Request for Expressions of Interest

(CONSULTING SERVICES – FIRMS SELECTION)

Country: Islamic Emirate of Afghanistan

Name of Project: Financial Settlement the Amu Darya Basin.

Project ID: MoMP-03-CS-QCBS-1404

Duration of Assignment: 6/month

Implementing Agency: Ministry of Mines and Petroleum

Duty Station: Sari Pul Province

Contract Type: Time Base

Reference No. MoMP-03-CS-QCBS-1404

Brief of the Assignment

1. Background:

According to the Amu Darya Basin EPSC contract, when the contract expires or is terminated, financial settlement is required to finalize all related legal, financial, and accounting matters. This TOR provides a principled, technical, and documented framework for the full, transparent, and legal implementation of financial settlement, so that the rights and responsibilities of both parties (the Ministry and the contractor) are clarified and guaranteed.

2. Objectives of Assignment:

Settlement of all financial accounts upon termination of the contract.

3. Determination and settlement of government rights (Royalty, Tax, Fees) according to the contract.

4. Recoverable Costs and settlement of remaining rights of the government company according to the contract.

5. Calculation and agreement of the government's environmental remediation costs according to the contract.

6. Preparation of a formal and final financial agreement (Final Settlement Agreement) between both parties.

1. Scope of the Services

Technical & Production Evaluation

Principles of Financial Settlement

Types of Financial Settlement:

Outstanding accounts under the contract:

• Ministry's share in Royalty as per Article 10.1(b) of the Contract.

• Taxes, According to Article 16 of the contract and the Tax Law.

• Surface Rental Fees: According to Article 14 of the Contract

• Custom Duties: According to Article 17

• Other fees such as Administrative Fees, Training Fees, Social Obligations

Settlement of expenses of the contracting company: (Cost Recovery):

• Operating expenses for exploration, development and production.

• Capital expenditure (Capex).

• Account for unclaimed or unspent funds of the contracting company.

• Reform and environmental cleanup costs

Cost Recovery of the Contractor Company:

• Operating expenses including exploration, development, production.

• Capital expenditure (Capex).

• Account for unclaimed or unspent funds of the contracting company.

• Reform and environmental cleanup costs

Settlement of environmental costs:

• Site cleanup and restoration costs (Decommissioning, Abandonment).

• Compensation for Environmental Damages.

Financial Settlement Process:

Documentation & Review

• Receive all expenses, income, and reports

• Analysis of achievements and obligations according to the contract materials

• Bank documents, payment documents, customs documents, tax certificates.

Account Reconciliation:

• All income received and paid by the company should be assessed.

• Implementation and settlement of government rights (Taxes, Royalty, Fees).

• Approval of company expenses.

• Rejection of non-recoverable costs.

Environmental Cost Review:

• Documentation of improvement plans.

• Verification and settlement of rectification costs.

• Environmental damage compensation analysis.

Preparation of the Final Financial Report:

• Detailed report of all settled accounts.

• Government revenue.

• Company receivables.

• Details of outstanding expenses and liabilities

Final Settlement Agreement:

• Signature by both parties.

• Approval from the bank, tax authorities, and relevant government bodies.

Financial Settlement Team:

(Deliverables):

(Timeline):

(Outcome):

1. All financial accounts are settled transparently upon termination of the contract.

2. Government rights (taxes, fees, royalties) should be received.

3. company's rights (unclaimed funds) should be settled.

4. There must be a formal agreement between both parties.

5. costs of environmental improvements should be clear and transparent.

Steps required for financial settlement on Cash Bases Accounting:

1. Audit and verification of all cash accounts

• Preparation of an accurate list of all cash receipts and expenditures.

• Collection of supporting documents (receipts, bank statements, payments order) of each expense and income.

• Recording of date, amount, purpose, and its account relation

2. Outstanding settlements:

• Only expenses paid in cash will be counted

• If any contract or promised money has not been paid, it will not be counted.

• Record the date, amount, purpose, and relationship with each account.

3. Analysis and settlement of the Ministry's (Royalty, Taxes, Fees):

• Only fees, taxes, and royalties paid in cash will be available.

• All payment receipts of Ministry must be collected and verified.

4. Company Recoverable Costs:

• Costs will be calculated that are paid in cash and are recoverable according to the contract.

• Compliance with the contract “R Factor Expenditure Account “recoverable cost must be verified

5. Environmental Cost Analysis:

• Only repairs and cleaned costs that have actually been paid for, will be counted

• Only accurate and real expenses will be counted as actual payments.

6. Preparation of financial report and accounts:

• Final financial report that covers all cash flow receives and paid records

• Documentation of all stages of the settlement

• Certification from both parties (Ministry and Company)

7. Payments with Compliance to legal principles:

• All payments must be made in US dollars (USD).

8. Rights to Audit accounts:

• The Ministry has the right to inspect all cash documents, receipts, and contracts.

• According to exhibit C, article III of contract, Ministry has the right to audit and inspect

9. As a result:

• In cash basis accounting, only the money that has been exchanged is counted for financial settlement.

For the financial settlement it is necessary to:

1. Collect all cash documents

2. All contracts, which cash payments has not been made, shall be set aside

3. There should be a transparent understanding between the Ministry and contracted company

1. General Principles of Cash Basis Accounting:

Cash Basis Accounting records only those expenses and revenues that are paid or received in cash.

However, whether these expenses are considered expenses or assets depends on the specific principles of the contract and the hydrocarbon sector.

2. EPSC Contract and Asset Registration Principle:

In the Amu Darya EPSC contract, the exploration, development, and production phase costs and assets are categorized as follows:

1. Recoverable Expenses:

• Expenses incurred by the company and permitted by the Ministry to recover them under the contract.

• Expenses are including:

• Expenses for research, survey, and drilling (Exploration & Drilling).

• Administrative and operational expenses

• Environmental protection expense

2. Capital Assets:

• Equipment’s, tools and machinery that have been purchased for long term operation:

• The assets which are not owned by the company, but are purchased for the government and used for production.

• Based on the contract, the recoverable assets, which the company can recover the cost of its investment.

Such as Drilling rigs

3. If the company purchase a drilling rig:

3. Summary:

3. Important points:

1. Cash bases accounting means, that cash transactions are recorded, but this does not mean that all expenses well be considered as an expense.

2. Based on the contract assets and expenses would be separated.

3. Assets purchased for long-term use (such as drilling rigs, machinery) are considered capital, have a recoverable cost, and are part of the asset list during financial settlement.

4. During the processes, these assets will be transferred to the Ministry and the contractor will have the right to recover its costs.

5. Result:

• Drilling rigs and other similar equipment are not considered consumables, but rather assets.

• These assets are recoverable according to the contract, meaning the company will get the money back.

• Cash Basis will be recorded only at the time of cash payment, but will be calculated and transferred to capital during accounting and settlement.

✅1. Contractor Subcontractor:

When a main contractor offers its operations (such as drilling, surveying, logistics, construction work), to subcontractor

these contracts are generally as follows:

✅2. (EPSC) contract from the prospective view of property:

If the equipment is owned by a subsidiary and has provided only service to the parent company:

• Only the service will be considered a recoverable expense of the original company under the contract.

• The tools and equipment used by the subsidiary do not become the property of the ministry.

• It means that The ministry only pays for the service, not the ownership of the equipment.

Important principle of contract:

"Assets which are purchased directly by the Contractor for use in Petroleum Operations and whose cost is recoverable, shall be transferred to the Ministry upon contract termination, Based on the contract.

• The target here is the equipment purchased by the parent company, not those brought in by the subsidiary.

• That is, if the equipment is not owned by the original company and is only part of the service, it is not transferred to the ministry.

✅ 3. (International Best Practices):

✅ 4. Detail of properties and functions based on the EPSC

Recoverable Costs:

• the costs (such as drilling services) that the ministry will reimburse.

Transferred Assets:

• the assets (equipment, facilities) that the original company purchased and that become the property of the ministry according to the contract.

• if the equipment was not purchased by the parent company, but was used in services by a subsidiary, it does not become the property of the ministry.

✅ 5. The Ministry's position during financial settlement:

1. Only those assets (equipment, equipment, facilities) that the parent company has purchased are owned by the ministry.

2. Service contracts (such as drilling, surveying) if the subsidiary's equipment is used, only the service is counted, the equipment is not transferred.

3. The Ministry should request a complete list of purchased equipment from the original company.

4. The Subcontractor equipment must be separated from services.

✅6. Result and example:

✅7. summary:

• Equipment used by the subsidiary solely for services is not considered the property of the Ministry.

• Only assets that the parent company has purchased and used for operations are transferred to the ministry.

• Services are considered separate, assets are considered separate

• distinction should be made clear during financial settlement.

• Expertise in technical analysis of Oil and gas exploration, production field equipment and other relevant oil and gas operations.

2. Qualification Requirements/Short listing Criteria

The Ministry of Mines and Petroleum, now invites eligible consulting firms (“Consultants”) to indicate their interest in providing the services described under paragraph 3 above. Interested Consultants should provide information demonstrating that they have the required qualifications and relevant experience to perform the Services.

The short listing criteria are:

1. The Consultant should be registered legal entity and should have been in existence for the last (5) years in providing Consultancy Services of similar or related assignments. The consultant should provide a copy of the certification of incorporation/ business license with its EOI.

2. The consultant shall have an annual turnover of USD 170,000 during last 5 years. The consultant shall demonstrate having sound financial situation and capacity by submitting audited financial reports for last 5(2020 to 2024) years ;

3. The consultant shall also provide proven experiences of having executed at least one contract with the value of USD 100,000 of similar nature and complexity during last5 years. The consultants are required to provide copies of the contract along with clients’ certificate towards completion of such assignments with their EOI.

The Consultant while describing the assignment(s) should furnish the following details:

• Consultant should explain in what way the executed assignment(s) was/were similar in nature to the current assignment and also indicating the input of key experts provided for the same

• The Consultant should explain the exact role played by the Consultant in the assignment if the assignment was carried out in association with other firms as JV or in sub-consultancy for carrying out the assignment.

4. Requirements for Consultants participating as Joint Venture, Consortium or Association:

Consultants may associate with other firms in the form of a joint venture or a sub-consultancy to enhance their qualifications. If consultants intend to associate with other firms, they are advised to clearly identify the lead partner and state the composition and nature of their association (JV/ sub-consultant) in their EOI.

In case associations between the firms are in the form of JV, the following requirements will also apply:

• Only the firm meeting the shortlisting criteria substantially shall act as the Lead Partner of the JV. In case, more than one firm meets the shortlisting criteria substantially, any of the firms may act as the Lead Partner. However, the lead partner needs to be identified in JV agreement or intention of forming JV to be submitted with the EoI.

• Other member(s) of JV also need to have proven experiences of having executed at least one contract of the nature of this assignment during last (5) years, however, the variance in similarity and complexity could be acceptable.

5. Consultant having some regional experience is desirable

6. Declaration by the Consultant that the Consultant is not black-listed by any Government agencies in Afghanistan

7. Declaration by the Consultant that the consultant does not have any conflict of interest in terms of taking any assistance / support from individual / firm / consultants who have been part of the Project… …………….consultancy or the procurement process.

8. Declaration by the Consultant that the information furnished in EoI is correct and for any misrepresentation detected at any stage of selection process or during execution of the resultant contract if successful, the Consultant to be taken up under the Law of the Land.

9. The EOI with all details should, preferably, not exceed 40 pages in total.

3. Legal References

The attention of interested Consultants is drawn to ‘Chapter 4 - Process of Request for Proposal’ of “Rule of Procurement Procedure” issued by Government of Islamic Emirate of Afghanistan. The consultants are also required to maintain high standard ethics throughout the procurement process. The Consultants’ attention is also drawn to Article 16 of Afghanistan Public Procurement Law for compliance. The consultants can download the Public Procurement Law and Procedure from: www.npa.gov.af

4. Method of Selection

A Consultant will be selected in accordance with the QCBS set out in Rule 59 of Procurement Procedures.

5. Submission of EOI

Expressions of interest as per Annexure ‘A’ attached must be delivered in a written form to the address below (in person, by mail, or by e-mail) by 20/June/2025 and Time 14:00 PM (Kabul Local Time).

Further information in respect to this REOI can be obtained at the address below by email or in person during office hours 08:00-04:00 Hours

Attention: Mulavi Mir Muhammad Nabi Burhani

Name of the Procuring Entity: Procurement directorate, Ministry of Mines & Petroleum

Address: Abdul Haque Square, Kabul Afghanistan

Email: sattar.pashtoon@gmail.com copied to syfallhbrhany039@gmail.com

The ToR is accessible through direct link: Click here