Madagascar - Tsimiroro Heavy Oil Exploration Project : Credit 1298 - Project Agreement - Conformed

CREDIT NUMBER 1298 MAG DDOUMENTS-1 Proj ect Agreement (Tsimiroro Heavy Oil Exploration Project) between INTERNATIONAL DEVELOPMENT ASSOCIATION and OFFICE MILITAIRE NATIONAL POUR LES INDUSTRIES STRATEGIQUES Dated rLe , 2 . 1982 CREDIT NUMBER 1298 MAG PROJECT AGREEMENT AGREEMENT, dated 0-p- , 1982, between INTERNATIONAL DEVELOPMENT ASSOCIATION (hereinafter called the Association) and OFFICE MILITAIRE NATIONAL POUR LES INDUSTRIES STRATEGIQUES (hereinafter called OMNIS). WHEREAS by the Development Credit Agreement of even date herewith between Democratic Republic of Madagascar (hereinafter called the Borrower) and the Association, the Association has agreed to make available to the Borrower an amount in various currencies equivalent to ten million seven hundred thousand Special Drawing Rights (SDR 10,700,000), on the terms and condi- tions set forth in the Development Credit Agreement, but only on condition that OMNIS agree to undertake such obligations toward the Association as are hereinafter set forth; and WHEREAS OMNIS, in consideration of the Association's enter- ing into the Development Credit Agreement with the Borrower, has agreed to undertake the obligations hereinafter set forth; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I Definitions Section 1.01. Wherever used in this Agreement, unless the context shall otherwise require, the several terms defined in the Development Credit Agreement and in the General Conditions (as so defined) have the respective meanings therein set forth. ARTICLE II Execution of the Project Section 2.01. OMNIS shall carry out the Project described in Schedule 2 to the Development Credit Agreement with due diligence and efficiency and in conformity with appropriate administrative, financial, engineering and petroleum exploration practices. Section 2.02. In order to assist OMNIS in carrying out the Project, OMNIS shall employ consultants whose selection, qualifi- cations, experience and terms and conditions of employment shall -2 - be satisfactory to the Association in accordance with the princi- ples and procedures described in the "Guidelines for the Use of Consultants by World Bank Borrowers and by the World Bank as Exe- cuting Agency" published by the Bank in August 1981. Section 2.03. Except as the Association shall otherwise agree, procurement of the drilling and testing services required for the Project and to be financed out of the proceeds of the Credit shall be governed by the provisions of the Schedule to this Agreement. Section 2.04. (a) OMNIS undertakes to insure, or make ade- quate provision for the insurance of, the imported goods to be financed out of the proceeds of the Credit made available to it by the Borrower against hazards incident to the acquisition, transportation and delivery thereof to the place of use or in- stallation, and for such insurance any indemnity shall be payable in a currency freely usable by OMNIS to replace or repair such goods. (b) OMNIS shall cause all goods and services financed out of the proceeds of the Credit made available to it by the Bor- rower to be used exclusively for the purposes of the Project. Section 2.05 (a) OMNIS shall furnish to the Association, promptly upon their preparation, the plans, specifications, reports, contract documents and procurement schedules for the Project, and any material modifications thereof or additions thereto, in such detail- as the Association shall reasonably request. (b) By March 31, 1983 or such other date as the Association may agree, OMNIS shall furnish to the Association for its approv- al a detailed proposal for the drilling program to be carried out under Part A of the Project, and OMNIS shall change the location of any wells to be drilled under such Part only after prior ap- proval of such change by the Association. (c) OMNIS shall: (i) maintain records and procedures ade- quate to record and monitor the progress of the Project (includ- ing its cost and the benefits to be derived from it), to identi- fy the goods and services financed out of the proceeds of the Credit, and to disclose their use in the Project; (ii) enable the Association's representatives to visit the facilities and con- struction sites included in the Project and to examine the goods -3- financed out of the proceeds of the Credit and any relevant records and documents; and (iii) 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 expenditures of such proceeds, the goods and services financed out of such proceeds, and, if applicable, any other financing arrangement agreed upon by OMNIS or the Borrower for the Project or a similar project in Tsimiroro. (d) Upon the award by OMNIS of any contract for goods, works or services to be financed out of the proceeds of the Cre- dit, the Association may publish a description thereof, the name and nationality of the party to whom the contract was awarded and the contract price. (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 OMNIS and the Association, OMNIS shall prepare and furnish to the Associa- tion a report, of such scope and in such detail as the Associa- tion shall reasonably request, on the execution and initial oper- ation of the Project, its cost and the benefits derived and to be derived from it, the performance by OMNIS and the Association of their respective obligations under the Project Agreement and the accomplishment of the purposes of the Credit. (f) OMNIS shall enable the Association's representatives to examine all installations, sites, works, buildings, property and equipment of OMNIS and any relevant records and documents. Section 2.06. (a) OMNIS shall, at the request of the Asso- ciation, exchange views with the Association with regard to the progress of the Project, the performance of its obligations under this Agreement and other matters relating to the purposes of the Credit. (b) OMNIS shall promptly inform the Association of any con- dition which interferes or threatens to interfere with the pro- gress of the Project, the accomplishment of the purposes of the Credit, or the performance by OMNIS of its obligations under this Agreement. Section 2.07. By October 31, 1983 OMNIS shall exchange views with the Association on the results achieved through explo- ratory drilling carried out under Part A of the Project, and the Association shall determine whether such results justify finan- cially and economically, the carrying out of Parts B and C of the Project. ARTICLE III Management and Operations of OMNIS Section 3.01. OMNIS shall carry on its operations and con- duct its affairs in accordance with sound administrative, finan- cial and petroleum exploration practices under the supervision of qualified and experienced management assisted by competent staff in adequate numbers. Section 3.02. (a) OMNIS shall at all times operate and main- tain its machinery, equipment and other property, and from time to time, promptly as needed, make all necessary repairs and re- newals thereof, all in accordance with sound engineering, finan- cial and petroleum exploration practices. (b) OMNIS shall take all steps necessary to acquire, main- tain and renew all licenses, consents and other rights as may be necessary or useful in the conduct of its business. (c) OMNIS shall: (i) obtain title to all goods financed in whole or in part out of the proceeds of the Credit free and clear of all encumbrances; and (ii) not sell, lease, transfer or other- wise dispose of any of its property and assets except in the ordinary course of business. Section 3.03. OMNIS shall take out and maintain with respon- sible insurers, or make other provisions satisfactory to the Association for, insurance against such risks and in such amounts as shall be consistent with appropriate practice. Section 3.04. Until the completion of the Project, OMNIS shall exchange views from time to time with the Association on petroleum exploration activities in the Borrower's territory. ARTICLE IV Financial Covenants Section 4.01. OMNIS shall maintain records adequate to reflect in accordance with consistently maintained appropriate accounting practices its operations and financial condition. -5- Section 4.02. ONIS shall: (i) have its accounts and finan- cial statements (balance sheets, statements of income and ex- penses and related statements) 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) certif'ed 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 detail as the Association shall have rea- sonably requested; and (iii) furnish to the Association such other information concerning the accounts and financial state- ments of OMNIS and the audit thereof as the Association shall from time to time reasonably request. Section 4.03. Except as the Association shall otherwise agree, all proceeds collected by OMNIS from the sale of reports, studies, data or other information resulting from activities carried out under the Project, shall be retained in a separate account to be kept by OMNIS in order to be utilized for the financing of further exploration activities. ARTICLE V Effective Date; Termination; Cancellation and Suspension Section 5.01. This Agreement shall come into force and effect on the date upon which the Development Credit Agreement becomes effective. Section 5.02. (a) This Agreement and all obligations of the Association and of OMNIS thereunder shall terminate on the ear- lier of the following two dates: (i) the date on which the Development Credit Agreement shall terminate in accordance with its terms; or (ii) a date 25 years after the date of this Agreement. (b) If the Development Credit Agreement terminates in ac- cordance with its terms before the date specified in paragraph (a) (ii) of this Section, the Association shall promptly notify OMNIS of this event. - 6 - Section 5.03. All the provisions of this Agreement shall continue in full force and effect notwithstanding any cancella- tion or suspension under the General Conditions. ARTICLE VI Miscellaneous Provisions Section 6.01. Any notice or request required or permitted to be given or made under this Agreement and any agreement between the parties contemplated by this Agreement shall be in writing. Such notice or request shall be deemed to have been duly given or made when it shall be delivered by hand or by mail, telegram, cable, telex or radiogram to the party to which it is required or permitted to be given or made at such party's address hereinafter specified or at such other address as such party shall have designated by notice to the party giving such notice or making such request. The addresses so specified are: 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) For OMNIS: Office Militaire National pour les Industries Strategiques 21, Lalana Razanakombana B.P. 1 Bis Antananarivo, Madagascar Cable address: Telex: OMNIS Antananarivo 22 370 - 7 - Section 6.02. Any action required or permitted to be taken, and any document required or permitted to be executed, under this Agreement on behalf of OMNIS may be taken or executed by the Director General of OMNIS or such other person or persons as the Director General of OMNIS shall designate in writing, and OMNIS shall furnish to the Association sufficient evidence of the authority and the authenticated specimen signature of each such person. Section 6.03. This Agreement may be executed in several counterparts, each of which shall be an original, and all col- lectively but one instrument. IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, have caused this Agreement to be signed in their respective names in the District of Columbia, United States of America, as of the day and year first above written. INTERNATIONAL DEVELOPMENT ASSOCIATION By Regional Vice President Eastern Africa OFFICE MILITAIRE NATIONAL POUR LES INDUSTRIES STRATEGIQUES By Authorized Representative -8- SCHEDULE Procurement A. International Competitive Bidding 1. Drilling and testing services for Part A of the Project, including the provision of tangibles and consumables, shall be procured under a contract awarded in accordance with procedures consistent with those set forth in the current edition of the "Guidelines for Procurement under World Bank Loans and IDA Cre- dits" published by the Bank in March 1977 (hereinafter called the Guidelines), on the basis of international ,ompetitive bidding as described in Part A of the Guidelines. 2. For drilling and testing services to be procured on the basis of international competitive bidding, in addition to the requirements of paragraph 1.2 of the Guidelines, OMNIS shall pre- pare and forward to the Association as soon as possible, and in any event not later than 60 days prior to the date ot availabili- ty to the public of the first tender, a general procurement notice, in such form and detail and containing such information as the Association shall reasonably request; the Association will arrange for the publication of such notice in order to provide timely notification to prospective bidders of the opportunity to bid for the works in question. OMNIS shall provide the necessary information to update such notice annually so long as any dril- ling or testing services remain to be procured on the basis of international competitive bidding. B. Review of Procurement Decisions by the Association 1. Review of invitations to bid and of proposed awards and final contracts: With respect to the contract awarded for the carrying out of Part A of the Project: (a) Before bids are invited, OMNIS 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 docu- ments 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 prospec- tive bidders. (b) After bids have been received and evaluated, OMNIS 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 Lhe intended award would be incon- sistent with the Guidelines or this Schedule, promptly inform OMNIS 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. (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, OMNIS shall furnish to the Association, promptly after its execution and prior to the submission to the Association 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 Asso- ciation 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 OMNIS and state the reasons for such determination. 3. Before agreeing to any material modification or waiver of the terms and conditions of a contract, or granting an extension of the stipulated time for performance of such contract, or issuing any change order under such contract (except in cases of extreme urgency) which would increase the cost of the contract by more than 15% of the original price, OMNIS shall inform the - 10 - 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 OMNIS 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 hereof I have signed thi3 Certifi- cate and affixed the Seal of the Association thereunto the day of 198 . FOR SECRETARY