Office of the Iraq Programme
oil for food

Provided for information purposes: please note that the OIP is unable to respond to inquiries from companies or their representatives  who should direct all inquiries or requests for further information to their Permanent Mission.

1. Contracting process and submission of applications (please see the chart)

• The Memorandum of Understanding between the Secretariat of the United Nations and the Government of Iraq on the implementation of Security Council resolution 986 (1995) stipulates: Each export of goods to Iraq shall be at the request of the Government of Iraq pursuant to paragraph 8 (a) of resolution 986 (1995). Accordingly, exporting States will submit all relevant documentation, including contracts, for all goods to be exported under the Resolution to the 661 Committee for appropriate action according to its procedures. It is understood that payment of the supplier from the "Iraq Account" can take place only for items purchased by Iraq that are included in the categorized list referred to in Section II of the present Memorandum. Should exceptional circumstances arise, applications for the export of additional items may be submitted to the 661 Committee for its consideration.

• The Government of Iraq will prepare a categorized list of humanitarian supplies which it intends to purchase and import pursuant to resolution 986 (1995). This list will be submitted to the Secretary-General together with the distribution plan referred to in paragraph 8(a)(ii) of the resolution.

• After approving the distribution plan, the Secretary-general will forward the list, which constitutes a part of the plan, to the Committee, and will make it known to all States.

• The Government of Iraq or the United Nations Inter-Agency Humanitarian Programme (for the three northern governorates of Dohuk, Erbil and Sulaymaniyah) will contract directly with suppliers to arrange the purchase of humanitarian supplies, and will conclude the appropriate contractual arrangements.

• Export to Iraq of medicine, health supplies, foodstuffs, and materials and supplies for essential civilian needs (hereinafter humanitarian supplies) financed from the Iraq account shall be undertaken in accordance with the following provisions.

Applications for each export of humanitarian supplies, to be financed from the Iraq account consistent with paragraph 22 of the Memorandum of Understanding, shall be submitted to the Committee at the request of the Government of Iraq by the exporting States with all relevant documentation, including the concluded contractual arrangements. Payment from the Iraq account can take place only for items included in the categorized list, unless the Committee exceptionally decides otherwise on a case-by-case basis and the distribution plan is amended accordingly.

• Such applications pursuant to resolution 986 (1995) shall be submitted as follows:

(a) Medicines and Health Supplies

The exporting State informs the Committee that the exporter requests payment from the Iraq account. A copy of the relevant documentation, including the concluded contractual arrangements and intended point(s) of entry into Iraq, must be attached to this communication.

(b) Foodstuffs

The exporting State notifies the Committee. The notification must indicate that the exporter requests payment from the Iraq account. A copy of the relevant documentation, including the concluded contractual arrangements and intended point(s) of entry into Iraq, must be attached to the notification.

(c) Other Materials and Supplies for Essential Civilian Needs

The exporting State submits an application for approval by the Committee under its no-objection procedure. The application must indicate that the exporter requests payment from the Iraq account. A copy of the relevant documentation, including the concluded contractual arrangements and intended point(s) of entry into Iraq, must be attached to the application.

• Member states are encouraged to present applications to the Committee as soon as contracts are concluded. The required delivery date of goods that are time-sensitive (harvest season, new school year, etc.) should be clearly stated in the applications. The Iraqi authorities could inform the Office of the Iraq Programme as soon as contracts are signed.

Initial processing by the Secretariat

• Experts in the Secretariat examine each contract, in particular the details of price and value, and whether the items to be exported are on the categorized list referred to above.   They will inform the Committee of their findings.

• Without prejudice to the Committee's ability to decide otherwise, incomplete applications will not be circulated until clarification is obtained from the applicant State and the Permanent Mission of Iraq to the United Nations. The Secretariat will thus immediately notify both the permanent mission of the applicant State and the Permanent Mission of Iraq of the irregularities found in the documentation submitted;

• Amendments made to such applications should be manifested formally, that is, by a letter from the Permanent Mission of the applicant State to the Secretariat and the other party or parties involved, with due regard to relevant commercial law and practice and Security Council resolutions;

• When a formal request is received from either party to declare an application null and void, the Secretariat will notify the other party and advise both parties that the application will be considered null and void after seven days, unless both parties confirm in writing that the application should be reinstated. The Secretariat, upon consultation with the parties concerned, may declare null and void an application during processing, before its circulation to the Committee, for purely technical reasons, for example, duplication. The Secretariat will inform the Committee of any contract that is declared null and void;

• Experts in the Secretariat will also comment to the Committee on required delivery date of goods that are time-sensitive (harvest season, new school year, etc.).

• The Committee is ready to consider applications on a project basis. Applications for the same project could be kept together during the screening and approval process, so that the full range of applications would serve as an explanatory background to a specific application.

Approval process

• If the Committee has no objection to a contract, the Secretariat informs the submitting permanent mission in writing that the contract is in order, that the exporter may be eligible for payment from the United Nations Iraq Account and that the approval letter will be issued on the basis of an irrevocable letter of credit for oil shipments and confirmation of the lifting of oil cargoes

• The Committee acts upon the findings of the experts in the Secretariat as set forth below:

(a) Medicines and Health Supplies

If the Committee finds, under its expedited no-objection procedure within two business days (in most but not in all cases) from the circulation of the application, that the contract is in order, it immediately informs the parties concerned that the exporter may be eligible for payment from the Iraq account.

(b) Foodstuffs

If the Committee finds, under its expedited no-objection procedure within two business days from the circulation of the application, that the contract is in order, it immediately informs the parties concerned that the exporter may be eligible for payment from the Iraq account.

(c) Other Materials and Supplies for Essential Civilian Needs

• If the Committee approves the supplies, under its no-objection procedure within seven days, and if the contract is found in order, the Committee informs the parties concerned of the approval and that the exporter may be eligible for payment from the Iraq account.

• With a view to facilitating the delivery of humanitarian supplies to Iraq, the Committee has decided that the validity period of its approval letters to ship humanitarian supplies to Iraq shall be 180 days. An additional period of 180 days may be approved, with further extensions approved only on an exceptional basis. Committee approval letters will include a reminder to exporters of the need to execute the contract in the appropriate time frame.

• If the Committee cannot approve the supplies, whether or not the contract is found in order, it informs the parties concerned that the supplies cannot be shipped.

• When the Committee has informed the parties concerned that the exporter is eligible for payment from the Iraq account, the Central Bank of Iraq will request the bank holding the Iraq account to open an irrevocable, non-transferable, non-assignable (except to the supplier's bank for the repayment of financing for the purchase of the humanitarian supplies) letter of credit for the account of the Iraqi purchaser in favour of the supplier, which will be available only at the bank holding the Iraq account, and provide for payment from the Iraq account. Such requests shall be submitted by the bank holding the Iraq account to the Secretary-general for expeditious approval, so that payment from the Iraq account can be made without delay. The letter of credit will require as condition of payment the submission to the bank holding the Iraq account of the usual commercial documentation, and of the following documents: a copy of the Committee's letter stating that the exporter is eligible for payment from the Iraq account, and a standardized confirmation by the Secretary-general of the arrival of the humanitarian supplies in Iraq.

• The arrival of the humanitarian supplies in Iraq will be confirmed by independent inspection agents appointed by the Secretary-general pursuant to resolution 986 (1995) and stationed at relevant entry points and other locations in Iraq as referred to in paragraph 26 of the Memorandum of Understanding.   When necessary, quality tests should be completed within reasonable time limits.  The independent inspection agents will add their authenticated confirmation of arrival to a copy of the Committee's letter stating that the exporter is eligible for payment from the Iraq account and to a copy of the invoice, and will inform the Secretary-general in accordance with paragraph 8 (a) (iii) of Security Council resolution 986 (1995). This information should be given without delay and in any case within 24 hours.

• The inspection agents will report all irregularities to the Secretary-general and to the Committee. If the problem is related to normal commercial practice, the Committee and the Government of Iraq will be informed but normal commercial resolution practices will go forth. Performance bonds may not be opened. Payments in favour of the purchaser resulting from normal commercial resolution practices should be made to the Iraq account. If the matter is of serious concern, the independent inspection agents will hold the shipment in question, pending guidance from the Committee. The Committee will make every effort to provide such guidance in the most expeditious manner.

• The bank holding the Iraq account shall effect payment under any letter of credit only if all documents stipulated in the letter of credit are presented to it and the terms and conditions of any such letter of credit are complied with. When specified in the contract and the supporting documents, payment can be made in several instalments corresponding to actual deliveries to Iraq. Documentary discrepancies can only be waived by the Secretary-general

• Letter of credit mentioned in these procedures should conform with the Uniform Customs and Practice for Documentary Credit. (SEE  "UNIQUE FEATURES OF THE LETTER OF CREDIT")

Expenses directly related to the export by Iraq of petroleum and petroleum products

• The export to Iraq of the parts and equipment which are essential for the safe operation of the Kirkuk-Yumurtalik pipeline system in Iraq will be undertaken in accordance with the procedures set out in section III [Export to Iraq of humanitarian supplies] of the present procedures. Requests for such exports to Iraq will be approved by the Committee on a case-by-case basis under its no-objection procedure. The Committee may request relevant United Nations personnel in Iraq to verify that the equipment exported to Iraq pursuant to paragraph 9 of resolution 986 (1995) is used only for the purposes permitted.

• Pursuant to paragraph 8(f) of resolution 986 (1995), the Committee can approve, under its no-objection procedure, the financing from the Iraq account of reasonable expenses, other than expenses payable in Iraq, which are determined by it to be directly related to the export by Iraq of petroleum and petroleum products permitted under paragraph 1 of resolution 986 (1995) or to the export to Iraq of the parts and equipment referred to in paragraph 9 of resolution 986 (1995) [related to the Kirkuk-Yumurtalik pipeline], and of activities directly necessary therefor.

Requests for meeting the expenses referred to in the previous paragraph will be submitted by the Government of Iraq together with all necessary documentation, and will be approved on a case-by-case basis by the Committee under its no-objection procedure. The Committee will seek, if necessary, the advice of the overseers or the independent inspection agents in reaching a decision.

Interrelationship between procedures governing applications submitted for payment from the Iraq Account in accordance with resolution 986 (1995) and those governing payment by other arrangement

• Paragraph 38 of the procedures contained in S/1996/636, 12 August 1998, stipulates: The provisions of this section [Export to Iraq of humanitarian supplies] are without prejudice to the application of the existing procedures of the Committee for goods which are not supplied pursuant to resolution 986 (1995).