Madagascar - Petroleum Exploration Promotion Project

Document of FILE COPY The World Bank L FOR OFFICIAL USE ONLY Report No. P-2689-MAG REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT TO THE DEMOCRATIC REPUBLIC OF MADAGASCAR FOR A PETROLEUM EXPLORATION PROMOTION PROJECT April 17, 1980 This document has a restricted distribution and may be used by recipients only In the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  CURRENCY EQUIVALENTS Calendar 1979 January 1980 Unit ' Malagasy Franc (FMG) - Malagasy Franc (FMG) US$1.00 - FMG 212.72 - FMG 201.91 FMG 1,000 u US$4.70 - US$4.95 FMG 1,000,000 - US$4,701 . US$4,952 (The cost estimates are based on US$1 - FMG 210) GLOSSARY OF ABBREVIATIONS OMNIS - Office Militaire National pour les Industries Strategiques KRAOMA - Malagasy Chromite Mines SOLIMA - Malagasy Petroleum Company JIRAMA - Malagasy Electricity and Water Corporation SECREN - Malagasy Ship Repair Enterprise GOVERNMENT OF MADAGASGAR FISCAL YEAR January 1 to December 31  FOR OFFICIAL USE ONLY MADAGASCAR PETROLEUM EXPLORATION PROMOTION PROJECT CREDIT AND PROJECT SUMMARY Borrower: Democratic Republic of Madagascar Beneficiary: Office Militaire National pour les Industries Strategiques (OMNIS) Amount: US$12.5 million Terms: Standard Onlending Terms: The Government would make the proceeds of the Credit available to OMNIS as a non-reimbursable contribution. Project (i) Objective: The project would support the Description: Government's efforts to develop a domestic supply of hydrocarbons and improve planning of the energy sector. (ii) Main Project Components: The project components are: (a) consultant services (107 man-months) to compile and review geological and geo- physical data and to supervise seismic surveys; (b) a 12-months program of onshore reconnaissance seismic work; (c) engineering study for a heavy oil pilot plant at Tsimiroro; (d) consultant services (18 man-months) for energy planning and development and related training of local staff. (iii) Benefits: The project would help attract private capital to undertake oil exploration in Madagascar. If the search for oil is successful, the project would contribute to meeting part of Madagascar's petroleum needs from domestic sources within ten years. It would also improve the planning and implementation capacity of OMNIS, the Government agency responsible for energy development. This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  - ii - (iv) Risks: There is a risk that the geophysical data acquired would be inadequate, but this should be mitigated by provision of technical assistance in supervising the contractor. The major risk is that the geological data collected would be insufficiently attractive to generate industry interest in applying for exploration permits. Given present indications and energy prices, these risks are acceptable. Foreign Local Total ----------(US$'000) -------- Estimated Costs: Assistance to Energy Planning 160 40 200 Assistance to OMNIS 2,615 130 2,745 Training 75 5 80 Reconnaissance Seismic Survey 4,500 2,700 7,200 Tsimiroro Heavy Oil Engineering Study 1,300 300 1,600 Geochemical and Laboratory Equipment 150 150 150 Baseline Cost 8,800 3,175 11,975 Physical Contingencies 640 270 910 Price Contingencies 1,260 455 1,715 Total Contingencies 1,900 725 2,625 Total Project Costs 10,700 3,900 14,600 (no customs duties or taxes applicable) Financing Plan: IDA 10,700 1,800 12,500 Government - 2,100 2,100 TOTAL 10.700 3,900 14,600 Estimated Disbursements: IDA FY FY 80 FY 81 FY 82 FY 83