Topic Tunisia TOPIC, S.A. (TOPIC or the company) is a small Tunisian oil and gas exploration and production (E&P) company, with interest in three oil and gas blocks in Tunisia:   - 100% interest in the offshore Halk el Menzel (HelM) concession block;  - 15% interest in the onshore Jelma exploration block; and  - 50% interest in the onshore Douleb West prospecting block.    The company is not currently producing from any of its blocks.   IFC has been requested to provide a financing package to the company to partially fund TOPICs 2008-2011 investment program, which includes:   - the development of an oil discovery in HelM;  - acquisition of seismic data and drilling of exploration wells at HelM and TOPICs other blocks; and  - further business development activities. - Fit with the World Bank Group Strategy:     The World Banks most recent Country Assistance Strategy (CAS) for Tunisia, proposes to help the Government of Tunisia (GoT) address three challenges:   - strengthen the business environment to support the development of a more competitive, internationally integrated private sector and improve competitiveness of the Tunisian economy;  - enhance skills and employability of graduates and labor force in a knowledge economy; and  - improve the quality of social services through increased efficiency of public expenditures.  IFCs strategy in Tunisia is to focus on where IFC can add value and foster private sector development especially in sectors currently not properly serviced by Tunisian commercial banks, including the oil and gas sector. The proposed IFC investment is therefore fully consistent with this strategy.  - Development Impact:    - Benefits to Government of Tunisia The project is expected to provide GoT with considerable revenues from TOPICs operations in HelM, through the collection of a 10-15% royalty and a 50-75% profit tax (current estimate of about $133 million in revenues to GoT by end of 2012 under IFCs base case).  TOPIC will also have an obligation, as per Tunisias Hydrocarbon Code, to sell 20% of its oil production to the local Tunisian market at a 10% discount to international prices.  - Direct and indirect local employment and training:    The proposed project and continued growth of the company is expected to bring direct and indirect local employment and training.  It is estimated that the development of HelM alone will generate 200 direct and indirect jobs during construction and 100 during operations. All TOPICs staff are currently Tunisian and it is expected that at least 90% of direct and indirect jobs created will be local.  - Local supplier linkages / community development:    The proposed project is expected to benefit local communities by way of purchases of local goods and services.  For example, the construction of the production facility for HelM will be built at the port of Sfax, in Tunisia, and will require substantial inputs from local industrial and marine subcontractors.  Over 50% of Project capex is expected to be sourced locally.  - Promoting local independent player:    The project will support one of the very few locally-owned private sector North African upstream companies and help it grow and reach international best practice on environmental and social issues and corporate governance.