Senegal - Petroleum Exploration Project : Credit 1323 - Credit Agreement - Conformed

CREDIT -NUMBER 1323 SE Development Credit Agreement (Petroleum Exploration Project) betveen REPUBLIC OF SENEGAL and INTERNATIONAL DEVELOPKEWT ASSOCIATION Dated u. ) 1983 CREDIT NUMBER 1323 SE DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated i qAA 1 , 1983, between REPUBLIC OF SENEGAL (hereinafter called the Borrower) and INTER- NATIONAL DEVELOPMENT ASSOCIATION (hereinafter called the Asso- ciation). WHEREAS (A) the Borrower has requested the Association to assist in the financing of the foreign exchange cost of the Proj-- ect described in Schedule 2 to this Agreement (hereinafter called the Project); (B) the Borrower has obtained from the Norwegian Agency for International Development (hereinafter called NORAD) a grant (hereinafter called the NORAD Grant) in an amount of NKr3,100,000 to assist in financing Part A.3 of the Project; (C) PETROSEN has obtained from Petro-Canada International Assistance Corporation (hereinafter called PCIAC) assistance in the form of a grant in an amount not in excess of Can$16,000,000 for purposes of Parts A, D.1, and E of the Project on the terms and conditions set forth in an agreement (herein- after called the PCIAC Agreement) dated October 6, 1982 between PETROSEN and PCIAC; and WHEREAS the Association is willing, on the basis inter alia of the foregoing, to extend the Credit to the Borrower upon the terms and conditions hereinafter set forth and in the Project Agreement of even date herewith between the Association and PETROSEN; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I General Conditions; Definitions Section 1.01. The parties to this Agre-ment accept all the provisions of the General Conditions Appl'cable to Development Credit Agreements of the Association, datEd June 30, 1980, with the same force and effect as if they were iully set forth herein (said General Conditions Applicable to Development Credit Agree- ments of the Association being hereinafter called the General Conditions). -2- Section 1.02. Wherever used in this Agreement, unless the context otherwise requires, the several terms defined in the Gen- eral Conditions and in the Preamble to this Agreement have the respective meanings therein set forth and the following addi- tional terms have the following meanings: (a) "Project Agreement" means the agreement between the Association and PETROSEN of even date herewith, as the same may be amended from time to time, and such term includes all schedules to the Project Agreement and all agreements supple- mental to the Project Agreement; (b) "PETROSEN" means Societe des Petroles du Senegal, a Societe anonyme d'economie mixte established and operating under the laws of the Borrower.. (c) "Statuts" means the Statuts of PETROSEN dated March 16, 1981 registered at the Registre de Commerce de Dakar. (d) "DMG" means the Direction des Mines et de la Geologie within the Borrower's Ministere du D'veloppement Industriel et de l'Artisanat. (e) "CFAF" and "CFA Franc" means the currency of the Bor- rower. (f) "Project Preparation Advances" means the project prepa- ration advances granted by the Bank to the Borrower pursuant to an exchange of letters, both dated January 31, 1980 and an ex- change of letters dated January 24, 1981 and March 6, 1981 between the Borrower and the Bank. ARTICLE II The Credit Section 2.01. The Association agrees to lend to the Bor- rower, on the terms and cona tions in the Development Credit Agreement set forth or referred to, an amount in various curren- cies equivalent to eight million nine hundred thousand Special Drawing Rights (SDR 8,900,000). 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 -3- 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, works 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 Borrower, 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 works required for the Pro- ject and to be financed out of the proceeds of the Credit shall be governed by the provisions of the Schedule to the Project Agreement. Section 2.04. The Closing Date shall be December 31, 1935 or such later date as the Association shall establish. The Asso- ciation 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. (b) The commitment charge shall be paid: (i) at such places as the Association shall reasonably request; (ii) without restrictions 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. -4- Section 2.07 Commitment charges and service charges shall be payable semiannually on March 15 and September 15 in each year. Section 2.08. The Borrower shall repay the principal amount of the Credit in semiannual installments payable on each March 15 and September 15 commencing March 15, 1993, and ending September 15, 2032, each installment to and including the installment pay- able on September 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 Republic of France is hereby specified for the purposes of Section 4.02 of the General Conditions. Section 2.10. PETROSEN is designated as representative of the Borrower for the purposes of taking any action required or permitted to be. taken under the provisions of Section 2.02 of this Agreement and Article V of the General Conditions in respect of Categories (2), (3), (4) and (5) of the table set forth in paragraph 1 of Schedule 1 to this Agreement. ARTICLE III Execution of the Project Section 3.01. (a) The Borrower shall carry out Part A of the Project through DMG with due diligence and efficiency and in con- formity with appropriate administrative, financial, engineering and petroleum industry practices, and shall provide promptly as needed, the funds, facilities, services and other resources required for the purpose. (b) Without any limitation or restriction upon any of its other obligations under the Development Credit Agreement, the Borrower shall cause PETROSEN to perform in accordance with the provisions of the Project Agreement all the obligations therein set forth, shall take and cause to be taken all action, including the provision of funds, facilities, services and other resources, necessary or appropriate to enable PETROSEN to perform such obligations, and shall not take or permit to be taken any action which would prevent or interfere with such performance. -5- (c) The Borrower shall make the proceeds of the Credit which shall be allocated from time to time to Categories (2), (3), (4), (5) and (6) of the table set forth in paragraph 1 of Schedule 1 to this Agreement available to PETROSEN on terms and conditions satisfactory to the Association. Said terms and condi- tions shall be periodically reviewed in consultation with the Association in the light of the financial situation of PETROSEN. Section 3.02. Consultants employed by the Borrower to assist it in carrying out training under Part A.1 of the Project shall have qualifications, experience and terms and conditions of employment satisfactory to the Association, and shall be selected in accordance with principles and procedures satisfactory to the Association on the basis of the "Guidelines for the Use of Con- sultants by World Bank Borrowers and by the World Bank as Execut- ing Agency" published by the Bank in August 1981. Section 3.03. (a) The Borrower: (i) shall maintain records and procedures adequate to record and monitor the progress of Part A of the Project (including its cost and the benefits to be derived from it), to identify the services financed out of the proceeds of the Credit for Part A of the Project, 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 docu- ments; and (iii) shall furnish to the Association at regular intervals all such information as the Association shall reason- ably request concerning the Project, its cost and, where appro- priate, the benefits to be derived from it, the expenditure of the proceeds of the Credit and the goods and services financed out of such proceeds. (b) 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. (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 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 of Part A -6- of the Project, its cost and the benefits derived and to be derived from it, the performance by the Borrower and the Associa- tion of their respective obligations under the Development Credit Agreement and the accomplishment of the purposes of the Credit. ARTICLE IV Other Covenants Section 4.01. The Borrower shall maintain or cause to be maintained records adequate to reflect in accordance with consis- tently maintained appropriate accounting practices the opera- tions, resources and expenditures, in respect of the Project, of the departments or agencies of the Borrower responsible for carrying out Part A of the Project. Section 4.02. (a) The Borrower shall obtain the Associa- tion's approval prior to taking any action: (i) to modify the share capital of PETROSEN, or selling, transferring or otherwise disposing of any part of its holdings of the stock of PETROSEN if as a result of such action, or sale, transfer or other disposal the Borrower would lose effective control of PETROSEN; and (ii) to susbstantially increase its proportionate holdings of PETRO- SEN's stock. (b) Unless the Association shall otherwise agree, the Bor- rower shall take all necessary steps in order that, to the extent that Banque Nationale de D6veloppement du Senegal and Societe Financiere Senegalaise pour le Developpement de l'Industrie et du Tourisme shall hold stock of PETROSEN, such stockholders shall continue to hold at least one seat each on PETROSEN's Board of Directors (Conseil d'Administration). Section 4.03. The Borrower shall consult the Association prior to implementing any recommendations based on the review provided for in Part A.3 of the Project. ARTICLE V Remedies of the Association Section 5.01. For the purposes of Section 6.02 of the Gen- eral Conditions the following additional events are specified pursuant to paragraph (h) thereof: -7- (a) PETROSEN shall have failed to perform any of its obli- gations under the Project Agreement. (b) As a result of events which have occurred after the date of the Development Credit Agreement, an extraordinary situa- tion shall have arisen which shall make it improbable that PETROSEN will be able to perform its obligations under the Pro- ject Agreement. (c) The Statuts shall have been amended, suspended, abro- gated, repealed or waived without the prior consent of the Asso- ciation. (d) The Borrower or any other authority having jurisdiction shall have taken any action for the dissolution or disestablish- ment of PETROSEN or for the suspension of its o-erations. (e) (i) Subject to subparagraph (ii) of this paragraph, PCIAC shall have suspended, cancelled or termi- nated in whole or in part, its assistance to PETROSEN under the PCIAC Agreement, pursuant to the terms of said agreement. (ii) Subparagraph (i) of this paragraph shall not apply if the Borrower aad PETROSEN establish to the satisfaction of the Association that: (A) such suspension, cancellation or termination is not caused by a failure to perform any of the obliga- tions under such agreement, and (B) adequate funds for the Project are available to PETROSEN from other sources on terms and conditions consistent with the obligations of the. Borrower under this Agreement and of PETROSEN under the Project Agree- ment. Section 5.02. For the purposes of Section 7.01 of the Gen- eral Conditions, the following additional events are specified pursuant to paragraph (d) thereof: (a) The event specified in paragraph (a) of Section 5.01 of this Agreement shall occur and shall continue for a period of sixty days after notice thereof shall have been given by the Association to the Borrower and PETROSEN. (b) Any event specified in paragraphs (c) and (d) of Sec- tion 5.01 of this Agreement shall occur. -8- ARTICLE VI Effective Date; Termination Section 6.01. The following event is specified as an addi- tional condition to the effectiveness of the Development Credit Agreement within the meaning of Section 12.01 (b) of the General Conditions, namely, that the execution and delivery of the Pro- ject Agreement on behalf of PETROSEN have been duly authorized or ratified by all necessary corporate action. Section 6.02. The following is specified as an additional matter, within the meaning of Section 12.02 (b) of the General Conditions, to be included in the opinion or opinions to be fur- nished to the Association,, namely, that the Project Agreement has been duly authorized or ratified by PETROSEN, and is legally binding upon PETROSEN in accordance with its terms. Section 6.03. The dateTu11t otti 110 is hereby specified for the purposes of Section 12.04 of the General Conditions. Section 6.04. The obligations of the Borrower under Article IV 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 VII Representative of the Borrower; Addresses Section 7.01. Except as provided in Section 2.10 of this Agreement, the Minister responsible for finance of the Borrower is designated as representative of the Borrower for the purposes of Section 11.03 of the General Conditions. Section 7.02. The following addresses are specified for the purpose of Section 11.01 of the General Conditions: For the Borrower: Ministare de l'Economie et des Finances Rue Charles Laine B.P. 4017 Dakar, S'negal -9- Cable address: Telex: MINFINANCES 512 Dakar, Senegal TRESOR SG 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 SENEGAL Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION Regional Vice President Western Africa - 10 - 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) Training for 90,000 100% Part A of the Project (2) Consultants' 1,800,000 100% of foreign services and expenditures training for Part B of the Project (3) Vehicles and office 60,000 100% of foreign equipment for Part expenditures B of the Project and 95% of local expendi- tures (4) Consultants' services 2,870,000 100% of foreign for Part C of expenditures the Project (5) Goods and services 2,360,000 100% of foreign for Part D.2 of expenditures the Project (6) Refunding of Project 930,000 Preparation Advances (7) Unallocated 790,000 TOTAL 8,900 000 - 11 - 2. For the purposes of this Schedule: (a) the term "foreign expenditures" 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; 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; provided, however, that if the currency of the Borrower is also that of another country from the territory of which goods or services are supplied, expenditures in such currency for such goods or services shall be deemed to be "foreign expenditures". 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 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 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 1 above, no withdrawals shall be made in respect of: (a) payments made for expenditures prior to the date of this Agreement; I (b) payments for taxes levied by, or in the territory of, the Borrower on goods or services, or on the importation, manu- facture, procurement or supply thereof; (c) expenditures under Category (4) above in respect of Part C.2 of the Project unless: (i) geological and .geophysical data satisfactory to the Association, of the portions of the basins included in such Part of the Project, owned by the Repub- lic of The Gambia and the Republic of Guinea-Bissau and by the Islamic Republic of Mauritania, are made available to the Bor- rower; and (ii) arrangements satisfactory to the Association, including contractual arrangements with consultants, have been - 12 - made among the Borrower, the Republic of The Gambia and the Re- public of Guinea-Bissau and among the Borrower and the Islamic Republic of Mauritania for carrying out the studies of such basins; and (d) expenditures under Category (5) above until: (i) the Borrower shall have provided a detailed work program for Part D.2 of the Project satisfactory to the Association; and (ii) an agreement shall have been concluded, and become effective, be- tween PETROSEN and Societe Nationale Elf Aquitaine (hereinafter called SNEA), containing terms and conditions satisfactory to the Association, for the purpose of granting to PETROSEN certain rights in respect of such part of the area, which is described in the Borrower's Decree No. 79.29/MDIA/DMG dated January 9, 1979, as shall be located west. of the 17th Meridian; in the event that the requirements under this paragraph shall not have been met by June 30, 1984 or such later date as the Association may agree, the Association shall thereafter, by notice to the Borrower and in its sole discretion, decid- whether these funds, either in part or in whole shall be cancelled in accordance with Section 6.03 (b) of the General Conditions. 5. Notwithstanding the allocation of an amount of the Credit or the disbursement percentages set forth in the table in paragraph 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 Agreement, by notice to the Bor- rower, cancel such amount of the Credit as, in the Association's - 13 - reasonable opinion, represents the amount of such expenditures which would otherwise have been eligible for financing out of the proceeds of the Credit. - 14 - SCHEDULE 2 Description of the Project The Project consists of the following parts: Part A: Strengthening of and Assistance to DMG 1. Strengthening of DMG's staff, including on-the-job training and training abroad. 2. Acquisition of office and laboratory equipment. 3. Review of legislative instruments in the petroleum sector and of instruments governing the establishment and opera- tions of PETROSEN, -and definition of proposed contractual arrangements for the participation of foreign petroleum com- panies in exploration in Senegal. Part B: Strengthening of PETROSEN 1. Establishment of PETROSEN's exploration department. 2. Strengthening of PETROSEN's staff,. including on-the-job training and training abroad. 3. Acquisition of office equipment and vehicles. 4. Auditing of PETROSEN's accounts for fiscal years 1982-83, 1983-84 and 1984-85. 5. Promotion of a continuing exploration program in Senegal, including the definition of such program, the monitoring thereof, the conduct of negotiations with foreign petroleum companies therefor and evaluation of the feasibility of PETROSEN's investment proposals. Part C: Comprehensive Basin Studies 1. A comprehensive study of the Borrower's sedimentary basins, including the compilation, evaluation and interpretation of existing and newly-acquired geological and geophysical data. 2. Participation by PETROSEN in comprehensive studies of the geology of the basins shared by the Borrower with the Repub- lic of Guinea-Bissau and the Republic of the Gambia on the - 15 - one hand, and the Islamic Republic of Mauritania on the other hand. 3. On-the-job training of the Borrower's and PETROSEN's staff participating in the carrying out of said studies. Part D: Exploration of the Diam Niadio Area 1. During a first phase: (a) a gravimetric and detailed magne- tic survey; and (b) a semi-detailed onshore seismic survey and accompanying high resolution seismic tests in specific locations to be determined on the basis of said survey. 2. A detailed seismic survey during a second phase. Part E: Exploration of the Casamance Offshore Basin 1. Offshore geophysical reconnaissance survey, including seis- mic works and their evaluation and interpretation. 2. Exploratory drilling if justified on the basis of the re- sults of the survey under paragrah 1 above. The Project is expected to be completed by June 30, 1985. 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 2L Lday of , 198 . FOR SECRETARY