JOINT CIRCULAR No. 501/LB REGULATING THE FINANCIAL DISTRIBUTION SYSTEM, CAPITAL MANAGEMENT, AND SETTLEMENT FOR GEOLOGICAL EXPLORATION WORKS

CIRCULAR

JOINT MINISTRY OF FINANCE - GEOLOGICAL GENERAL DEPARTMENT DECREE NO. 501/LB ON DECEMBER 31, 1983 REGULATING THE SYSTEM OF FINANCIAL ISSUANCE, CAPITAL MANAGEMENT AND SETTLEMENT FOR GEOLOGICAL EXPLORATION WORKS

Pursuant to Decision No. 71-CT dated March 11, 1983 of the Council of Ministers on the reform of planning methods and economic accounting for geological exploration work under the Geological General Department, which stipulates that geological tasks reflected in geological schemes (including budgets) shall serve as the basis for planning, financial issuance, settlement, and capital management for geological exploration works.

The Ministry of Finance - Geological General Department hereby regulates and guides the implementation of the system of issuance, payment, settlement, and capital management, which is part of the regulations concerning the planning system, preparation and approval of geological schemes, and acceptance of completed geological work issued in relevant joint circulars.

II- SUPPORT MEASURES FOR STATE-OWNED AGRICULTURAL FARMS AND FORESTRY COMPANIES IN THE FIELD OF SCIENCE AND TECHNOLOGY

1- All geological tasks, including regional geological surveying, resource exploration (referred to as geological exploration), included in the annual plan must be determined from geological schemes (consisting of three parts: geological tasks, construction volume, and budget) established and approved according to the prescribed principles.

Geological schemes can be defined as a single step or divided into multiple steps implemented over several years in accordance with the scheme establishment regulation of the Geological General Department.

The annual geological exploration plan is built based on the approved steps of the schemes. Budgets for each step are developed based on the volume, norms, and prices specified.

2- Capital for payment of geological exploration work is issued when the geological tasks of a scheme step are completed or the entire scheme is completed and accepted according to the current regulations of the Geological General Department.

Geological units implementing geological schemes are entitled to a fixed profit margin of 10% of the budget cost of the scheme and this amount is included in the budget value of the scheme.

3- Survey work and costs for establishing schemes must be approved and recorded in the state plan. Costs for this work according to the approved budget are settled once the geological scheme is completed. If the scheme is approved for execution, the settlement value is considered a completed scheme step and included in the budget value of the scheme; if not approved for execution, it is considered abandoned.

4- Large temporary works required to be depreciated under the economic public service fund are considered a separate step of the entire geological scheme. In case the work serves a specific scheme, its cost is directly charged to that scheme. If serving multiple schemes, the cost is recorded against the main scheme.

5- Capital allocated for payment of completed scheme steps (or schemes) belongs to the economic public service fund and is planned according to the format specified in Section II of this circular.

6- Geological units implementing economic accounting are provided with working capital according to Decision No. 71-CP dated March 11, 1983 of the Council of Ministers.

Pending the regulations on working capital allocation, to promptly implement capital issuance and management according to the schemes, provisional advances will be made initially. The annual advance level for each geological unit will be specifically reviewed by the Ministry of Finance and the Geological General Department.

Provisional advances to units will be processed through local investment construction banks based on the capital transferred by the Ministry of Finance. Each year, the advance level will be reassessed, with excess funds recovered and additional funds provided if needed.

7- Geological tasks undertaken by geological units on behalf of localities or economic units of other sectors are guaranteed funding and settlement according to economic contracts.

The volume value of contracted work must be recorded in the production, technical, and financial plans of the geological unit as a separate component.

8- During the year, depending on the implementation of the geological exploration plan, the Geological General Department has the authority to adjust capital between schemes within the approved annual capital limit, but not exceeding the total budgeted amount for approved schemes. To ensure issuance and settlement, the Geological General Department must detail the adjusted amounts between schemes and inform the finance authorities and banks.

9- Cases where the total budget of each geological scheme exceeds 10%, affecting the annual budget, require the Geological General Department to submit detailed explanations to the Ministry of Finance and the State Planning Commission for review and resolution. Specific cases of budget adjustments are detailed in Section II of this circular.

II- PLANNING OF FUNDS ISSUED

10- Annually, based on approved geological schemes currently underway, exploration project plans, and state plan inspection results announced by the Geological General Department, economic accounting geological units prepare production-technical-financial plans for submission to the Geological General Department within the specified timeframe.

11- The Geological General Department reviews and adjusts the plans of geological units, consolidates them into the industry's overall task, and submits them to the state.

Simultaneously, they are sent to the State Planning Commission and the Ministry of Finance within the specified period.

The industry-wide plan of the Geological General Department must include a financial income and expenditure plan, detailing the capital needs for each scheme step to be completed in the planning year, based on the planned volume of each task within those steps and the prescribed budget cost for each task.

12- Based on the Geological General Department's plan, the Ministry of Finance collaborates with the State Planning Commission to draft plans for capital issuance and settlement for the Geological General Department to submit to the state for approval.

13- When the geological exploration plan and the geological capital allocation plan are approved by the Council of Ministers, the Ministry of Finance will issue specific notifications regarding the capital allocation plan, transferring funds for payment through the Investment and Construction Bank. The quarterly capital allocation amount is based on the documents and plans submitted by the General Department of Geology and verified.

14- Based on the geological exploration plan and the budget plan approved by the State, the General Department of Geology will establish a capital distribution plan for economic accounting geological units in accordance with completed geological tasks for the year, divided by quarter.

The total allocated capital for phased completion plans distributed to geological units shall not exceed the total capital recorded in the State budget plan for the General Department of Geology.

15- The documents and plans sent by the General Department of Geology to the Ministry of Finance and the Investment and Construction Bank include:

- A copy of the decision approving the phased geological P.A plan;

- Annual and quarterly plans according to the phased schemes;

- Capital allocation plan for the completion phase and interim capital advance plan for the year;

- Comprehensive financial income and expenditure plan for the year (divided by quarter) for the entire sector;

- Quarterly, six-month, nine-month, and annual settlement reports.

16- Following established principles, after receiving the capital allocation notification from the Ministry of Finance and the planning documents from the General Department of Geology, the Central Investment and Construction Bank will notify the local branch banks serving geological units of the payment capital.

17- Geological units must submit to local bank branches and provincial finance departments the following documents approved by the General Department of Geology:

To be sent to branches:

- A copy of the decision approving the phased geological scheme;

- Annual plan divided by phases;

- Capital allocation plan according to the completion scheme;

- Interim capital advance plan for the year;

- Financial income and expenditure plan for the year (divided by quarter);

- Approved phased scheme budget estimates.

To be sent to the State Revenue Collection Bureau or State Revenue Office and central enterprise financial management department: financial income and expenditure plan for the year divided by quarter and quarterly settlement reports.

18- The deadlines for submitting the above documents by the General Department of Geology to the Ministry of Finance and the Central Investment and Construction Bank are as follows:

- Production and financial plan for the next year within thirty days from the date of signing the plan assignment decision by the Council of Ministers;

- Quarterly plans to be submitted fifteen days before the start of each quarter;

- A copy of the approval decision within thirty days from the date of approval.

Geological units must submit these documents to local bank agencies in the order specified above, plus ten additional days for each case.

19- During the year, the capital allocation plan may be adjusted for changes in the budgeted prices of work items in the phased schemes. Adjustments to budgeted prices are only allowed in the following cases:

- The State has decided to change salary levels, salary supplements, and other allowances, material and equipment prices, depreciation rates, etc.;

- Changes in comprehensive exploration standards;

- Variations in geological conditions compared to the budget when formulating the scheme.

20- Any adjustments to the scheme related to either of the following two conditions must be approved by the authority that approved the geological task scheme:

- Changing the objectives of the geological scheme;

- Exceeding the approved contingency reserves for the schemes.

III- CAPITAL PAYMENT FOR PHASED SCHEMES AND COMPLETED GEOLOGICAL SCHEMES

21- Phased schemes can only be paid when the following conditions are met:

- All works of the phase have been completed in accordance with quality and geological objectives specified in the annual plan;

- Achieving acceptance results in accordance with the acceptance procedures issued by the General Department of Geology.

The payment price for the completed phased scheme is the budgeted price approved by the competent authority. During construction, if there are increases or decreases in volume and costs, the increase or decrease in volume confirmed by the Acceptance Committee and approved by the competent authority under current regulations will be included in the payment calculation.

22- The basis for paying capital for the completed phased scheme includes:

- Completion acceptance record of the phase;

- Decision on handling matters within the authority's jurisdiction if applicable;

- Settlement statement of the value of the completed phase volume according to the budgeted price and a profit margin of 10%;

- Documents approving the values of saved volumes from higher authorities (if applicable);

- Calculations explaining the adjustment of the budgeted cost.

23- The final phase of the geological task can only be paid when the following documents are available:

- Documents specified in Article 22 above;

- Handover report record for archiving;

- Approval document for the report by the competent authority.

24- In cases where geological tasks, including survey design tasks for scheme formulation, are suspended due to a decision by the competent authority and losses caused by objective reasons, capital will be paid for the completed work volume.

The documents for payment basis are:

- Decision suspending geological task construction;

- Settlement report on the costs of completed work volumes;

- Confirmation inspection record of the Acceptance Committee.

IV- ACCEPTANCE AND SETTLEMENT FOR COMPLETED GEOLOGICAL SCHEMES
25- The acceptance work for completed geological phased schemes is conducted by the Acceptance Committee determined by the General Director. It operates in accordance with the acceptance procedures issued by the General Department. Financial and banking agencies participate in the Acceptance Committee as official members. Based on the quality and results of the completed geological phased scheme, the Acceptance Committee is responsible for calculating, checking, confirming the adjustment of the budgeted cost, and recommending payment of capital for the accepted geological scheme.

26- Geological schemes must be settled when the approved geological scheme summary report is submitted for archiving (or handed over to the ordering agency). Within a maximum of thirty days, the unit must submit the settlement report to the following agencies:

- General Department of Geology

- Central Investment and Construction Bank.

- Ministry of Finance

- Central Investment and Construction Bank.

The Geological Survey General Department shall review the final settlement report on geological tasks submitted by units, in coordination with the financial authority and the bank at the same level, and must notify the result of such review to the unit within thirty days from the date of receipt of the final settlement report.

V- INCENTIVES AND PENALTIES FOR GEOLOGICAL TASKS

27- In order to encourage geological units to complete geological schemes with quality according to economic and technical targets set forth (increasing mineral reserves, shortening completion time, and saving costs), geological schemes meeting the following requirements shall be considered for incentives:

Fulfilling quality standards (in accordance with the acceptance procedures for various types of work stipulated by the Geological Survey General Department), specifically: - The average acceptance points of all stages meet the acceptance requirements;

- The final report on the geological scheme reaches a good standard or higher;

- Achieving all objectives set for the geological scheme;

- Production costs of the geological scheme do not exceed the approved total budget estimate;

- Completion time adheres to the prescribed plan;

The amount of incentive, its usage, and the distribution ratio will be specified later.

The incentive fund will be included in the budget of the geological scheme as a separate item.

28- If a geological task does not meet the acceptance requirements, the unit shall be penalized, and the penalty amount will be deducted from the reward fund and welfare fund.

The Acceptance Committee is the body recommending incentives and penalties for geological schemes. After agreement from the Ministry of Finance, the Director of the Geological Survey General Department shall issue a decision on incentives for the geological unit implementing the scheme.

VI- IMPLEMENTATION PROVISIONS

29- This Circular applies from January 1, 1984, to research and exploration units under the Geological Survey General Department.

It is requested that the Central Investment and Construction Bank guide the payment procedures and capital management for geological units in accordance with Point e of Decision 71-CT dated March 11, 1983, issued by the Chairman of the Council of Ministers, and the decisions in this Circular.

According to current regulations, at year-end, the Central Investment and Construction Bank shall settle accounts with the state budget for the funds paid for completed stages (or schemes) and the temporarily advanced funds.

Any previous regulations contrary to this Circular are hereby abolished.