from Category (6) above. 3. The disbursement percentages have been calculated in com- pliance with the policy of the Bank that no proceeds of the 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 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: (a) expenditures made prior to the date of this Agreement; and (b) payments for technical assistance under Part D (i) of the Project, unless an exploration contract acceptable to the Borrower and the Bank has been entered into with an oil company. 5. Notwithstanding the allocation of an amount of the Loan or the disbursement percentages set forth in the table in para- graph 1 above, if the Bank has reasonably estimated that the amount of the 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 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 reallo- cation 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. 6. If the Bank 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 9 .of the Loan and the Bank may, without in any way restricting or limiting any other right, power or remedy of the Bank under the Loan Agreement, by notice to the Borrower, cancel such amount of the 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 Loan. - 10 - SCHEDULE 2 Description of the Project The main objective of the Project is to attract foreign investments in petroleum exploration offshore Liberia under conditions which would ensure maximum work commitment and early commencement of drilling and would be equitable from the point of view of the evaluation of the potential and prevailing world- wide contractual terms. The Project consists of the following components: Part A. Evaluation of Hydrocarbon Potential and Formulation of Exploration Strategy (i) Collection and analysis of past exploration data. (ii) Integration and interpretation of these data. (iii) Review of contractual and legal framework. (iv) Recommendation of a strategy for the Borrower. Part B. Seismic Survey, Interpretation and Report Preparation A seismic survey of about 2,500 km of the Borrower's offshore, focused primarily on areas where prospects appear likely, and where insufficient data are pre- sently available. Computer-processing, reprocessing, interpretation and integration of the result of the seismic survey with existing data. Preparation and sale to oil companies of reports resulting from the fore- going. Part C. Promotion, Auction and Negotiation of Bids Establishment of promotion seminars for the oil indus- try, revision of the petroleum code and the preparation of model contracts and negotiations with oil companies. Part D. Strengthening of Institutions in the Energy Sector, consisting of: (i) employment of a resident petroleum geologist to assist in supervising and controlling the - 11 - activities of oil companies, after exploration permits have been awarded, together with related expert services. (ii) Provision of 5 man-years of training in petroleum- related subjects. (iii) Employment of an energy specialist to advise the Borrower on energy policies. Part E. Procurement of library equipment and microfilm facilities for the storage of petroleum exploration data The Project is expected to be completed by June 30, 1983. - 12 - SCHEDULE 3 Amortization Schedule Payment of Principal Date Payment Due (expressed in dollars)* On each March 1 and September 1 beginning March 1, 1986 through March 1, 2000 165,000 On September 1, 2000 215,000 * To the extent that any portion of the Loan is repayable in a currency other than dollars (see General Conditions, Section 4.02), the figures in this column represent dollar equivalents determined as for purposes of withdrawal. - 13 - 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 Loan pursuant to Section 3.05 (b) of the General Conditions: Time of Prepayment Premium Not more than three years before maturity 1.40% More than three years but not more than six years before maturity 2.75% More than six years but not more than eleven years before maturity 5.00% More than eleven years but not more than sixteen years before maturity 7.40% More than sixteen years but not more than eighteen years before maturity 8.30% More than eighteen years before maturity 9.25% - 14 - SCHEDULE 4 Procurement A. International Competitive Bidding 1. The services for the seismic survey to be carried out under Part B of the Project 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 Cre- dits" 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 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 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 services in question. The Borrower shall provide the necessary information to update such notice annually so long as any 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 services to be procured on the basis of interna- tional competitive bidding, bidders shall be required to state in their bid the price for the service, the time schedule for the service, a description of the equipment to be utilized and the proposed methodology. B. Other Procurement Procedures (a) Goods and equipment for library facilities not exceeding $100,000 equivalent may, unless the Bank shall otherwise agree, be procured in accordance with local bidding procedures. (b) Services for computer processing may be procured on the basis of quotations from several experienced compIuter firms. - 13 - 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 Loan pursuant to Section 3.05 (b) of the General Conditions: Time of Prepayment Premium Not more than three years before maturity 1.40% More than three years but not more than six years before maturity 2.75% More than six years but not more than eleven years before maturity 5.00% More than eleven years but not more than sixteen years before maturity 7.40% More than sixteen years but not more than eighteen years before maturity 8.30% More than eighteen years before maturity 9.25% -14- SCHEDULE 4 Procurement A. International Competitive Bidding 1. The services for the seismic survey to be carried out under Part B of the Project 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 Cre- dits" 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 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 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 services in question. The Borrower shall provide the necessary information to update such notice annually so long as any 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 services to be procured on the basis of interna- tional competitive bidding, bidders shall be required to state in their bid the price for the service, the time schedule for the service, a description of the equipment to be utilized and the proposed methodology. B. Other Procurement Procedures (a) Goods and equipment for library facilities not exceeding $100,000 equivalent may, unless the Bank shall otherwise agree, be procured in accordance with local bidding procedures. (b) Services for computer processing may be procured on the basis of quotations from several experienced computer firms. - 15 - C. Review of Procurement Decisions by the Bank 1. Review of invitations to bid and of proposed awards are final contracts: (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 documents 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 Bor- rower 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, by the consultants referred to in Section 3.02 of this Agreement, on the evaluation and com- parison of the bids received, together with the recommendations for award of the said consultants and such other information as the Bank shall reasonably request. The Bank shall, if it deter- mines that the intended award would be inconsistent 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 Bank'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 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. 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 Loan Account in respect of such contract, two conformed copies of such con- tract, together with the analysis of the respective bids, recom- mendations for award and such other information as the Bank shall - 16 - 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 exten- sion 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 10% 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 A2/Alday of A1461., 198 . FOR SECRETARY