Ghana - Energy Project : Credit 1373 - Credit Agreement - Conformed

O)CtF FI C1A L DOCUIMENTS REDIT NUMBER 1373 GH Development Credit Agreement (Energy Project) between REPUBLIC OF GHANA and INTERNATIONAL DEVELOPMENT ASSOCIATION Dated , 1983 CREDIT NUMBER 1373 GH DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated 4.LA 97 , 1983, between REPUBLIC OV GHANA (hereinafter called the Borrower) and INTERNATIONAL DEVELOPMENT ASSOCIATION (hereinafter called the Association). ARTICLE I General Conditions; Definitions Section 1.01. The parties to this Agreement accept all the provisions of the General Conditions Applicable to Development Credit Agreements of the Association, dated June 30, 1980, with the same force and effect as if they were fully set forth herein (said General Conditions Applicable to Development Credit Agree- ments of the A&sociation 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 Gen- eral Conditions have the respective meanings therein set forth and the following additional terms have the following meanings: (a) "MFP" means the Borrower's Ministry of Fuel and Power; (b) "NEB" means the National Energy Board to be established by the Borrower under Part C 1 of the Project; (c) "GNPC" means the Ghana National Petroleum Corporation to be established under Part B 1 of the Project; (d) "Saltpond field" means the oil field located 65 miles west of Accra and 8 miles offshore; (e) "Tano Tar Sands" means the tar sands located on the on-shore Tano basin near the Borrower's western border; (f) "Project Preparation Advances" means the project preparation advances granted by the Association to the Borrower pursuant to an exchange of letters dated July 25, 1980 and August 14, 1980, and September 28, 1981 and May 3, 1982 res- pectively, between the Borrower and the Association. -2- ARTICLE II The Credit Section 2.01. The Association agrees to lend to the Bor- rower, on the terms and conditions in the Development Credit Agreement set forth or referred to, an amount in various cur- rencies equivalent to ten million two hundred thousand Special Drawing Rights (SDR 10,200,000). Section 2.02. (a) The amount of the Credit may be withdrawn from the Credit Account in accordance with the provisions of Schedule 1 to this Agreement, -as such Schedule may be amended from time to time by agreement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 Asso- ciation, for expenditures made (or, if the Association 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 Credit. (b) Promptly after the Effective Date, the Association shall, on behalf of the Borrdwer, withdraw from the Credit Account and pay to itself the amount required to repay the prin- cipal amount of the Project Preparation Advances withdrawn and outstanding as of such date and to pay all unpaid charges there- on. The unwithdrawn balance of the authorized amount of the Pro- ject Preparation Advances shall thereupon be cancelled. Section 2.03. Except as the Association shall otherwise agree, procurement of the goods and civil works required for the Project and to be financed out of the proceeds of the Credit shall be governed by the provisions of Schedule 3 to this Agree- ment. Section'2.04. The Closing Date shall be December 31, 1987 or such later date as the Association shall establish. The Associa- tion shall promptly notify the Borrower of such later date. Section 2.05. (a) The Borrower shall pay to the Association a commitment charge at the rate of one-half of one per cent (1/2 of 1%) per annum on the principal amount of the Credit not with- drawn from time to time. The commitment charge shall accrue from a date sixty days after the date of the Development Credit Agree- ment to the respective dates on which amounts shall be withdrawn by the Borrower from the Credit Account or shall be cancelled. - 3 - (b) The commitment charge shall be paid: (i) at such places as the Association shall reasonably request; (ii) without re- strictions of any kind imposed by, or in the territory of, the Borrower; and (iii) in the currency specified in this Agreement for the purposes of Section 4.02 of the General Conditions or in such other eligible currency or currencies as may from time to time be designated or selected pursuant to the provisions of that Section. Section 2.06. The Borrower shall pay to the Association a service charge at the rate of three-fourths of one per cent (3/4 of 1%) per annum on the principal amount of the Credit withdrawn and outstanding from time to time. Section 2.07. Commitment charges and service charges shall be payable semiannually on June 15 and December 15 in each year. Section 2.08. The Borrower shall repay the principal amount of the Credit in semiannual installments payable on each June 15 and December 15 commencing June 15, 1993, and ending December 15, 2032, each installment to and including the installment payable on December 15, 2002, to be one-half of one per cent (1/2 of 1%) of such principal amount, and each installment thereafter to be one and one-half per cent (1-1/2%) of such principal amount. Section 2.09. The currency of the United States of America is hereby specified for the purposes of Section 4.02 of the General Conditions. ARTICLE III Execution of the Project Section 3.01. (a) The Borrower shall carry out the Project through its MFP with due diligence and efficiency and in conform- ity with appropriate administrative, financial, engineering, economic and petroleum resources management practices, and shall provide, promptly as needed, the funds, facilities, services and other resources required for the purpose. (b) The Borrower shall carry out Parts B.1 and C.1 of the Project according to a timetable satisfactory to the Association. -4- (c) The Borrower shall: (i) establish GNPC and NEB with organizations consistent with the objectives of the Project which, in the case of GNPC, shall include an Exploration Department and a Production Department; and (ii) appoint as head of said Departments qualified and experienced staff. (d) The Borrower shall cause the beneficiaries of the fellowships to be granted under the Project to take courses and programs which shall have been approved by the Association. Section 3.02. (a) In order to assist the Borrower in the carrying out of the Project, the Borrower shall employ consul- tants and experts whose qualifications, experience and terms and conditions of employment shall be satisfactory to the Associa- tion, such consultants to be selected in accordance with prin- ciples and procedures satisfactory 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. (b) The Borrower shall cooperate fully with such consul- tants and experts in the performance of their services for the Project and make available to them all information relevant to the Project. (c) The Borrower shall promptly furnish to the Association copies of the documents prepared by such consultants and experts for the Project, including reports and drafts thereof, plans, designs, specifications, work schedules and estimates of costs, as the Association shall reasonably request. (d) The Borrower and Association shall from time to time exchange views on the progress and results of the activities of such consultants and experts. (e) The Borrower shall not amend or waive any of the terms and conditions of employment of the experts or consultants em- ployed under the Project, or grant any material extension of time or any approval of sub-contracts or modifications thereof, or agree to any substitution of personnel of such experts or consul- tants without the prior concurrence of the Association. - 5 - Section 3.03. (a) The Borrower undertakes to insure, or make adequate provision for the insurance of, the imported goods to be financct out of the proceeds of the Credit against hazards inci- dent to the acquisition, transportation and delivery -thereof t:o the place of use or installation, and for such insurance any indemnity 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 Credit to be used exclusively for the purposes of the Project. Section 3.04. The Borrower shall: (a) not later than September 30, 1984, carry out, under terms of reference satisfactory to the Association, the study included under Part C.4 of the Project; (b) promptly upon its completion, furnish to the Associa- tion a copy of such study and afford the Association a reasonable opportunity to comment on the recommendations of such study; and (c) not later than December 31, 1984, prepare, and there- after carry out according to a timetable satisfactory to the Association a plan of action, satisfactory to the Association, to implement all such recommendations of such study as are accept- able to the Borrower and the Association. Section 3.05. (a) Promptly after its completion, the Bor- rower shall exchange views with the Association on the results of the study included under Parts A.9 and C.3 of the Project; and (b) the Borrower shall exchange views with the Association on the future development of the Saltpond field. Section 3.06. The Borrower shall not later than December 31, 1985, prepare and furnish to the Association for comment, a proposal for a work program of investments in renewable energy and for financing such investments. Section 3.07. (a) The Borrower shall furnish to the Associa- tion, promptly upon their preparation, the plans, specifications, reports, contract documents and work and procurement schedules for the Project, and any material modifications thereof or addi- tions thereto, in such detail as the Association shall reasonably request. -6- (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 Credit, and to disclose their use in the Project; (ii) shall enable the Association's representatives to visit the facilities and construction sites included in the Project and to examine the goods financed out of the proceeds of the Credit and any relevant records and documents; and (iii) shall furnish to the Association at regular intervals all such information as the Association shall reasonably request concerning the Project, its cost and, where appropriate, the benefits to be derived from it, the expen- diture of the proceeds of the Credit and the goods and services financed out of such 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 Credit, the Association may publish a description thereof, the name and nationality of the party to whom the contract was awarded and the contract price. (d) Until the Closing Date, the Borrower shall, through its administrative units in charge of the carrying out of the Pro- ject, including NEB and GNPC, prepare and furnish to the Associa- tion quarterly and annual reports, of such scope and detail as the Association shall reasonably request, on the progress of the execution of the Project. (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 Association, the Borrower shall prepare and furnish to the Association a report, of such scope and in such detail as the Association shall reasonably request, on the execution and ini- tial operation of the Project, its cost and the benefits derived and to be derived from it, the performance by the Borrower and the Association of their respective obligations under the Devel- opment Credit Agreement and the accomplishment of the purposes of the Credit. ARTICLE IV Other Covenants Section 4.01. (a) The Borrower's M1FP shall maintain or cause ti bt aintained separate accounts and records adequate to - 7 - reflect in accordance with consistently maintained appropriate accounting practices the operations, resources and expenditures, in reslect of the Project, of the departments or agencies of the Borrower responsible for carrying out the Project or any part thereof. (b) The Borrower shall: (i) have the accounts referred to in paragraph (a) of this Section for each fiscal year audited, in accordance with appropriate auditing principles consistently applied, by independent auditors acceptable to the Association; and (ii) furnish to the Association as soon as available, but in any case not later than six months after the end of each such year, (A) a certified copy of the report of such audit by such auditors, of such scope and in such detail as the Association shall have reasonably requested, and (B) such other Information concerning said accounts and the audit thereof as the Association shall from time to time reasonably request. ARTICLE V Effective Date; Termination Section 5.01. The date t 1 40 is hereby speci- fied for the purposes of Section 12.04 of the General Conditions. Section 5.02. The obligations of the Borrower under Section 4.01 of this Agreement shall cease and determine on the date on which the Development Credit Agreement shall terminate or on a date twenty years after the date of this Agreement, whichever shall be the earlier. ARTICLE VI Representatives of the Borrower; Addresses Section 6.01. The Principal Secretary of the Ministry of Finance and Economic Planning 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: - 8- For the Borrower: Republic of Ghana Principal Secretary Ministry of Finance and Economic Planning Accra, Ghana Cable address: ECONOMICON Accra For the Association: International Development Association 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: Telex: INDEVAS 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 GHANA By Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION By ff'ty Regional Vice President Western Africa -9- SCHEDULE 1 Withdrawal of the Proceeds of the Credit 1. The table below sets forth the Categories of items to be financed out of the proceeds of the Credit, the allocation of the amounts of the Credit to each Category and the percentage of expenditures for items so to be financed in each Category: Amount of the Credit Allocated % of (Expressed in Expenditures Category SDR Equivalent) to be Financed (1) Civil Works 140,000 50% (2) Equipment 240,000 ) (3) Seismic 930,000 ) 100% of foreign Survey ) expenditures (4) Tano Tar 610,000 ) Sands study ) (5) Renewable 280,000 ) energy demon- ) stration projects ) (6) Consultant 4,330,000 ) Services ) (7) Training 460,000 ) (8) Refunding of Project 665,000 Amount due Preparation Advances (9) Unallocated 2,545,000 TOTAL 10,200,000 2. For the purposes of this Schedule the term "foreign expendi- tures" means expenditures in the currency of any country other than the Borrower and for goods or services supplied from the territory of any country other than the Borrower. - 10 - 3. The disbursement percentages have been calculated in compli- ance with the policy of the Association that no proceeds of the Credit shall be disbursed on account of payments fo- axes 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 res- pect of any item to be financed out of the proceeds of the Credit decreases or increases, the Association 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 Association. 4. Notwithstanding the provisions of paragraph I above, no withdrawals shall be made in respect of payments made for expen- ditures prior to the date of this Agreement, except that with- drawals, in an aggregate amount not exceeding the equivalent of SDR 90,000, may be made in respect of Category 5 on account of expenditures for legal and economic services made before that date but after January 1, 1983. 5. Notwithstanding the allocation of an amount of the Credit or the disbursement percentages set forth in the table in para- graph 1 above, if the Association has reasonably estimated that the amount of the Credit then allocated to any Category will be insufficient to finance the agreed percentage of all expenditures in that Category, the Association may, by notice to the Borrower: (i) reallocate to such Category, to the extent required to meet the estimated shortfall, proceeds of the Credit which are then allocated to another Category and which in the opinion of the Association are not needed to meet other expenditures; and (ii) if such reallocation cannot fully meet the estimated shortfall, reduce the disbursement percentage then applicable to such expen- ditures in order that further withdrawals under such Category may continue until all expenditures thereunder shall have been made. 6. If the Association 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 expend- itures for such item shall be financed out of the proceeds of the Credit and the Association may, without in any way restricting or limiting any other right, power or remedy of the Association under the Development Credit Ag--eement, by notice to the Bor- rower, cancel such amount of the Credit as, in the Association's reasonable opinion, represents the amount of such expenditures which would otherwise have been eligible for financing out of the proceeds of the Credit. - 11 - SCHEDULE 2 Description of the Project The Project will assist the Borrower in evaluating and promoting the development of the country's petroleum potential, strengthening the petroleum subsector organization, implementing energy studies and coordinating and promoting the development and use of renewable energy. The Project consists of the following Parts: A. Petroleum exploration promotion 1. Retrieving, reviewing and interpreting existing geolo- gical and geophysical data, including a basin source rock analysis, and a comprehensive stratigraphic study of available well information. 2. Evaluation of all data generated by the seismic survey to be carried out in off shore Ghana and integrating it with existing data. 3. Acquisition and evaluation of about 1,000 kilometers of new data in the Tano offshore area. 4. Collection and evaluation of new data on the Tano Tar Sands area, including data from some 75 kilometers of seismic lines and samples from five core holes. 5. Revision of the Borrower's petroleum legislation and the formulation of draft model petroleum exploration and production agreements. 6. Preparation of a promotional package for the petroleum industry and organization of bidding by petroleum com- panies on acreage open for exploration. 7. Provision of technical assistance for the negotiation of exploration contracts with petroleum companies. 8. Monitoring the activities of operating petroleum com- panies and integrating the data they furnish into existing knowledge of the basin. - 12 - 9. Completion of the Saltpond field reservoir engineering study or monitoring activities at Saltpond. B. Strengthening the Borrower's Petroleum Sector Organization 1. Establishment of a national petroleum corporation res- ponsible for exploration, development, production and disposal of petroleum, which responsibilities shall include, inter alia, executing related contracts, eval- uating and integrating the data provided to the Bor- rower by petroleum companies and other sources and, when required, participating in oil and gas develop- ment. 2. Technical assistance services of geological, geophysi- cal and petroleum engineering experts, including pro- vision of on-the-job training for GNPC staff. 3. Training abroad of about ten Ghanaian nationals in petroleum geology, geophysics, engineering, economics and law. 4. Expansion of existing offices and construction of storage facilities for well cores and samples; acquisi- tion and utilization of library materials; and acquisi- tion and utilization of equipment for reproducing and storing seismic sections and well logs. C. Strengthening the Borrower's National Energy Sector Organization 1. Establishment of a national energy board as an advisory body to MFP, responsible for developing and coordina- ting energy policies. 2, Provision of technical assistance to NEB, including services of energy economists, renewable energy spe- cialists as well as short term assistance by economic and energy experts to assist NEB in the collection of data and preparation of work programs in the renewable energy field and to provide on-the-job training to NEB staff. - 13 - 3. Natural gas utilization study, including an evaluation of potential domestic markets in power generation and other large volume energy uses. 4. Study on options and steps to be taken by the Borrower to establish an adequate pricing system for petroleum products. 5. Development of safety and other regulations relating to exploration and production activities and the estab- lishment of procedures for inspecting and monitoring such activities. 6. Development of a detailed and comprehensive energy statistical data base, including energy end-use surveys and carrying out studies that will serve as the basis for drawing up a long-term energy plan for Ghana. 7. Preparation of a work plan for investments in the renewable energy sector based on field testing and demonstration projects. 8. Establishment of up-to-date energy information centers for planning and renewable energy. 9. The acquisition and utilization of equipment for renew- able and energy planning purposes. 10. Training of Ghanaian nationals in energy sector plan- ning and management and renewable energy technologies. The Project is expected to be completed by June 30, 1987. - 14 - SCHEDULE 3 A. Procurement Procedures 1. The work on the Tano Tar Sands under Part A.4 of the Project shall be carried out under a seismic contract and a drilling con- tract. Both contracts shall be awarded through limited inter- natio: 1l tendering after obtaining quotations from a group of potential contractors broad enough, under the circumstances, to assure competitive prices, in at least three of the countries or territories eligible under 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). The evaluation and comparison of quotations obtained through limited international tendering and the award of the contracts to be so procured shall be made in accordance with procedures con- sistent with those set forth in Part A of the Guidelines. 2. Contracts for the construction of facilities and for the acquisition of equipment shall be awarded in accordance with local procurement procedures satisfactory to the Association, provided that for each contract quotations from at least three established and reliable contractors or suppliers will be ob- tained. 3. The seismic survey included under Part A.2 of the Project shall be contracted without formal bidding, following procedures satisfactory to the Association. B. Review of Procurement Decisions by the Association 1. Review of invitations to bid and of proposed awards and final contracts: With respect to all contracts estimated to cost the equiva- lent of $50,000 or more: (a) Before bids are invited, the Borrower shall furnish to the Association, 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 Association shall reasonably request. Any further modification to the bidding documents shall require the Association's concurrence before it is issued to the prospective bidders. - 15 - (b) After bids have been received and evaluated, the Bor- rower shall, before a final decision on the award is made, inform the Association of the name of the bidder to which it intends to award the contract and shall furnish to the Association, in suf- ficient time for its review, a detailed report on the evaluation and comparison of the bids received, and such other information as the Association shall reasonably request. The Association shall, if it determines that the intended award would be incon- sistent 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 Association'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 Association promptly after its execution and prior to the submission to the Association of the first application for with- drawal of funds from the Credit Account in respect of such con- tract. 2. With respect to each contract not governed by the preceding paragraph the Borrower shall furnish to the Association, promptly after its execution and prior to the submission to the Associa- tion of the first application for withdrawal of funds from the Credit 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 Association shall reasonably request. The Association shall, if it determines that the award of the contract was not consistent with the Guidelines or this Schedule, promptly inform the Bor- rower and state the reasons for such determination. 3. Before agreeing to any material modification or 47aiver of the terms and conditions of a contract, or granting an extension of the stipulated time for performance of such contract, or issu- ing 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 Association of the proposed modification, waiver, extension or change order and the reasons therefor. The Association, if it determines that the proposal would be inconsistent with the pro- visions of this Agreement, shall promptly inform the Borrower and state the reasons for its determination. 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 198 .3 FOR SECRETARY