Uganda - Petroleum Exploration Promotion Project : Credit 1561 - Credit Agreement - Conformed

CREDIT NUMBER 1561 UG Development Credit Agreement (Petroleum Exploration Promotion Project) between THE REPUBLIC OF UGANDA and INTERNATIONAL DEVELOPMENT ASSOCIATION Dated 30 1985 CREDIT NUMBER 1561 UG DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated 301' 3O , 1985, between THE REPUBLIC OF UGANDA (the Borrower) and INTERNATIONAL DEVELOPMENT ASSOCIATION (the Association). WHEREAS the Borrower, having satisfied itself as to the feasibility and priority of the Project described in Schedule 2 to this Agreement, has requested the Association to assist in the financing of the Project; and WHEREAS the Association has agreed, on the basis, inter alia, of the foregoing, to extend the Credit to the Borrower upon the terms and conditions set forth in this Agreement; NOW THLREFORE the parties hereto hereby agree as follows: ARTICLE I General Conditions; Definitions Section 1.01. The General Conditions Applicable to Develop- ment Credit Agreements of the Association, dated January 1, 1985, (the General Conditions) constitute an integral part of this Agreement. Section 1.02. Unless the context otherwise requires, the several terms defined in the General Conditions have the respec- tive meanings therein set forth and the following additional terms have the following meanings: (a) "Special Account" means the account referred to in Section 2.02 (b) of this Agreement; (b) "MLMWR" means the Borrower's Ministry of Lands, Mineral and Water Resources; (c) "GSMD" means the Geological Survey and Mines Department within MLMWR; and (d) "Petroleum Unit" means the Petroleum Unit established by the Borrower in GSMD on October 26, 1984. -2- ARTICLE II The Credit Section 2.01. The Association agrees to lend to the Bor- rower, on the terms and conditions set forth or referred to in the Development Credit Agreement, an amount in various currencies equivalent to five million two hundred thousand Special Drawing Rights (SDR 5,200,000). 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 (a) The amount of the Credit may be withdrawn from the Credit Account in accordance with the provisions of Schedule 1 to this Agreement, as such Schedule may be amended from time to time by agreement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 Association, 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 described in Schedule 2 to this Agreement and to be financed out of the proceeds of the Credit. (b) The Borrower shall, for the purposes of the Project, open and maintain in dollars a special account in the Bank of Uganda on terms and conditions satisfactory to the Association. Deposits into, and payments out of, the Special Account shall be made in accordance with the provisions of Schedule 5 to this Agreement. Section 2.03. The Closing Date shall be December 31, 1990 or such later date as the Association shall establish. The Associa- tion shall promptly notify the Borrower of such later date. Section 2.04. (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 $ection 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. -3- Section 2.05. 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 2.06. Commitment charges and service charges shall be payable semiannually on May 1 and November 1 in each year. Section 2.07. The Borrower shall repay the principal amount of the Credit in semiannual installments payable on each May 1 and November 1 commencing May 1, 1995, and ending November 1, 2034. Each installment to and including the installment payable on November 1, 2004 shall be one-half of one per cent (1/2 of 1%) of such principal amount, and each installment thereafter shall be one and one-half per cent (1-1/2%) of such principal amount. Section 2.08. 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 declares its commitment to the objectives of the Project as set forth in Schedule 2 to this Agreement, and, to this end, shall carry out the Project through MLMWR with due diligence and efficiency and in conformity with appropriate administrative, financial and petroleum industry practices, and shall provide, promptly as needed, the funds, facilities, services and other resources required for the Project. (b) Without limitation upon the provisions of paragraph (a) of this Section, the Borrower shall carry out the Project in accordance with the Implementation Program set forth in Sched- ule 4 to this Agreement, as such Schedule may be amended from time to time by agreement between the Borrower and the Associa- tion. Section 3.02. Except as the Association shall otherwise agree, procurement of the goods, works and consultants' services 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 Agreement. ARTICLE IV Other Covenants Section 4.01. (a) The Borrower shall maintain or cause to by maintained separate records and accounts adequate to reflect i1 accordance with sound accounting practices the operations, resources and expenditures in respect of the Project of the departments or agencies of the Borrower responsible for carrying out the Project or any part thereof. (b) The Borrower shall: (i) have the accounts referred to in paragraph (a) of this Section including the Special Account for each fiscal year audited, in accordance with appropriate auditing principles consistently applied, by independent auditors acceptable to the Association; (ii) furnish to the Association, as soon as available, but in any case not later than five months after the end of each such year, a certified copy of the report of such audit by the said auditors, of such scope and in such detail as the Association shall have reasonably requested; and (iii) furnish to the Association such other information concerning the said accounts and the audit thereof and said records as the Association shall from time to time reasonably request. Section 4.02. Except as the Association shall otherwise agree, the Borrower shall: (a) maintain or cause to be maintained separate accounts showing all proceeds from the sale of reports or information produced or obtained under the Project; and (b) make available funds for financing further studies, surveys or exploration for hydrocarbons in Uganda or for the strengthening of GSMD, if justified, up to an amount at least equivalent to the aggregate sale proceeds raferred to in paragraph (a) of this Section. ARTICLE V Termination Section 5.01. The date 90 days after the date of this Agreement is hereby specified for the purposes of Section 12.04 of the General Conditions. Section 5.02. The obligations of the Borrower under Sec- tion 4.02 of this Agreement shall cease and determine on the date on which the Development Credit Agreement shall terminate or on the date 10 years after the date of this Agreement, whichever shall be the earlier. ARTICLE VII Representative of the Borrower; Addresses Section 6.01. The Minister of the Borrower at the time responsible for Finance is designated as representative of the Borrower for the purposes of Section 11.03 of the General Conditions. Section 6.02. The following addresses are specified for the purposes of Section 11.01 of the General Conditions: For the Borrower: Secretary to the Treasury Ministry of Finance P.O. Box 8147 Kampala, Uganda Cable address: Telex: FINSEC 61170 Kampala For the Association: International Development Association 1818 H Street, N.W. Washington, D.C. 20433 United States of America -6- Cable address: Telex: INDEVAS 440098 (ITT) Washington, D.C. 248423 (RCA) or 64145 (WUI) IN WITNESS WHEREOF, the parties hereto, acting through their duly authorized representatives, 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. THE REPUBLIC OF UGANDA By Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION Regional Vicehredent Eastern and Southern Africa 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) Goods 490,000 100% of foreign expenditures, 100% of local expenditures (ex-factory cost) and 80% of local ex- penditures for other items pro- cured locally (2) Consultants' 1,660,000 100% Services (3) Geophysical 620,000 100% surveys (4) Training 310,000 100% of foreign expeditures (5) Project Adminis- 123,000 100% of foreign tration expenditures (6) Special Account 320,000 Amounts to be deposited pur- suant to para- graph 3 (a) of Schedule 5 to this Agreement (7) Unallocated 1,677,000 TOTAL 5,200,000 -8- 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. Notwithstanding the provisions of paragraph 1 above, no withdrawals shall be made in respect of payments made for expenditures-prior to the date of this Agreement. -9- SCHEDULE 2 Description of the Project The objectives of the Project are to assist the Borrower in: (i) the promotion of hydrocarbon exploration in Uganda by the oil industry; and (ii) the strengthening of GSMD in the administra- tion and supervision of exploration promotion, exploration and development of petroleum resources. The Project consists of the following parts, subject to such modifications thereof as the Borrower and the Association may agree upon from time to time to achieve such objectives: Part A: Petroleum Exploration Promotion 1. Preparation of promotional reports and documents on national petroleum potential for sale to interested parties. 2. Definition and preparation of an exploration strategy and carrying out of a promotion meeting, as appropriate. 3. Evaluation of proposals of, and preparation for discussions of proposals with interested parties. Part B: Surveys 1. Carrying out of geophysical surveys, geologic field work, appropriate, geochemical studies and photogeologic studies. Part C: Training Training of the Borrower's staff involved in the carrying out of petroleum-related activities and the administration and supervision of such activities. Part D: Rehabilitation of GSMD Rehabilitation of transportation, office and laboratory equipment of GSMD including the acquisition of vehicles and materials. Part E: Project Administration 1. Carrying out of audits of the project accounts. - 10 - 2. Carrying out of contacts with oil industry representatives including visits overseas by the Borrower's staff involved with petrole=m-related activities. The Project is expected to be completed by June 30, 1990. - - 11 - SCHEDULE 3 Procurement and Consultants' Services I. Procurement of Goods and Works A. International Competitive Bidding Gravity survey work shall be procured under contracts, awarded in accordance with procedures consistent with those set forth in Sections I and II of the "Guidelines for Procurement under IBRD Loans and IDA Credits" published by the Bank in August 1984 (the Guidelines). B. Other Procurement Procedures Contracts for goods shall be grouped in bidding packages to the maximum extent practicable and may be procured on the basis of competitive bidding, advertised locally, in accordance with procedures satisfactory to the Association. C. Review by the Association of Procurement Decisions 1. Review of invitations to bid and of proposed awards and final contracts: (a) With respect to each contract estimated to cost the equivalent of $100,000 or more, the procedures set forth in paragraphs 2 and 4 of Appendix 1 to the Guidelines shall apply. Where payments for such contract are to be made out of the Special Account, such procedures shall be modified to ensure that the two conformed copies of the contract required to be furnished to the Association pursuant to said paragraph 2 (d) shall be furnished to the Association prior to the making of the first payment out of the Special Account in respect of such contract. (b) With respect to each contract not governed by the pre- ceding paragraph, the procedures set forth in paragraphs 3 and 4 of Appendix 1 to the Guidelines shall apply. Where payments for such contract are to be made out of the Special Account, such procedures shall be modified to ensure that the two conformed copies of the contract together with the other information required to be furnished to the Association pursuant to said paragraph 3 shall be furnished to the Association as part of the - 12 - evidence to be furnished pursuant to paragraph 4 of Schedule 5 to this Agreement. 3. The figure of 15% is hereby specified for purposes of para- graph 4 of Appendix 1 to the Guidelines. II. Employment of Consultants In order to assist the Borrower in the carrying out of the Project, the Borrower shall employ exploration consultants whose qualifications, experience and terms and conditions of employment shall be satisfactory to the Association. Such consultants shall be selected in accordance with principles 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. - 13 - SCHEDULE 4 Implementation Program 1. In order to assLst the Borrower in the implementation of the Project, the Borrower shall maintain at least until the comple- tion of the Project the Petroleum Unit established by it in GSMD headed by the Commissioner of Geological Surveys and Mines and assisted by a Project Coordinator, geophysicists, geologists, an accountant and an administrative officer whose qualifications and experience shall be satisfactory to the Association and with an adequate number of support staff. 2. For the purposes of carrying out Part C of the Project, the Borrower shall cause the exploration consultants referred to in Part II of Schedule 3 to the Development Credit Agreement to prepare, by not later than September 30, 1985, for approval by the Borrower and the Association, a training program for the Borrower's staff. Upon review and approval of the program by the Association, the Borrower shall implement the training program as so approved. 3. In order to assist the Borrower in the auditing of Project amounts required pursuant to Article IV to the Development Credit Agreement, the Borrower shall employ auditors in accordance with the provisions of Part II of Schedule 3 to the Development Credit Agreement. - 14 - SCHEDULE 5 Special Account 1. For the purposes of this Schedule: (a) the term "Category" means a category of items to be financed out of the proceeds of the Credit as set forth in the table in paragraph 1 of Schedule 1 to this Agreement; (b) the term "eligible expenditures" means expenditures 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 allocated from time to time to Categories (1) to (5) in accor- dance with the provisions of Schedule 1 to this Agreement; and (c) the term "Authorized Allocation" means an amount in dollars equivalent to the amount allocated to Category (6) which is to be withdrawn from the Credit Account and deposited in the Special Account pursuant to paragraph 3 (a) of this Schedule. 2. Payments out of the Special Account shall be made exclu- sively for eligible expenditures in accordance with the provi- sions of this Schedule. 3. After the Association has received evidence satisfactory to the Association that the Special Account has been duly opened, withdrawals of the Authorized Allocation and subsequent with- drawals to replenish the Special Account may be made as follows: (a) On the basis of a request or requests by the Borrower for a deposit or deposits which add up to the aggregate amount of the Authorized Allocation, the Association shall, on behalf of the Borrower, withdraw from the Credit Account and deposit in the Special Account such amount or amounts as the Borrower shall have requested. (b) The Borrower shall furnish to the Association requests for replenishment of the Special Account at such intervals as the Association shall specify. On the basis of such requests, the Association shall withdraw from the Credit Account and deposit into the Special Account such amounts as shall be required to replenish the Special Account with amounts not exceeding the amount of payments made out of the Special Account for eligible - 15 - expenditures. Except as the Association may otherwise agree, each such deposit shall be withdrawn by the Association from the Credit Account under the respective Categories (1) to (5), and in the respective equivalent amounts, as shall have been justified by the evidence supporting the request for such deposit furnished pursuant to paragraph 4 of this Schedule. 4. For each payment made by the Borrower out of the Special Account for which the B6rTower requests replenishment pursuant to paragrqph 3 (b) of this Schedule, the Borrower shall furnish to the Association, prior to or at the time of such request, such documents and other evidence as the Association shall reasonably request, showing that such payment was made for eligible expen- ditures. 5. (a) Notwithstanding the provisions of paragraph 3 of this Schedule, no further deposit into the Special Account shall be made by the Association when either of the following situations first arises: (i) the Association shall have determined that all further withdrawals can be made directly by the Borrower from the Credit Account in accordance with the provisions of paragraph (a) of Sec- tion 2.02 of this Agreement; or (ii) unless otherwise agreed by the Association, when the total unwithdrawn amount of the Credit allo- cated to Categories (1) to (5) for the Project, minus the amount of any outstanding qualified agreement to reimburse made by the Association and of any outstanding special commitment entered into by the Association pursuant to Section 5.02 of the General Conditions with respect to the Project, shall be equal to the equivalent of twice the amount of the Authorized Allocation. (b) Thereafter, withdrawal from the Credit Account of the remaining unwithdrawn amount of the Credit allocated to Cate- gories (1) to (5) for the Project shall follow such procedures as the Association shall specify by notice to the Borrower. Except as the Association shall otherwise agree, such further with- drawals shall be made only after and to the extent that the Association shall have been satisfied that all such amounts remaining on deposit in the Special Account as of the date of - 16 - such notice have been or will be utilized in making payments f or eligible expenditures. 6. (a) If the Association shall have determined at any time that any payment out of the Special Account (i) was made for any expenditure or in any amount not eligible pursuant to paragraph 2 of this Schedule, or (ii) was not justified by the evidence furnished pursuant to paragraph 4 of this Schedule, the Borrower shall, promptly upon notice from the Association, deposit into the Special Account (or, if the Association shall so request, refund to the Association) an amount equal to the amount of such payment or the portion thereof not so eligible or justified. Unless otherwise agreed by the Association, no further deposit by the Association into the Special Account shall be made until the Borrower has made such deposit or refund. (b) If the Association shall have determined at any time that any amount outstanding in the Special Account will not be tequired to cover further payments for eligible expenditures, the Borrower shall, promptly upon notice from the Association, refund to the Association such outstanding amount. 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 0 day of LL , 198 5 FOR SECRETARY