Conformed Copy - L3364 - Gas Flaring Reduction Project - Loan Agreement

Page 1 CONFORMED COPY LOAN NUMBER 3364 IN (Gas Flaring Reduction Project) between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT and OIL AND NATURAL GAS COMMISSION Dated July 11, 1991 LOAN NUMBER 3364 IN LOAN AGREEMENT AGREEMENT, dated July 11, 1991, between INTERNATION- AL BANK FOR RECONSTRUCTION AND DEVELOPMENT (the Bank) and OIL AND NATURAL GAS COMMISSION (the Borrower). WHEREAS: (A) India, acting by its President (the Guarantor) and the Borrower, having been satisfied as to the feasibility and priority of the Project described in Schedule 2 to this Agreement, have requested the Bank to assist in the financing of the Project; (B) by an agreement (the Guarantee Agreement) of even date herewith between the Guarantor and the Bank, the Guarantor has agreed to guarantee the obligations of the Borrower in respect of the Loan and to undertake such other obligations as set forth in the Guarantee Agree- ment; and WHEREAS the Bank has agreed, on the basis, inter alia, of the foregoing, to extend the Loan to the Borrower upon the terms and conditions set forth in this Page 2 Agreement; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I General Conditions; Definitions Section 1.01. The "General Conditions Applicable to Loan and Guarantee Agreements" of the Bank, dated January 1, 1985, with the modifications set forth below (the General Conditions) constitute an integral part of this Agreement: (a) the last sentence of Section 3.02 is deleted; and (b) in Section 6.02, sub-paragraph (k) is re- lettered as sub-paragraph (l) and a new sub-paragraph (k) is added to read: "(k) An extraordinary situation shall have arisen under which any further withdrawals under the Loan would be inconsistent with the provisions of Article III, Section 3 of the Bank's Articles of Agreement." Section 1.02. Unless the context otherwise requires, the several terms defined in the General Conditions have the respective meanings therein set forth and the term "Special Account" means the account referred to in Section 2.02 (b) of this Agreement. 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 the Loan Agreement, various currencies that shall have an aggregate value equivalent to the amount of four hundred fifty million dollars ($450,000,0- 00), being the sum of withdrawals of the proceeds of the Loan, with each withdrawal valued by the Bank as of the date of such withdrawal. Section 2.02. (a) The amount of the Loan may be withdrawn from the Loan Account in accordance with the provisions of Schedule 1 to this Agreement for expendi- tures 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. (b) The Borrower shall, for the purposes of the Project, open and maintain in dollars a special deposit account in State Bank of India on terms and conditions satisfactory to the Bank, including appropriate protec- tion against set-off, seizure or attachment. 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 Decem- ber 31, 1995 or such later date as the Bank shall establish. The Bank shall promptly notify the Borrower and the Guarantor of such later date. Section 2.04. The Borrower shall pay to the Bank a commitment charge at the rate of three-fourths of one Page 3 percent (3/4 of 1%) per annum on the principal amount of the Loan not withdrawn from time to time. Section 2.05. (a) The Borrower shall pay interest on the principal amount of the Loan withdrawn and outstanding from time to time, at a rate for each Interest Period equal to the Cost of Qualified Borrowings determined in respect of the preceding Semester, plus one-half of one percent (1/2 of 1%). On each of the dates specified in Section 2.06 of this Agreement, the Borrower shall pay interest accrued on the principal amount outstanding during the preceding Interest Period, calculated at the rate applicable during 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 determined in respect of such Semester. (c) For the purposes of this Section: (i) "Interest Period" means a six-month peri- od ending on the date immediately preced- ing each date specified in Section 2.06 of this Agreement, beginning with the Interest Period in which this Agreement is signed. (ii) "Cost of Qualified Borrowings" means the cost, as reasonably determined by the Bank and expressed as a percentage per annum, of the outstanding borrowings of the Bank drawn down after June 30, 1982, excluding such borrowings or portions thereof as the Bank has allocated to fund: (A) the Bank's investments; and (B) loans which may be made by the Bank after July 1, 1989 bearing interest rates de- termined otherwise than as provided in paragraph (a) of this Section. (iii) "Semester" means the first six months or the second six months of a calendar year. (d) On such date as the Bank may specify by no less than six months' notice to the Borrower, paragraphs (a), (b) and (c) (iii) of this Section shall be amended to read as follows: "(a) The Borrower shall pay interest on the principal amount of the Loan withdrawn and outstanding from time to time, at a rate for each Quarter equal to the Cost of Qualified Borrowings determined in respect of the pre- ceding Quarter, plus one-half of one percent (1/2 of 1%). On each of the dates specified in Section 2.06 of this Agreement, the Borrower shall pay interest accrued on the principal amount outstanding during the preceding Inter- est Period, calculated at the rates applicable during such Interest Period." "(b) As soon as practicable after the end of each Quarter, the Bank shall notify the Borrower and the Guarantor of the Cost of Qualified Borrowings determined in respect of such Quarter." "(c) (iii) `Quarter' means a three-month period commencing on January 1, April 1, July 1 or October 1 in a calendar year." Page 4 Section 2.06. Interest and other charges shall be payable semiannually on March 15 and September 15 in each year. Section 2.07. The Borrower shall repay the princi- pal amount of the Loan in accordance with the amortiza- tion schedule set forth in Schedule 3 to this Agreement. ARTICLE III Execution of the Project Section 3.01. 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 with due diligence and efficiency and in conformity with appropriate administrative, financial and engineering practices, and shall provide, promptly as needed, the funds, facilities, services and other resources required for the Project. Section 3.02. Except as the Bank 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 Loan shall be governed by the provisions of Schedule 4 to this Agreement. Section 3.03. The Borrower shall carry out by March 31, 1992: (i) a safety engineering study of existing platforms linked to facilities that will be constructed under the Project; and (ii) a safety audit for its entire offshore operations and shall review the results of said study and the audit with the Bank and shall, thereafter, implement the recommendations. 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 and financial 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. Section 4.04. The Borrower shall retain the services of a financial advisor for mobilizing foreign exchange resources required for the Project. Section 4.05. The Borrower shall establish and maintain Project Implementation Units for each Part A, B, D and E of the Project and a Project Coordinator for the whole Project. Section 4.06. The Borrower shall carry out by December 31, 1991 a review of its procurement and project implementation organization, discuss the results of said Page 5 review with the Bank and, thereafter, implement the recommendations arising from said review. ARTICLE V Financial Covenants Section 5.01. (a) The Borrower shall maintain records and accounts adequate to reflect in accordance with sound accounting practices its operations and financial condition. (b) The Borrower shall: (i) have its records, accounts and financial statements (balance sheets, statements of income and expenses and related state- ments) and the records and accounts for the Special Account for each financial year audited, in accordance with appro- priate auditing principles consistently applied, by independent auditors accept- able to the Bank; (ii) furnish to the Bank as soon as available, but in any case not later than nine months after the end of each such year: (A) certified copies of its financial statements for such year as so audited; and (B) the report of such audit by said auditors, of such scope and in such de- tail as the Bank shall have reasonably requested; and (iii) furnish to the Bank such other in- formation concerning said records, accounts and financial statements as well as the audit thereof as the Bank shall from time to time reason- ably request. (c) For all expenditures with respect to which withdrawals from the Loan Account were made on the basis of statements of expenditure, the Borrower shall: (i) maintain, in accordance with para- graph (a) of this Section, records and accounts reflecting such expenditures; (ii) retain, until at least one year after the Bank has received the audit report for the financial year in which the last withdrawal from the Loan Account or pay- ment out of the Special Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (iii) enable the Bank's representatives to examine such records; and (iv) ensure that such records and accounts are included in the annual audit referred to in paragraph (b) of this Section and that the report of such audit contains a sepa- rate opinion by said auditors as to whet- her the statements of expenditure submit- ted during such financial year, together with the procedures and internal controls involved in their preparation, can be relied upon to support the related with- drawals. Page 6 (d) Notwithstanding the foregoing provisions of this Section, the unaudited financial statements shall be furnished to the Bank not later than six months after end of each financial year. Section 5.02. Except as the Bank shall otherwise agree, the Borrower shall: (a) not incur any debt, unless the net revenues of the Borrower for the financial year immediately preceding the date of such incurrence or for a later twelve-month period ended prior to the date of such incurrence, whichever is the greater, shall be at least 1.5 times the estimated maximum debt service requirements of the Borrower for any succeeding financial year on all debt of the Borrower, including the debt to be incurred; (b) not incur any debt, if after the incurrence of such debt the ratio of debt to equity shall be greater than 1 to 1.5; and (c) maintain a ratio of current assets to current liabilities of not less than 1.2. (d) For the purposes of this Section: (i) The term "debt" means any indebtedness of the Borrower maturing by its terms more than one year after the date on which it is originally incurred. (ii) Debt shall be deemed to be incurred: (A) under a loan contract or agreement or other instrument providing for such debt or for the modification of its terms of payment on the date of such contract, agreement or instrument; and (B) under a guarantee agreement, on the date the agreement providing for such guarantee has been entered into. (iii) The term "net revenues" means the differ- ence between: (A) the sum of revenues from all sources related to operations adjusted to take account of the Borrower's rates in effect at the time of the incurr- ence of debt even though they were not in effect during the twelve- month period to which such revenues relate and net non-operating income; and (B) the sum of all expenses related to operations including administration, adequate maintenance, taxes and payments in lieu of taxes, but ex- cluding provision for depreciation, other non-cash operating charges and interest and other charges on debt. (iv) The term "net non-operating income" means the difference between: (A) revenues from all sources other than those related to opera- tions; and (B) expenses, including taxes and payments in lieu of taxes, in- curred in the generation of Page 7 revenues in (A) above. (v) The term "debt service requirements" means the aggregate amount of repayments (including sinking fund payments, if any) of, and interest and other charges on, debt. (vi) The term "equity" means the sum of the total unimpaired paid-up capital, re- tained earnings and reserves of the Bor- rower not allocated to cover specific liabilities. (vii) The term "current assets" means cash, all assets which could in the ordinary course of business be converted into cash within twelve months, including accounts receiv- able, marketable securities, inventories and pre-paid expenses properly chargeable to operating expenses within the next financial year. (viii) The term "current liabilities" means all liabilities which will become due and payable or could under circumstances then existing be called for payment within twelve months, including accounts pay- able, customer advances, debt service requirements, taxes and payments in lieu of taxes, and dividends. (ix) Whenever for the purposes of this Section it shall be necessary to value, in terms of the currency of the Guarantor, debt payable in another currency, such valua- tion shall be made on the basis of the prevailing lawful rate of exchange at which such other currency is, at the time of such valuation, obtainable for the purposes of servicing such debt, or, in the absence of such rate, on the basis of a rate of exchange acceptable to the Bank. Section 5.03. (a) Before March 31 in each of its financial years, the Borrower shall, on the basis of forecasts prepared by the Borrower and satisfactory to the Bank, review whether it would meet the requirements set forth in Section 5.02 of this Agreement in respect of such year and the next following financial year and shall furnish to the Bank the results of such review upon its completion. (b) If any such review shows that the Borrower would not meet the requirements set forth in Section 5.02 of this Agreement for the Borrower's financial years covered by such review, the Borrower shall promptly take all necessary measures (including, without limitation, adjustments of the structure or levels of its rates) in order to meet such requirements. Section 5.04. the Borrower shall exchange views with the Bank annually on the Borrower's investment program as well as the implications of said program on its financial position. ARTICLE VI Remedies of the Bank Section 6.01. Pursuant to Section 6.02 (l) of the Page 8 General Conditions, the following additional events are specified: (a) The Oil and Natural Gas Commission Act, 1959 of the Guarantor, as amended to the date of this Agreement, shall have been amended, suspended, abrogated, repealed or waived so as to affect materially and adversely the ability of the Borrower to perform any of its obligations under this Agreement; and (b) A subsidiary shall have been created or acquired by the Borrower, if such creation or acquisition will affect materially and adversely the conduct of the Borrower's business or its financial condition or the performance of its obligations under this Agreement. Section 6.02. Pursuant to Section 7.01 (h) of the General Conditions, the following additional event is specified, namely, that any event specified in Section 6.01 of this Agreement shall occur. ARTICLE VII Effective Date; Termination Section 7.01. The following events are specified as additional conditions of the effectiveness of the Loan Agreement within the meaning of Section 12.01 (c) of the General Conditions: (a) domestic and foreign oil companies have been invited to participate in the fourth round of bidding for the on-shore and off-shore parcels of acreage selected by the Guarantor for exploration; (b) the agency referred to in Section 3.02 of the Guarantee Agreement has been established; and (c) the Borrower has obtained environmental clearance for all components of the Project. Section 7.02. The date ninety (90) days after the date of this Agreement is hereby specified for the purposes of Section 12.04 of the General Conditions. ARTICLE VIII Representative of the Borrower; Addresses Section 8.01. The Chairman of the Borrower is designated as representative of the Borrower for the purposes of Section 11.03 of the General Conditions. Section 8.02. The following addresses are specified for the purposes of Section 11.01 of the General Condi- tions: 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 248423 (RCA) Washington, D.C. 82987 (FTCC) 64145 (WUI) or 197688 (TRT) Page 9 For the Borrower: Chairman Oil and Natural Gas Commission Tel Bhavan Dehra Dun, U.P. India Cable address: Telex: COMONG 0585-206 Dehra Dun 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. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By /s/ Heinz Vergin Acting Regional Vice President Asia OIL AND NATURAL GAS COMMISSION By /s/ Anil Kumar Authorized Representative 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 expenditures 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) Process facilities and pipeline systems: (a) equipment and 325,000,000 100% of foreign materials expenditures and 100% of local expenditures (ex-factory cost) (b) erection/ 90,000,000 100% of foreign installation expenditures and and rig hire 90% of local expenditures (c) supervision 10,000,000 100% and specialized Page 10 services (2) Consultants' 5,000,000 100% services and training (3) Unallocated 20,000,000 ___________ TOTAL 450,000,000 =========== 2. For the purposes of this Schedule: (a) the term "foreign expenditures" means expendi- tures 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 expendi- tures in the currency of the Borrower or for goods and 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, except that withdrawals, in an aggregate amount not exceeding the equivalent of $45,000,000, may be made on account of payments made for expenditures before that date but after October 31, 1990. SCHEDULE 2 Description of the Project The objectives of the Project are to: (i) improve the management of the Bombay High reservoir; (ii) eliminate flaring of associated gas in the Bombay High oil field; (iii) reduce energy shortages in the Western Region of India; and (iv) promote private participation in Oil and Gas Sector in India. The Project consists of the following parts, subject to such modifications thereof as the Borrower and the Bank may agree upon from time to time to achieve such objectives: Part A: SHG Process Platform The construction of a process platform in the southern sector of the Bombay High oil field with a processing capacity of 100,000 barrels (bbl) of oil per day, 15 MMCMD of gas and 140,000 bbl of water per day, including a 78 kilometer (km) pipeline with a diameter of 28 inches to the BPB platform at South-Bassein. Part B: NQP Process Platform The construction of a process platform in the northern sector of the Bombay High oil field, with a processing capacity of 60,000 bbl of oil per day, 6.8 MMCMD of gas and 30,000 bbl of water per day, including a 30 km pipeline with a diameter of 18 inches to the BHN - Uran gas trunk pipeline. Part C: Existing Platforms The carrying out of modifications of existing platforms. Page 11 Part D: Pipelines 1. The construction of a 26"-36" gas pipeline, from the existing process platform, ICP, in the southern sector of the Bombay High oil field to the Heera - Uran trunk pipeline of about 140 km. 2. The construction of a 42" trunk gas pipeline from South - Bassein to Hazira of about 250 km. Part E: Hazira Gas Terminal The expansion of existing Hazira gas terminal. Part F: Reservoir Management The carrying out of a program of Bombay High reservoir management, including the hire of rigs. Part G: Consultant Services The utilization of consultants services for engi- neering, project management and other implementation activities. Part H: Studies and Training The carrying out of reservoir performance and management studies, and training. Part I: Environmental Measures The implementation of a package of measures to reduce the environmental risk and enhance the safety of offshore operations. * * * The Project is expected to be completed by June 30, 1995. SCHEDULE 3 Amortization Schedule Payment of Principal Date Payment Due (expressed in dollars)* March 15, 1997 8,205,000 September 15, 1997 8,525,000 March 15, 1998 8,855,000 September 15, 1998 9,195,000 March 15, 1999 9,550,000 September 15, 1999 9,920,000 March 15, 2000 10,305,000 September 15, 2000 10,700,000 March 15, 2001 11,115,000 September 15, 2001 11,545,000 March 15, 2002 11,990,000 September 15, 2002 12,455,000 March 15, 2003 12,935,000 September 15, 2003 13,435,000 March 15, 2004 13,955,000 September 15, 2004 14,495,000 March 15, 2005 15,055,000 September 15, 2005 15,635,000 March 15, 2006 16,240,000 September 15, 2006 16,870,000 March 15, 2007 17,520,000 September 15, 2007 18,195,000 Page 12 March 15, 2008 18,900,000 September 15, 2008 19,630,000 March 15, 2009 20,390,000 September 15, 2009 21,175,000 March 15, 2010 21,995,000 September 15, 2010 22,845,000 March 15, 2011 23,730,000 September 15, 2011 24,640,000 _____________________________ * The figures in this column represent dollar equiva- lents determined as of the respective dates of withdrawal. See General Conditions, Sections 3.04 and 4.03. Premiums on Prepayment Pursuant to Section 3.04 (b) of the General Condi- tions, the premium payable on the principal amount of any maturity of the Loan to be prepaid shall be the percent- age specified for the applicable time of prepayment below: Time of Prepayment Premium The interest rate (ex- pressed as a percentage per annum) applicable to the Loan on the day of prepayment multi- plied by: Not more than three years 0.15 before maturity More than three years but 0.30 not more than six years before maturity More than six years but 0.55 not more than 11 years before maturity More than 11 years but not 0.80 more than 16 years before maturity More than 16 years but not 0.90 more than 18 years before maturity More than 18 years before 1.00 maturity SCHEDULE 4 Procurement and Consultants' Services Section I. Procurement of Goods and Works Part A: International Competitive Bidding Goods 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 May 1985 (the Guidelines). Part B: Preference for Domestic Manufacturers In the procurement of goods in accordance with the Page 13 procedures described in Part A hereof, goods manufactured in India may be granted a margin of preference in accordance with, and subject to, the provisions of paragraphs 2.55 and 2.56 of the Guidelines and paragraphs 1 through 4 of Appendix 2 thereto. Part C: Review by the Bank of Procurement Decisions 1. Review of invitations to bid and of proposed awards and final contracts: (a) With respect to each contract, 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 proce- dures shall be modified to ensure that the two conformed copies of the contract required to be furnished to the Bank pursuant to said paragraph 2 (d) shall be furnished to the Bank prior to the making of the first payment out of the Special Account in respect of such contract. (b) The provisions of the preceding subparagraph (a) shall not apply to contracts on account of which the Bank has authorized withdrawals on the basis of state- ments of expenditure. 2. The figure of 15% is hereby specified for purposes of paragraph 4 of Appendix 1 to the Guidelines. Section II. Employment of Consultants In order to assist the Borrower in carrying out of the Project, the Borrower shall employ consultants whose qualifi- cations, experience and terms and conditions of employment shall be satisfactory to the Bank. Such consultants shall be selected in accordance with princi- ples and procedures satisfactory to the Bank 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. SCHEDULE 5 Special Account 1. For the purposes of this Schedule: (a) the term "eligible Categories" means Categories (1) and (2) set forth in the table in paragraph 1 of Schedule 1 to this Agreement; (b) the term "eligible expenditures" means expendi- tures in respect of the reasonable cost of goods and services required for the Project and to be financed out of the proceeds of the Loan allocated from time to time to the eligible Categories in accordance with the provisions of Schedule 1 to this Agreement; and (c) the term "Authorized Allocation" means an amount equivalent to $35,000,000 to be withdrawn from the Loan 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 exclusively for eligible expenditures in accordance with the provisions of this Schedule. 3. After the Bank has received evidence satisfactory to it that the Special Account has been duly opened, withdrawals of the Authorized Allocation and subsequent withdrawals to replenish the Special Account shall be made as follows: Page 14 (a) For withdrawals of the Authorized Allocation, the Borrower shall furnish to the Bank a request or requests for a deposit or deposits which do not exceed the aggregate amount of the Authorized Allocation. On the basis of such request or requests, the Bank shall, on behalf of the Borrower, withdraw from the Loan Account and deposit in the Special Account such amount or amounts as the Borrower shall have requested. (b) (i) For replenishment of the Special Account, the Borrower shall furnish to the Bank requests for deposits into the Special Account at such intervals as the Bank shall specify. (ii) Prior to or at the time of each such request, the Borrower shall furnish to the Bank the documents and other evidence required pursuant to paragraph 4 of this Schedule for the payment or payments in respect of which replenishment is re- quested. On the basis of each such re- quest, the Bank shall, on behalf of the Borrower, withdraw from the Loan Account and deposit into the Special Account such amount as the Borrower shall have re- quested and as shall have been shown by said documents and other evidence to have been paid out of the Special Account for eligible expenditures. All such deposits shall be withdrawn by the Bank from the Loan Account under the respective eligible Categories, and in the respective equivalent amounts, as shall have been justified by said documents and other evidence. 4. For each payment made by the Borrower out of the Special Account, the Borrower shall, at such time as the Bank shall reasonably request, furnish to the Bank such documents and other evidence showing that such payment was made exclusively for eligible expenditures. 5. Notwithstanding the provisions of paragraph 3 of this Schedule, the Bank shall not be required to make further deposits into the Special Account: (a) if, at any time, the Bank shall have determined that all further withdrawals should be made by the Borrower directly from the Loan Account in accordance with the provisions of Article V of the General Condi- tions and paragraph (a) of Section 2.02 of this Agree- ment; or (b) once the total unwithdrawn amount of the Loan allocated to the eligible Categories, less the amount of any outstanding special commitment entered into by the Bank pursuant to Section 5.02 of the General Conditions with respect to the Project, shall equal the equivalent of twice the amount of the Authorized Allocation. Thereafter, withdrawal from the Loan Account of the remaining unwithdrawn amount of the Loan allocated to the eligible Categories shall follow such procedures as the Bank shall specify by notice to the Borrower. Such further withdrawals shall be made only after and to the extent that the Bank shall have been satisfied that all such amounts remaining on deposit in the Special Account as of the date of such notice will be utilized in making payments for eligible expenditures. Page 15 6. (a) If the Bank shall have determined at any time that any payment out of the Special Account: (i) was made for an expenditure or in an amount not eligible pursuant to paragraph 2 of this Schedule; or (ii) was not justi- fied by the evidence furnished to the Bank, the Borrower shall, promptly upon notice from the Bank: (A) provide such additional evidence as the Bank may request; or (B) deposit into the Special Account (or, if the Bank shall so request, refund to the Bank) an amount equal to the amount of such payment or the portion thereof not so eligible or justified. Unless the Bank shall otherwise agree, no further deposit by the Bank into the Special Account shall be made until the Borrower has provided such evidence or made such deposit or refund, as the case may be. (b) If the Bank shall have determined at any time that any amount outstanding in the Special Account will not be required to cover further payments for eligible expenditures, the Borrower shall, promptly upon notice from the Bank, refund to the Bank such outstanding amount. (c) The Borrower may, upon notice to the Bank, refund to the Bank all or any portion of the funds on deposit in the Special Account. (d) Refunds to the Bank made pursuant to paragraphs 6 (a), (b) and (c) of this Schedule shall be credited to the Loan Account for subsequent withdrawal or for cancellation in accordance with the relevant provisions of this Agreement, including the General Conditions.