Turkey - Thrace Gas Exploration Project : Loan 2327 - Loan Agreement - Conformed

OFFICIALSLONNHEo3QT DOCUMENT OAN NUBER TU Loan Agreement (Thrace Gas Exploration Project) between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT and TURKIYE PETROLLERI ANONIM ORTAKLIGI Dated 3 O , 1983 LOAN NUMBER 3R7Tu LOAN AGREEMENT AGREEMENT, dated 'S, 1983, between INTERNATIONAL BANK FOR RECONS RUCTION AND DEVELOPMENT (herein- after called the Bank) and TURKIYE PETROLLERI ANONIM ORTAKLIGI (hereinafter called the Borrower). ARTICLE I General Conditions; Definitions 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 October 27, 1980, 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). Section 1.02. Wherever used in this Agreement, unless the context otherwise requires, the several terms defined in the General Conditions have the respective meanings therein set focth and the following additional terms have the following meanings: (a) "Statutes" means the Statutes of the Borrower dated March 7, 1954, No. 6327, as amended from time to time; (b) "Decree 20" means the Decree of the Guarantor dated March 27, 1979; and (c) "Previous Agreements" means (1) the Project Agreement between the Borrower and the Bank for the Petroleum Exploration Project (Loan Number 1916 TU), dated November 24, 1980, and (2) the Project Agreement between the Borrower and the Bank for the Bati Raman Enhanced Oil Recovery Field Demonstration Project (Loan Number 1917 TU), dated November 24, 1980. 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 this Loan Agreement, an amount in various currencies equivalent to fifty- five million two hundred thousand dollars ($55,200,000). -2- 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 The amount of the Loan may be withdrawn from the Loan Account in accordance with the provisions of Schedule 1 to this Agreement, as such Schedule may be amended from time to time by agreement between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 services required for the Project described in Schedule 2 to this Agreement and to be financed out of the proceeds of the Loan. Section 2.03. Except as the Bank shall otherwise agree, procurement of the goods 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 Schedule 4 to this Agreement. Section 2.04. The Closing Date shall be December 31, 1987 or such later date as the Bank shall establish. The Bank shall promptly notify the Borrower and the Guarantor of such later date. Section 2.05. (a) The Borrower shall pay to thp 'ank a fee equivalent to one hundred thirty-seven thousand .x hundred fifty-six dollars ($137,656). (b) On or promptly after the Effective Date, the Bank shall, on behalf of the Borrower, withdraw from the Loan Account and pay to itself the amount of the said fee in such currency or currencies as the Bank shall determine. Section 2.06. The Borrower shall pay to the Bank a commit- ment 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 2.07. (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 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 Borrower and the Guarantor of the Cost of Qualified Borrowings for such Semester. (c) For purposes of this Section: - 3 - (i) "Interest Period" means the six-month period commencing on each date specified in Section 2.08 of this Agreement, including the Interest Period in which this Agreement is signed. (ii) "Cost" of Qualified Borrowings means the cost, expressed as a percentage per annum, as reasonably determined by the Bank, provided that the amount of $8,520.5 million referred to in (iii) (B) hereunder shall be reckoned at a cost of 10.93% per annum. (iii) "Qualified Borrowings" means: (A) outstanding borrowings of the Bank drawn down after June 30, 1982; and (B) until July 1, 1985, the amount of $8,520.5 million (representing borrowings of the Bank between July 1, 1981 and June 30, 1982) less any part thereof repaid earlier than July 1, 1985. (iv) "Semester" means the first six months or the second six months of a calendar year. Section 2.08. Interest and other charges shall be payable semiannually on March 15 and September 15 in each year. Section 2.09. 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. The Borrower shall carry out the Project with due diligence and efficiency and in conformity with appropriate administrative, financial and engineering practices. Section 3.02. In order to assist the Borrower in the imple- mentation of Part B of the Project, the Borrower shall obtain the services of specialized firms, whose qualifications, experience and terms and conditions of employment shall be satisfactory to the Bank, to perform well services under the Project and to train the Borrower's staff in performing such services. -4- Section 3.03. (a) The Borrower undertakes to insure, or make adequate provision for the insurance of, the imported goods to be financed out of the proceeds of the Loan against hazards incident to the acquisition, transportation and delivery thereof to the place of use or installation, and for such insurance any indem- nity shall be payable in a currency freely usable by the Borrower to replace or repair such goods. (b) The Borrower shall cause all goods and services financed out of the proceeds of the Loan to be used exclusively for the purposes of the Project. - 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 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 construc- tion 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 con- cerning 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 the proceeds. (c) Upon the award by the Borrower 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) The Borrower shall enable the Bank's representatives to examine all plants, installations, sites, works, buildings, property and equipment of the Borrower and any relevant records and documents. - 5 - (e) 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 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 Borrower and the Bank of their respective obligations under the Loan Agreement and the accom- plishment of the purposes of the Loan. Section 3.05. The Borrower shall carry out the training activities referred to in Part C (2) (a) of the Project in accordance with annual programs satisfactory to the Bank. Section 3.06. The Borrower shall: (a) carry out the seismic and drilling activities provided under Parts A and B of the Project in accordance with an annual program satisfactory to the Bank; (b) make any change to such program, required in the course of its implementation, only with the agreement of the Bank; and (c) prepare, for every well to be drilled under Part B (2) of the Project, a geological prognosis, a benefit-risk analysis and a drilling program and provide the same to the Bank, for its approval, not later than one month before the start of site preparation for the drilling of such well. ARTICLE IV Management and Operations of the Borrower Section 4.01. The Borrower shall carry on its operations and conduct its affairs in accordance with sound administrative, financial and engineering practices under the supervision of qualified and experienced management 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 and administrative 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. - 6 - Section 4.04. The Borrower shall: (a) maintain separate accounts for its exploration and production activities; (b) not transfer funds from such accounts to the accounts of any of its other activities or subsidiaries; and (c) to the extent permitted under the Guarantor's legislation, conduct all transactions between its production and refining units at market prices and use such prices for purposes of calculating the amount due to the Guarantor pursuant to Decree 20. Section 4.05. The Borrower shall review with the Bank, not later than October 31 of each .year, the Borrower's proposed exploration programs for the following year and take the Bank's comments into account in implementing such programs. Section 4.06. (a) Except as the Bank shall otherwise agree, the Borrower shall, not later than June 30, 1984, make all necessary arrangements to completely separate its activities with respect to exploring, producing, refining and distributing domestic oil and products derived therefrom from those with respect to the importing of foreign petroleum products, and refining and distributing such petroleum and petroleum products. (b) The provision of paragraph (a) of this Section shall supersede any provisions to the contrary contained in the Previous Agreements. ARTICLE V Financial Covenants Section 5.01. The Borrower shall maintain records adequate to reflect in accordance with consistently maintained appropriate accounting practices its operations and financial condition. Section 5.02. The Borrower shall: (a) 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; (b) furnish to the Bank as soon as available, but in any case not later than six 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 (c) furnish to the Bank such other information - 7 - concerning said accounts, financial statements, records and expenditures, as well as the audit thereof, as the Bank shall from time to time reasonably reeniest. Section 5.03. (a) The Borrower represents that at the date of this Agreement no lien exists on any of its assets as security for any debt. (b) The Borrower undertakes that, except as the Bank shall otherwise agree: (i) if the Borrower shall create any lien on any of its assets as security for any debt, such lien will equally and ratably secure the payment of the principal of, and interest and other charges on, the Loan, and in the creation of any such lien express provision will be made to that effect, at no cost to the Bank; and (ii) if any statutory lien shall be created on any assets of the Borrower as security for any debt, the Borrower shall grant, at no cost to the Bank, an equivalent lien satisfactory to the Bank to secure the payment of the principal of, and interest and other charges on, the Loan; provided, however, that the foregoing provisions of this paragraph shall not apply to: (A) any lien created on property, at the time of purchase thereof, solely as security for the payment of the purchase price of such property or as security for the payment of debt incurred for the purpose of financing the purchase of such property; or (B) any lien arising in the ordinary course of banking transactions and securing a debt maturing not more than one year after the date on which it is originally incurred. Section 5.04. As used in the following Sections of this Article, the following terms shall have the following meanings: (a) "current assets" means the sum of unrestricted cash available for use in current operations, marketable securities (excluding securities, marketable or not, acquired for purposes of control, affiliation, or other continuing business advantage), receivables collectible in the normal course of business within one year, and inventories valued at the lower of cost or market; (b) "current liabilities" means all obligations due on demand or within one year or whose liquidation is reasonably expected to require the use of existing resources classified as current assets, such obligations to include, but not to be limited to, customer's advances, accrued taxes on or measured by income, other accrued taxes and current maturities of long-term debt; -8- (c) "net revenues" means gross revenues from all sources less operating and administrative expenses, including taxes, sur- charges and other levies, but before provision for depreciation and interest and other charges on debt; (d) "debt service requirements" means the aggregate amount of amortization (principal payments and any mandatory sinking fund payments) on long-term debt, interest and other charges on other debt payable during the period concerned; (e) "long-term debt" means-any debt maturing more than one year after the date on which it is originally incurred: (i) debt shall be deemed to be incurred: (A) under a loan contract or agreement, on the date of such loan contract or agreement; and (B) under a guarantee agreement, on the date the agreement providing for such guarantee has been entered into but only, except in the case of a guarantee of debt of a subsidiary, to the extent that the guaranteed debt is outstanding; and (ii) whenever in connection with this Article it shall be necessary to value in terms of the currency of the Guarantor debt payable by the Borrower in any other currency, such valuation shall be made at the prevailing lawful rate of exchange at which such other currency is, at the time of such valuation, obtainable by the Borrower for the purpose of servicing such debt or in the absence of such rate of exchange, at another rate accept- able to the Bank; and (f) "equity" means the aggregate of the unimpaired paid-up capital, surplus if it is represented by a positive number, and free reserves of the Borrower. Section 5.05. The Borrower shall conduct its operation and affairs in such manner as shall be necessary for it: (a) to attain at all times: (i) a ratio of its long-term debt to its equity not greater than 1:1; and (ii) a ratio of its aggregate current assets to its aggregate current liabilities not less than 1:1; and (b) on the first day of each month, to have avail- able for use in current operations, cash, marketable securities (excluding securities, whether marketable or not, acquired for -9- purposes of control, affilitation or other continuing business advantage) and net lines of credit, from commercial banks (guaranteed for at least one month) equal in the aggregate to not less than the estimated operating expenses for the following two months. For purposes of this paragraph, "operating expenses" means all operating and administrative expenses, including provision for taxes, if any, but before provision for depre- ciation and interest and other charges on debt. Section 5.06. The Borrower shall not incur any long-term debt in any year unless a reasonable forecast of its revenues and expenditures shows that its .-aggregate projected net revenues for each full fiscal year during the term of the long-term debt to be incurred.shall be at least 2 times the aggregate projected debt service requirements in such year on all long-term debt of the Borrower. For purposes of this Section, "a reasonable forecast" means a forecast prepared by the Borrower in the fiscal year in which the debt in question is proposed to be incurred and reviewed by the Bank which both the Borrower and the Bank accept as reasonable and as to which the Bank has notified the Borrower of its acceptability, provided no event has occurred since the Bank's acceptance of such forecast which would have a material adverse effect on the financial condition or future operating results of the Borrower. Section 5.07. Until the completion of the Project, the Borrower shall furnish by October 31 of each year to the Bank, for its review and comments, its proposed investment program and corresponding financing plan for the following fiscal year. Section 5.08. The Borrower shall not make any repayment in advance of maturity in respect of any of its outstanding debt which would materially and adversely affect its ability to meet its financial obligations under this Agreement. ARTICLE VI Remedies of the Bank Section 6.01. For the purposes of Section 6.02 of the General Conditions, the following additional events are specified pursuant to paragraph (k) thereof: (a) a change shall have been made in the Statutes which would materially and adversely affect the operations or the financial condition of the Borrower; and - 10 - (b) a resolution shall have been passed for the dissolution or liquidation of the Borrower. Section 6.02. For the purposes of Section 7.01 of the General Conditions, the following additional event is specified pursuant to paragraph (h) thereof, namely, that the event speci- fied in paragraph (a) or paragraph (b) of Section, 6.01 shall occur. ARTICLE VII Termination Section 7.01. The date ^ Q > 3 , is hereby specified for the purpose of Section 12.04 of the General Conditions. ARTICLE VIII Addresses Section 8.01. 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: Turkiye Petrolleri Anonim Ortakligi Mudafaa Cad No. 22 Ankara, Turkey - 11 - 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. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By f4J? O 6a_lc_ Regional Vice President Europe, Middle East and North Africa TURKIYE PETROLLERI ANONIM ORTAKLIGI Authorized Representative - 12 - 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 amounts of the Loan to each Category and the percentage of expen- ditures 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) Seismic sur sy 4,500,000 100% of foreign and interpretation expenditures (2) Materials and. 7,000,000 100% of foreign equipment under expenditures and Part B (1) of 100% of local the Project expenditures ex-factory (3) Materials and 20,400,000 100% of foreign equipment under expenditures and Part B (2) of 100% of local the Project expenditures ex-factory (4) Materials and 2,400,000 100% of foreign equipment under expenditures and Part B (3) of 100% of local the Project expenditures ex-factory (5) Technical services 6,700,000 100% of foreign and assistance under expenditures Part B of the Project (6) Technical assistance 2,500,000 100% of foreign for other than Part B expenditures of the Project - 13 - Amount of the Loan Allocated % of (Expressed in Expenditures Category Dollar Equivalent) to be Financed (7) Training under 1,500,000 100% of foreign Part C of the expenditures Proiect (8) Studies under 2,700,000 100% Part D of the Project (9) Fee 137,656 Amount due under Section 2.05 of this Agreement (10) Unallocated 7,362,344 TOTAL 55,200,000 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. The disbursement percentages have been calculated in com- pliance with the policy of the Bank that the proceeds of the Loan shall not 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; on this basis, if the amount of any such taxes levied on or in respect of items in any Category decreases or increases, the Bank may, by notice to the Borrower, increase or decrease the disbursement percentage then applicable to such Category as required to be consistent with the aforementioned policy of the Bank. - 14 - 4. Notwithstanding the provisions of paragraph 1 above, no withdrawals shall be made in respect of expenditures made prior to the date of this Agreement. 5. Notwithstanding the allocation of an amount of the Loan or the disbursement percentages set forth in the table in paragraph 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 Cate- gory, the Bank may, by notice to the Borrower: (a) 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 (b) if such reallocation 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 pro- curement of any item in any Category is inconsistent with the procedures set forth or referred to in this Agreement, no expenditure for such item shall be financed out of the proceeds 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. - 15 - SCHEDULE 2 Description of the Project The main objectives of the Project are to assess the hydro- carbon potential of areas covered by the Borrower's licenses in the Thrace basin and to strengthen the Borrower's ability to design and implement an integrated basin-oriented exploration programs. The Project consists of the following: Part A: Seismic Survey and Interpretation Shooting and processing of about 1800 km seismic lines; about 1300 km of such lines to be used for completing the seismic coverage of the Borrower's license areas in the Thrace basin to at least 4 km x 4 km grid size, and the remaining lines to be used for infill seismic for detailed mapping of exploration prospects. Part B: Drilling Rigs and Exploration Drilling (1) Rehabilitation and upgrading, through provision of materials, equipment and spare parts of three of the Borrower's heavy duty (F 320) drilling rigs. (2) Drilling and testing of about eleven exploration wells. (3) Completion and equipping of the wells proven to be productive under the drilling activities referred to in (2) above, currently estimated at five wells. Part C: Technical Assistance and Training (1) Technical assistance to the Borrower: (a) in the implementation of Parts A and B of the Project; and (b) in financial planning and budgeting. (2) (a) Short- and long-term training courses for the Borrower's staff in the areas of drilling technology and mud engineering; well testing and completion; advanced seismic acquisition, processing and interpretation and financial manage- ment. - 16 - (b) Provision of equipment for a language laboratory. Part D: Studies (1) Geological and sedimentological studies in order to determine the size and production profiles of expected gas accumulation and to predict the trends of proven gas reservoirs. (2) Field development studies to determine the optimum way to develop fields and connect them to distribution networks. The Project is expected to be completed by June 30, 1987. - 17 - SCHEDULE 3 Amortization Schedule Payment of Principal Date Payment Due (expressed in dollars)* On each March 15 and September 15 beginning March 15, 1988 through March 15, 2000 2,125,000 On September 15, 2000 2,075,000 * The figures in this column represent dollar equivalents determined as of the respective dates of withdrawal; see General Conditions, Section 3.04. - 18 - 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 3.04 (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 not .35 more than six years before maturity More than six years but not .65 more than eleven years before maturity More than eleven years but not .88 more than fifteen years before maturity More than fifteen years 1.00 before maturity - 19 - SCHEDULE 4 Procurement A. International Competitive Bidding 1. 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 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 services to be procured on the basis of inter- national competitive bidding, and 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 publica- tion of such notice in order to provide timely notification to prospective bidders of the opportunity to bid for the goods and services in question. The Borrower shall provide the necessary information to update such notice annually so long as any goods or 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 goods to be procured on the basis of international com- petitive bidding: (a) 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; (b) 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 (c) the cost of inland freight and other expenditures incidental to the delivery of the goods to the place of their use or installation shall be included. - 20 - B. Preference for Domestic Manufacturers In the procurement of goods in accordance with the proce- dures described in Part A of this Schedule, goods manufactured in Turkey may be granted a margin of preference in accordance with, and subject to, the following provisions: 1. All bidding documents for the procurement of goods shall clearly indicate any preference which will be granted, the information required to establish the eligibility of a bid for such preference and the following methods and stages that will be followed in the evaluation and comparison of bids. 2. After evaluation, responsive bids will be classified in one of the following three groups: (1) Group A: bids offering goods manufactured in Turkey if the bidder shall have established to the satisfaction of the Borrower and the Bank that the manufacturing cost of such goods includes a value added in Turkey equal to at least 20% of the ex-factory bid price of such goods. (2) Group B: all other domestic bids. (3) Group C: bids offering any other goods. 3. In order to determine the lowest evaluated bid of each group, all evaluated bids in each group shall first be compared among themselves, without taking into account customs duties and other import taxes levied in connection with the importation, and sales and similar taxes levied in connection with the sale or delivery, pursuant to the bids, of the goods. Such lowest evaluated bids shall then be compared with each other, and if, as a result of this comparison, a bid from group A or group B is the lowest, it shall be selected for the award. 4. If, as a result of the comparison under paragraph 3 above, the lowest bid is a bid from group C, all group C bids shall be further compared with the lowest evaluated bid from group A after adding to the evaluated bid price of the imported goods offered in each group C bid, for the purpose of this further comparison only, an amount equal to: (a) the amount of customs duties and other import taxes which a non-exempt importer would have to pay for the importation of the goods offered in such group C bid; or - 21 - (b) 15% of the c.i.f. bid price of such goods if said customs duties and taxes exceed 15% of such price. If the group A bid in such further comparison is the lowest, it shall be selected for the award; if not, the bid from group C which as a result of the comparison under paragraph 3 is the lowest evaluated bid shall be selected. C. Other Procurement Procedures 1. Goods and services which the Bank and the Borrower agree can be purchased only from a limited number of suppliers, may be procured by the Borrower under contracts awarded on the basis of limited international tendering procedures satisfactory to the Bank; provided, however, that the aggregate cost of contracts so awarded shall not exceed $8,000,000 equivalent. 2. Equipment for the language laboratory, referred to in Part C (2) (b) of the Project and for urgently needed drilling services and materials may be procured by the Borrower under contracts awarded on the basis of its shopping procedures; provided, however, that the cost of any such contract shall not exceed the equivalent of $250,000 and that the aggregate cost of contracts so awarded shall not exceed the equivalent of $2,000,000. D. Review of Procurement Decisions by the Bank Review of invitations to bid and of proposed awards and final contracts: 1. With respect to all contracts estimated each to cost the equivalent of $250,000 or more: (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 Borrower shall, before a final decision on the award is made, inform the Bank of the name of the bidder to which it intends to - 22 - 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, together with the recommen- dations for award 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 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 was invited. (d) Two conformed copies of the contract shall be furnished to the Bank promptly after its execution and pr-*or 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 contract, together with the analysis of the respective bids, recommendations for award and such other information as the Bank shall 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 extension 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 15% 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 no -day of TmntL. , 198. CF FOR SECRETARY