Tanzania - Urban Water Supply Project : Loan 1354 - Loan Agreement - Conformed

CONFORMED COPY LOAN NUMBER 1354 TA LOAN AGREEMENT (Urban Water Supply Project) between <7 UNITED REPUBLIC OF TANZANIA and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Dated January 5, 1977 LOAN AGREEMENT AGREEMENT, dated January 5, 1977, between UNITED REPUBLIC OF TANZANIA (hereinafter called the Borrower) and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (hereinafter called the Bank). -2- ( ARTICLE I General Conditions; Definitions Section 1.01. The parties to this Agreement accept all the provisions of the General Conditions Applicable to Loan and Guar- antee Agreements of the Bank, dated March 15, 1974, with the same force and effect as if they were fully set forth herein (said General Conditions Applicable to Loan and Guarantee Agreements of the Bank being hereinafter called the General Conditions). Section 1.02. Wherever used in this Agreement, unless the context otherwise requires, the several terms defined in the General Conditions have the respective meanings therein set forth and the following additional terms have the following meanings: (a) "MWEM" means the Borrower's Ministry of Water, Energy and Minerals; (b) "urban water supply fund" means that fund referred to in Section 3.06 of this Agreement; and (c) "urban water supply unit" means that unit referred to in Section 3.05 of this Agreement. (1 () -3- ARTICLE II The Loan Section 2.01. The Bank agrees to lend to the Borrower, on the terms and conditions in the Loan Agreement set forth or re- ferred to, an amount in various currencies equivalent to fifteen million dollars ($15,000,000). Section 2.02. The amount of the Loan may be withdrawn from the Loan Account in accordance with the provisions of Schedule 1 to this Agreement as such Schedule may be amended from time to time by agreement between the Borrower and the Bank, for expendi- tures made (or, if the Bank shall so agree, to be made) in respect of the reasonable cost of goods and services required for the Project described in Schedule 2 to this Agreement and to be financed out of the proceeds of the Loan. Section 2.03. Except as the Bank shall otherwise agree, contracts for the purchase of goods or for civil works to be financed out of the proceeds of the Loan, shall be procured in accordance with the provisions of Schedule 4 to this Agreement. Section 2.04. The Closing Date shall be June 30, 1981 or such later date as the Bank shall establish. The Bank shall promptly notify the Borrower of such later date. 01 Section 2.05. The Borrower shall pay to the Bank a commitment charge at the rate of three-fourths of one per cent (3/4 of 1%) per annum on the principal amount of the Loan not withdrawn from time to time. Section 2.06. The Borrower shall pay interest at the rate of eight and seventy hundredths per cent (8.70%) per annum on the principal amount of the Loan withdrawn and outstanding from time to time. Section 2.07. Interest and other charges shall be payable semi-annually on June 1 and December 1 in each year. Section 2.08. The Borrower shall repay the principal amount of the Loan in accordance with the amortization schedule set forth in Schedule 3 to this Agreement. S -5- ARTICLE III Execution of the Project Section 3.01. The Borrover shall carry out the Project through MWEM with due diligence and efficiency and in conformity with appropriate utility, ingineering, administrative and financial practices, and shall provide, promptly as needed, the funds, facilities, services and other resources required for the purpose. Section 3.02. (a) In order to assist the Borrower in design- ing and supervising the construction of the new works at Morogoro included in Part A of the Project and the new training facilities included in Part B.2 of the Project, the Borrower shall employ consultants whose qualifications, experience and terms and condi- tions of employment shall be as agreed between the Borrower and the Bank. (b) In order to assist the Borrower in providing the manage- ment advisory services for Part B.1 of the Project, the Borrower shall employ by June 30, 1977, or such later date as shall be agreeable to the Borrower and the Bank ,three senior advisors to be attached to the headquarters of MWEM, including a technical expert, a financial expert and a personnel and training expert, each of whose qualifications, experience and terms and conditions of employment shall be as agreed between the Borrower and the Bank. Section 3.03. (a) The Borrower undertakes to insure, or make adequate provision for the insurance of, the imported goods to be -6- financed out of the proceeds of the Loan against hazards incident to the acquisition, transportation and delivery thereof to the place of use or installation, and for such insurance any indemnity shall be payable in a currency freely usable by the Borrower to re- place or repair such goods. (b) Except as the Bank shall otherwise agree, the Borrower shall cause all goods and services financed out of the proceeds of the Loan to be used exclusively for the Project. Section 3.04. (a) The Borrower shall furnish to the Bank, promptly upon their preparation, the plans, specifications, reports, contract documents and construction, procurement and staff training schedules for the Project, and any material modi- fications thereof or additions thereto, in such detail as the Bank shall reasonably request. (b) The Borrower: (i) shall maintain records adequate to record the progress and cost of the Project and to identify the goods and services financed out of the proceeds of the Loan, and to disclose the use thereof in the Project; (ii) shall enable the Bank's accredited representatives to visit the facilities and construction sites included in the Project and to examine the goods financed out of the proceeds of the Loan and any relevant records and documents; and (iii) shall furnish to the Bank all such infor- mation as the Bank shall reasonably request concerning the Project, the expenditure of the proceeds of the Loan and the goods and ser- vices financed out of such proceeds. -7- (c) The Borrower shall establish and apply, in consultation with the Bank, suitable indices for monitoring the Project and for measuring the achievement of the staffing, training, financial and water supply goals of the Project. Section 3.05. The Borrower shall organize and maintain an urban water supply unit in Morogoro for the operation, mainte- nance, billing and accounting for water supply in Morogoro town. Section 3.06. The Borrower shall establish an urban water supply fund to be administered by MWEM to receive all revenues earned from the supply of water in Morogoro town and other towns. Disbursements from this fund with respect to operating and main- tenance costs, debt service and minor extensions for Morogoro will be made in accordance with budgets prepared by the urban water supply unit and approved by MWEM. Section 3.07. The Borrower shall, from time to time, discuss with the Bank the operations and activities of the urban water supply unit and the urban water supply fund, to identify and correct any difficulties in such operations or activities. Section 3.08. The Borrower shall appoint in MWEM a second full-time training officer to assist in carrying out the train- ing program of MWEM under the Project. -8- ARTICLE IV Other Covenants Section 4.01. (a) It is the policy of the Bank, in making loans to, or with the guarantee of, its members not to seek, in normal circumstances, special security from the member concerned but to ensure that no other external debt shall have priority over its loans in the allocation, realization or distribution of for- eign exchange held under the control or for the benefit of such member. To that end, if any lien shall be created on any public assets (as hereinafter defined), as security for any external debt, which will or might result in a priority for the benefit of the creditor of such external debt in the allocation, realization or distribution of foreign exchange, such lien shall, unless the Bank shall otherwise agree, ipso facto and at no cost to the Bank, equally and ratably secure the principal of, and interest and other charges on, the Loan, and the Borrower, in creating or per- mitting the creation of such lien, shall make express provision to that effect. .(b) The foregoing undertaking shall not apply to: (i) any lien created on property, at the time of purchase thereof, solely as security for payment of the purchase price of such property; (ii) any lien arising in the ordinary course of banking trans- actions and securing a debt maturing not more than one year after its date; and (iii) any charges on the General Fund of the East African Community (hereinafter referred to as the Community) securing a debt of the Community where the amount of the debt service on such debt in any financing year together with other -9- debt service on other debt of the Community payable from such General Fund in such financial year does not exceed 2% of the average of customs duties and excise duties collected by the East African Customs and Excise Department in the three financial years preceding such occurrence. For the purposes of this paragraph, "debt service" shall include payments of the principal of and interest and other charges on, debt; and any reference to incurring of debt shall include the assumption and guarantee of debt and any renewal, extension or modification of the terms of the debt or of the assumption or guarantee thereof. (c) As used in this Section, the term "public assets" means assets of the Borrower, of any political or administrative subdi- vision thereof and of any entity owned or controlled by, or oper- ating for the account or benefit of, the Borrower or any such subdivision, including gold and other foreign exchange assets held by any institution performing the functions of a central bank or exchange stabilization fund, or similar functions, for the Borrower. Section 4.02. (a) The Borrower shall maintain or cause to be maintained records adequate to reflect in accordance with con- sistently maintained appropriate accounting practices the opera- tions, resources and expenditures, in respect of the Project, of the departments, agencies or units of the Borrower responsible for carrying out the Project or any part thereof. -10 0 (b) The Borrower shall: (i) have the records referred to in paragraph (a) hereof for each fiscal year audited, in accordance with appropriate auditing principles consistently applied, by its Auditor General, or by other independent auditors acceptable to the Bank; (ii) furnish to the Bank as soon as available, but in any case not later than six months after the end of each such year, (A) certified copies of such records for such year as so audited and (B) the report of such audit by its Auditor General or such other auditors, of such scope and in such detail as the Bank shall have reasonably requested; and (iii) furnish to the Bank such other information concerning such accounts and the audit thereof as the Bank shall from time to time reasonably request. Section 4.03. The Borrower shall, in accordance with criteria 0 to be agreed between the Borrower and the Bank, review and adjust the water tariffs within Tanzania which apply to domestic and industrial consumers at periodic intervals in order to maintaia these tariffs in real terms at the level existing in July 1976. Section 4.04. The Borrower agrees to compensate the urban water supply fund for water supplied by public standpipes. Section 4.05. The Borrower shall cause the water supply plant, equipment, properties and facilities serving Morogoro town to be operated and maintained and all necessary renewals and repairs thereto to be made, all in accordance with appropriate administra- tive, engineering, public utility and financial practices. * -11 - ARTICLE V Termination Section 5.01. The date April 5, 1977 is hereby specified for the purposes of Section 12.04 of the General Conditions. ARTICLE VI Representative of the Borrower; Addresses Section 6.01. The Minister of the Borrower at the time responsible for Finance is designated as representative of the Borrower for the purposes of Section 11.03 of the General Conditions. Section 6.02. The following addresses are specified for the purposes of Section 11.01 of the General Conditions: For the Borrower: Ministry of Finance and Planning P.O. Box 9111 Dar es Salaam United Republic of Tanzania Cable address: TREASURY Dar es Salaam For the Bank: International Bank for Reconstruction and Development 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: Telex: INTBAFRAD 440098 (ITT) Washington, D.C. 248423 (RCA) or 64145 (wUI) * -13 - IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, have caused this Agree- ment 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. UNITED REPUBLIC OF TANZANIA By /s/ Paul Bomani Authorized Representative INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By /s/ Willi A. Wapenhans Regional Vice President Eastern Africa SCHEDULE 1 Withdrawal of the Proceeds of the Loan 1. The table below sets forth the Categories of items to be financed out of the proceeds of the Loan, the allocation of the amounts of the Loan to each Category and the percentage of ex- penditures for items so to be financed in each Category: Amount of the Loan Allocated % of (Expressed in Expenditures Category Dollar Equivalent) to be Financed (1) Civil works 8,900,000 80% (2) Equipment 2,00,000 100% of foreign expenditures, 100% of local expenditures ex-factory, and 80% of local expenditures for imported items procured in Tanzania (3) Engineering consul- 1,500,000 100% of foreign tant services; expenditures management advisory services; and training expenditures not included in Categories (1) and (2) above (4) Unallocated 2,200,000 TOTAL 15,000,000 -15- 2. For the purposes of this Schedule: (a) the term "foreign expenditures" means expenditures in the currency of any country other than the Borrower and for goods or services supplied from the territory of any country other than the Borrower; and (b) the term "local expenditures" means expenditures in the currency of the Borrower and for goods and services supplied from the territory of the Borrower. 3. The disbursement percentages have been calculated in compli- ance with the policy of the Bank that no proceeds of the Loan shall be disbursed on account of payments for taxes levied by, or in the territory of, the Borrower on goods or services, or on the importation, manufacture, procurement or supply thereof; to that end, if the aiount of any such taxes levied on or in respect of any item to be financed out of the proceeds of the Loan decreases or increases, the Bank may, by notice to the Borrower, increase or decrease the disbursement percentage then applicable to such item as required to be consistent with the aforementioned policy of the Bank. 4. Notwithstanding the provisions of paragraph 1 above, no with- drawals shall be made in respect of payments made for expenditures prior to the date of this Agreement, except that withdrawals, in an aggregate amount not exceeding the equivalent of $500,000 may be made in respect of Categories 1 and 3 on account of payments made for such expenditures before that date but after July 1, 1976. 5. Notwithstanding the allocation of an amount of the Loan or the disbursement percentages set forth in the table in paragraph 1 above, if the Bank has reasonably estimated that the amount of the Loan then allocated to any Category will be insufficient to finance the agreed percentage of all expenditures in that Category, the Bank may, by notice to the Borrower: (i) reallocate to such Category, to the extent required to meet the estimated shortfall, proceeds of the Loan which are then allocated to another Category and which in the opinion of the Bank are not needed to meet other expenditures; and (ii) if such reallocation cannot fully meet the estimated shortfall, reduce the disbursement percentage then appli- cable to such expenditures in order that further withdrawals under such Category may continue until all expenditures thereunder shall have been made. 6. If the Bank shall have reasonably determined that the pro- curement of any item in any Category is inconsistent with the procedures set forth or referred to in this Agreement, no expen- ditures for such item shall be financed out of the proceeds of the Loan and the Bank may, without in any way restricting or lim- iting any other right, power or remedy of the Bank under the Loan Agreement, by notice to the Borrower, cancel such amount of the Loan as, in the Bank's reasonable opinion, represents the amount of such expenditures which would otherwise have been eligible for financing out of the proceeds of the Loan. SCHEDULE 2 Description of the Project The Project consists of the following parts: Part A: Development of the production and distribution capa- cities of Morogoro's water supply system by: 1. Construction of an earth dam across the Ngerengere river near Morogoro with tower intake, culvert and spillway. 2. Construction of production facilities including transmission pipelines, treatment and pumping stations, storage reservoirs and reticulation extensions in Morogoro. 3. Supply of new vehicles for the urban water supply unit in Morogoro. Part B: Management and technical assistance consisting of: 1. Strengthening of the management and operations in the Borrower's water supply sector through provision of management advisory services in MWEM's head- quarters. - 18- 2. Execution of MWEM's sector training program, including expansion and diversification of the Water Resources Institute. The Project is expected to be completed by June 30, 1980. ) -19 - SCHEDULE 3 Amortization Schedule Payment of Principal Date Payment Due (expressed in dollars)* On each June 1 and December 1 beginning December 1, 1981 through June 1, 1996 485,000 On December 1, 1996 450,000 * To the extent that any portion of the Loan is repayable in a currency other than dollars (see General Conditions, Section 4.02), the figures in this column represent dollar equiva- lents determined as for purposes of withdrawal. - 20- Premiums on Prepayment The following percentages are specified as the premiums pay- able on repayment in advance of maturity of any portion of the principal amount of the Loan pursuant to Section 3.05 (b) of the General Conditions: Time of Prepayment Premium Not more than three years before maturity 1.30% More than three years but not more than six years before maturity 2.60% More than six years but not more than eleven years before maturity 4.8o% More than eleven years but not more than sixteen years before maturity 6.95% More than sixteen years but not more than eighteen years before maturity 7.85% More than eighteen years before maturity 8.70% -21 - SCHEDULE 4 Procurement A. International Competitive Bidding Except as provided in Part B hereof, contracts for the pur- chase of goods or for civil works shall be procured in accordance with procedures consistent with those set forth in Part A of the "Guidelines for Procurement under World Bank Loans and IDA Credits" published by the Bank in August 1975 (hereinafter called the Guide- lines), on the basis of international competitive bidding. B. Other Procurement Procedures Contracts estimated to cost less than the equivalent of $100,000 shall be awarded after obtaining a reasonable number of quotations from qualified and experienced suppliers or contractors, provided that the aggregate amount of contracts awarded pursuant to this paragraph shall not exceed the equivalent of $500,000. C. Evaluation and Comparison of Bids for Goods; Preference for Domestic Manufacturers 1. For the purpose of evaluation and comparison of bids for the supply of goods under paragraph A hereof: (i) bidders shall be required to state in their bid the c.i.f. (port of entry) price for imported goods, or the ex-factory price for domestically- manufactured goods; (ii) customs duties and other import taxes - 22 0 on imported goods, and sales and similar taxes on domestically- supplied goods, shall be excluded; and (iii) the cost to the Borrower of inland freight and other expenditures incidental to the delivery of goods to the place of their use or installation shall be included. 2. Goods manufactured in Tanzania may be granted a margin of preference in accordance with, and subject to, the following provisions: (a) All bidding documents for the procurement of goods shall clearly indicate any preference which will be granted, the infor- mation required to establish the eligibility of a bid for such preference and the following methods and stages that will be fol- lowed in the evaluation and comparison of bids. (b) After evaluation, responsive bids will be classified in one of the following three groups: (1) Group A: bids offering goods manufactured in Tanzania if the bidder shall have established to the satisfaction of the Borrower and the Bank that the manufacturing cost of such goods includes a value added in Tanzania equal to at least 20% of the ex-factory bid price of such goods. (2) Group B: all other bids offering goods manufactured in Tanzania. * -23 - (3) Group C: bids offering any other goods. (c) All evaluated bids in each group shall be first compared among themselves, excluding any customs duties and other import taxes on goods to be imported and any sales or similar taxes on goods to be supplied domestically, to determine the lowest evalu- ated bid of each group. Such lowest evaluated bids shall then be compared with each other, and if, as a result of this comparison, a bid from group A or group B is the lowest, it shall be selected for the award. (d) If, as a result of the comparison under paragraph (c) above, the lowest bid is a bid from group C, all group C bids shall be further compared with the lowest evaluated bid from group A after adding to the c.i.f. bid price of the imported goods offered in each group C bid, for the purpose of this fur- ther comparison only, an amount equal to (i) the amount of cus- toms duties and other import taxes which a non-exempt importer would have to pay for the importation of the goods offered in such group C bid; or (ii) 15% of the c.i.f. bid price of such goods if said customs duties and taxes exceed 15% of such price. If the group A bid in such further comparison is the lowest, it shall be selected for the award; if not, the bid from group C which as a result of the comparison under paragraph (c) is the lowest evaluated bid shall be selected. D. Evaluation and CoMarion of Bids for Civil Works; Preference for Domestic Contractors With respect to any contract for civil works to be procured in accordance with the procedures described in Part A of this Schedule, the Borrower may grant a margin of preference of 7-1/2% to domestic contractors, in accordance with, and subject to, the following provisions: (a) Contractors applying for such preference shall provide, as part of their bids information, including details of ownership, as shall be required to determine whether, according to the classification established by the Borrower and accepted by the Bank, a particular firm or group of firms qualifies for a domestic preference. The bidding documents shall clearly indicate the preference and the method that will be followed in the evaluation and comparison of bids to give,effect to such preference. (b) After bids have been received and reviewed by the Bor- rower, responsive bids will be classified into the following groups: (i) bids offered by domestic contractors eligible for preference; and (ii) bids offered by other contractors. For the purpose of evaluation and comparison of bids an amount equal to 7-1/2% of the bid amount shall be added to bids received under group (ii) above. -25 - E. Review of Procurement Decisions by the Bank 1. Review of invitations to bid and of proposed awards and final contracts: With respect to all contracts estimated to cost the equiva- lent of $100,000 or more: (a) Before bids are invited, the Borrower shall furnish to the Bank, 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 Bank shall reasonably request. Any further modification to the bidding documents shall require the Bank's concurrence before it is issued to the prospective bidders. (b) After bids have been received and evaluated, the Bor- rower shall, before a final decision on the award is made, inform the Bank of the name of the bidder to which it intends to award the contract and shall furnish to the Bank, in sufficient time for its review, a detailed report, by the consultants referred to in Section 3.02 (a) of this Agreement, on the evaluation and compari- son of the bids received, together with the recommendations for award of the said consultants and such other information as the Bank shall reasonably request. The Bank shall, if it determines that the intended award would be inconsistent with the Guidelines or this Schedule, promptly inform the Borrower and state the reasons for such determination. - 26- (c) The terms and conditions of the contract shall not, with- out the Bank's concurrence, materially differ from those on which bids were asked or prequalification invited. (d) Two conformed copies of the contract shall be furnished to the Bank promptly after its execution and prior to the submis- sion to the Bank of the first application for withdrawal of funds from the Loan Account in respect of such contract. 2. With respect to each contract to be financed out of the pro- ceeds of the Loan and not governed by the preceding paragraph, the Borrower shall furnish to the Bank, promptly after its execu- tion and prior to the submission to the Bank of the first applica- tion for withdrawal of funds from the Loan 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 Bank shall reasonably re- quest. The Bank shall, if it determines that the award of the contract was not consistent with the Guidelines or this Schedule, promptly inform the Borrower and state the reasons for such de- termination.