Tanzania - Kigoma Rural Development Project : Credit 0508 - Credit Agreement - Conformed

CONFORMED COPY CREDIT NUMBER 508 TA Development Credit Agreement (Kigoma Rural Development Project) BETWEEN UNITED REPUBLIC OF TANZANIA AND INTERNATIONAL DEVELOPMENT ASSOCIATION DATED AUGUST 21, 1974 CONFORMED COPY CREDIT NUMBER 508 TA Development Credit Agreement (Kigoma Rural Development Project) BETWEEN UNITED REPUBLIC OF TANZANIA AND INTERNATIONAL DEVELOPMENT ASSOCIATION DATED AUGUST 21, 1974 DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated August 21, 1974, between UNITED REPUBLIC OF TANZANIA (hereinafter called the Borrower) and INTERNATIONAL DEVELOPMENT ASSOCIATION (hereinafter called the Association). WHEREAS (A) The Borrower has requested the Association to assist in the financing of the Project described in Schedule 2 to this Agreement by extending the Credit as hereinafter provided; (B) The Project will be carried out in part by the Tanzania Rural Development Bank (hereinafter called TRDB) as a financial intermediary and procurement specialist with the Borrower's assistance and, as part of such assistance, the Borrower will make available to TRDB a portion of the proceeds of the Credit as hereinafter provided; (C) The Borrower has requested the United Nations Capital Development Fund (hereinafter called UNCDF) to assist in financing the water supply systems and health facilities included in Part A(1) of the Project; (D) The UNCDF, by an agreement (hereinafter called UNCDF Agreement) between the UNCDF and the Borrower of even date herewith, has agreed to provide a grant in the amount of $1,500,000 for such purpose; and (E) The Association is willing to m-ake the Credit available upon the terms and conditions set forth hereinafter and in a project agreement of even date herewith between the Association and TRDB; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I General Conditions; Definitions Section 1.01. The parties to this Agreement accept all the provisions of the General Conditions Applicable to Development Credit Agreements of the Association, dated March 15, 1974, with the same force and effect as if they were fully set forth herein (said General Conditions Applicable to Development Credit Agreements of the Association being hereinafter called the General Conditions). 4 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 -nd the following additional terms have the following meanings: (a) "Project Agreement" means the agreement between the Association and TRDB of even date herewith, as the same may be amended from time to time, and such term includes all schedules to the Project Agreement; (b) "Subsidiary Loan Agreement" means the agreement to be entered into between the Borrower and TRDB pursuant to Section 3.01(c) of this Agreement, as the same may be amended from time to time, and such term includes all schedules to the Subsidiary Loan Agreement; (c) "KRA" means the regional administration of Kigoma Region; (d) "KCU" means the cooperative union of Kigoma Region, established under the Cooperative Societies Act, 1968, and any successor or successors thereto; (e) "ATTC" means the agricultural trials and training center to be established pursuant to the provisions of Section 3.05 of this Agreement, and any successor or successors thereto; (f) "VSFR" means the village site feasibility report which shall be prepared by KRA for each proposed Project Village pursuant to the provisions of Section 3.03 of this Agreement; (g) "Project Special Fund" means the fund to be established by KRA pursuant to the provisions of Section 3.06 of this Agreement; (h) "Project Village" means a village in Kigoma Region which, based upon the VSFR, is selected to receive assistance under the Project; (i) "Sub-loan" means a loan made or proposed to be rnade by TRDB to KCU or to a Project Village, either through KCU or directly; (j) "RDD" means the Regional Development Director of Kigoma Region; and (k) "EAPTC" means the East African Posts and Telecommunications Corporation, a corporation provided for under Chapter XIX of the Treaty for East African Cooperation dated June 6, 1967 and established under the East African Posts and Telecommunications Corporation Act, 1967. 5 ARTICLE II The Credit Section 2.01. The Association agrees to lend to the Borrower, on the terms and conditions in the Development Credit Agreement set forth or referred to, an amount in various currencies equivalent to ten million dollars ($10,000,000). Section 2.02. The amount of the Credit may be withdrawn from the Credit Account in accordance with the provisions of Schedule 1 to this Agreement, as such Schedule may be amended from time to time, for expenditures made (or, if the Association shall so agree, to be made) in respect of the reasonable cost of goods and services required for the Project and to be financed out of the proceeds of the Credit. Section 2.03. Except as the Association shall otherwise agree, contracts for the purch?se of goods or for the carrying out of works or services (other than consultants services) for the Project to be financed out of the proceeds of the Credit, shall be awarded in accordance with the provisions of Schedule 3 to this Agreement. Section 2.04. The Closing Date shall be December 31, 1980 or such other date as shall be agreed between the Borrower and the Association. Section 2.05. The Borrower shall pay to the Association a service charge at the rate of three-fourths of one per cent (3/4 of 1%) per annum on the principal amount of the Credit withdrawn and outstanding from time to time. Section 2.06. Service charges shall be payable semi-annually on March 15 and September 15 in each year. Section 2.07. The Borrower shall repay the principal amount of the Credit in semi-annual installments payable on each March 15 and September 15 commencing September 15, 1984 and ending March 15, 2024, each installment to and including the installment payable on March 15, 1994 to be one-half of one per cent (1/2 of 1%) of such principal amount, and each installment thereafter to be one and one-half per cent (1-1/2%) of such principal amount. Section 2.08. The currency of the United Kingdom of Great Britain and Northern Ireland is hereby specified for the purposes of Section 4.02 of the General Conditions. 6 ARTICLE III Execution of the Project Section 3.01. (a) The Borrower shall carry out Parts A, D, E and F of the Project, and cause TRDB to carry out Parts B and C of the Project, with due diligence and efficiency and in conformity with appropriate administrative, agricultural, educational, financial, public health and technical practices, and shall provide, promptly as needed, the funds, facilities, services and other resources therefor. (b) Without any limitation or restriction upon any of its other obligations under the Development Credit Agreement, the Borrower shall cause TRDB to perform in accordance with the provisions of the Project Agreement and the Subsidiary Loan Agreement all the obligations therein set forth, shall take and cause to be taken all action necessary or appropriate to enable TRDB to perform such obligations, and shall not take or permit to be taken any action which would prevent or interfere with such performance. (c) The Borrower shall make a portion of the proceeds of the Credit available to TRDB under a subsidiary loan agreement to be entered into between the Borrower and TRDB under terms and conditions which shall have been approved by the Association. (d) The Borrower shall exercise its rights under the Subsidiary Loan Agreement in such manner as to protect the interests of the Borrower and the Association and to accomplish the purposes of the Credit, and except as the Association shall otherwise agree, the Borrower shall not assign, nor amend, abrogate or waive the Subsidiary Loan Agreement or any provision thereof. Section 3.02. Within six months after the Effective Date, or such other date as shall be agreed between the Association and the Borrower, in order to carry out Parts E and F of the Project, the Borrower shall: (a) employ or cause to be employed, experts with qualifications and experience acceptable to the Borrower and the Association, upon terms and conditions satisfactory to the Borrower and the Association, as follows: (i) KCU shall employ competent and experienced persons to serve in the positions of Operations Manager and Financial Controller; and 7 (ii) the Porrower shall employ competent and experienced persons to assist in carrying out Part F of the Project; and (b) employ, or cause to be employed, competent and experienced persons as follows: (i) KCU shall employ a competent and experienced person to serve in the position of Training Supervisor; (ii) the Borrower shall employ competent and experienced persons to serve in the positions of Trial Officers and Training Officers; and (iii) the Borrower shall employ a competent and experienced person to serve in the position of Land Use Planner. Section 3.03. The Borrower shall cause KRA to prepare a village site feasibility report (VSFR) for each proposed Project Village pursuant to the procedures set forth or referred to in Schedule 4 to this Agreement, as such Schedule may be amended from time to time by agreement between the Borrower and the Association. Section 3.04. The Borrower shall cause KRA to ensure that each water supply system provided under Part A(i)(a) of the Project to a Project Village is designed as the least-cost water supply system for that Project Village. Section 3.05. (a) Within six months of the date of this Agreement, or such other date as shall be agreed between the Borrower and the Association, the Borrower shall cause KRA to select a suitable site for the establishment of an agricultural trials and training center (ATTC), such selection to be based upon a detailed soil and topographic survey to be made available to the Association. (b) Except as the Association shall otherwise agree, the Borrower shall cause KRA to start construction of ATTC buildings within six months of the Effective Date and shall cause KRA to complete such construction within twelve months of the start thereof. Section 3.06. Except as the Association shall otherwise agree, the Borrower shall cause KRA to establish a project special fund under the management of the RDD for the purpose of assisting in solving specific problems of Project implementation, such as financing the services of consultants or training. 8 Section 3.07. The Borrower shall from time to time exchange views with the Association on the buying and selling prices of agricultural commodities, taking into account inter alia the financial viability of Project Villages and KCU and the establishment of a.ltquate production incentives for Project Villages. Section 3.08. The Borrower undertakes, within six months of the Effective Date or such other date as shall be agreed between the Borrower and the Association, to make a financial reorganization of KCU and, from time to time, to take sluch other measures as shall be necessary to ensure that, in accordance with sound financial practices, KCU is in a position to service debts incurred prior to the date of this Agreement as well as those incurred during the execution of the Project. Section 3.09. (a) The Borrower shall cause each of KRA and KCU to: (i) maintain separate records adequate to record the progress of the Project (including the cost thereof) and to identify the goods and services financed out of the proceeds of the Credit, and to disclose the use thereof in the Project; (ii) without limitation upon the provisions of paragraph (b) of this Section, enable the Association's representatives to visit the facilities and construction sites included in the Project, and to examine the goods financed out of such proceeds and any relevant records and documents; and (iii) furnish to the Association all such information as the Association shall reasonably request concerning the Project, the expenditure of the proceeds of the Credit and the goods and services financed out of such proceeds. (b) The Borrower shall cause each of KRA and KCU to enable the Association's representatives to examine all installations, sites, works, buildings, property and equipment of KRA and KCU, respectively, relating to the Project and any relevant records and documents. Section 3.10. (a) The Borrower shall cause KRA to furnish to the Association for discussion and agreement by the Association not later than March I in each year the proposed annual development plan for Project Villages for the coming fiscal year. (b) The Borrower shall cause KRA to furnish to the Association for comment not later than March 1 in each year the proposed annual development plan for all villages in Kigoma Region for the coming fiscal year. ARTICLE IV Financial Covenants Section 4.01. (a) The Borrower shall cause each of KRA and KCU to maintain records adequate to reflect in accordance with consistently maintained appropriate 9 accounting practices the operations, resources and expenditures of KRA and the operations and financial statements of KCU. (b) The Borrower shall cause KRA to: (i) have its accounts for each fiscal year audited, in accordance with sound auditing principles consistently applied, by independent auditors acceptable to the Association; (ii) furnish to the Association as soon as available, but in any case not later than six months after the end of each such year, (A) certified copies of its accounts for such year as so audited and (B) the report of such audit by said auditors, or such scope and in such detail as the Association shall have reasonably requested; (iii) furnish to the Association such other information concerning the accounts of KRA and the audit thereof as the Association shall from time to time reasonably request. (c) The Borrower shall cause the accounts and financial statements (balance sheets, statements of income and expenses and related statements) of KCU and Project Villages receiving Sub-loans under the Project for each fiscal year to be audited by the Borrower's Registrar of Cooperatives not later than six months after the close of each such fiscal year and to this end, the Borrower shall appoint within the Kigoma Region prior to any lending to KCU or Project Villages, auditors * reporting to the Registrar of Cooperatives. Section 4.02. (a) In carrying out Part F(i) of the Project, the Borrower shall conduct a study on: (i) the fiscal implication of providing the water supply services included in the Project; and (ii) the appropriate methods and procedures for allocating and financing the cost of such services. (b) The Borrower shall exchange views with the Association on the findings and recommendations of the study referred to in sub-Section (a) hereof and the implementation thereof. ARTICLE V Remedies of the Association Section 5.01. For the purposes of Section 6.02 of the General Conditions, the following additional events are specified: (a) TRDB shall have failed to perform any of its obligations under the Project Agreement; (b) an extraordinary situation shall have arisen which shall make it improbable that TRDB will be able to perform its obligations under the Project Agreement; (c) the organization, powers and responsibilities of TRDB shall have been altered in such a way as to affect materially and adversely the execution of the Project or the efficient operation of TRDB; and (d) the right of the Borrower to withdraw the proceeds of the UNCDF Agreement shall have been suspended in whole or in part. Section 5.02. For the purposes of Section 7.01 of the General Conditions, the following additional events are specified, namely, that the events specified in Sections 5.01(a), (c) and (d) of this Agreement shall occur and continue for a period of 60 days after notice thereof shall have been given by the Association to the Borrower. ARTICLE VI Effective Date; Termination Section 6.01. The following events are specified as additional conditions to the effectiveness of the Development Credit Agreement within the meaning of Section 10.01(b) of the General Conditions: (a) the execution and delivery of the Project Agreement on behalf of TRDB have been duly authorized or ratified by all necessary corporate and governmental action; and (b) the execution and delivery of the Subsidiary Loan Agreement on behalf of the Borrower and TRDB, respectively, have been duly authorized or ratified by all necessary corporate and governmental action. Section 6.02. The following are specified as additional matters, within the meaning of Section 12.02(b) of the General Conditions, to be included in the opinion or opinions to be furnished to the Association: (a) that the Project Agreement has been duly authorized or ratified by, and executed and delivered on behalf of, TRDB, and constitutes a legally binding obligation of TRDB in accordance with its terms; and (b) that the Subsidiary Loan Agreement has been duly authorized or ratified by, and executed and delivered on behalf of, the Borrower and TRDB, respectively, and constitutes a legally binding obligation of the Borrower and TRDB in accordance with its terms. Section 6.03. The date November 19, 1974 is hereby specified for the purposes of Section 12.04 of the General Conditions. 11 Section 6.04. The obligations of the Borrower under Sections 4.01 and 5.02 of this Agreement shall cease and determi-ae on the date on which the Development Credit Agreement shall terminate or on a date twenty-five years after the date of this Agreement, whichever shall be the earlier. ARTICLE VII Representative of the Borrower; Addresses Section 7.01. 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 7.02. The following addresses are specified for the purposes of Section 11.01 of the General Conditions: For the Borrower: The Principal Secretary The Treasury P.O. Box 9111 Dar es Salaam United Republic of Tanzania Cable address: TREASURY Dar es Salaam For the Association: International Development Association 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: INDEVAS Washington, D.C. IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, have caused this Agreement to be signed 12 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 DEVELOPMENT ASSOCIATION By /s / Michael L. Lejeune Director, Country Programs Department Eastern Africa Regional Office 13 SCHEDULE 1 Withdrawal of the Proceeds of the Credit 1. The table below sets forth the Categories of items to be financed out of the proceeds of the Credit, the allocation of the amounts of the Credit to each Category and the percentage of expenditures for items so to be financed in each Category: Amount of the Credit Allocated %0/ of (Expressed in Expenditures Category Dollar Equivalent) to be Financed (1) Civil works 2,700,0 90% (other than water supply systems, health facilities and KCU collection and marketing facilities) (2) Incremental cost 1,00,00 100% of foreign of seasonal inputs expenditures or including fertil- 90% of local izers, pesticides expenditures and sprayers (3) Aerial photography, 400,000 100% of foreign radio-telephone expenditures or system, vehicles 90% of local and spare parts expenditures (other than for KCU), equipment and seasonal inputs for ATTC, and equip- ment for schools, rural training centers and pilot livestock program (4) Sub-loans to KCU for 600,000 90% of amounts equipment, vehicles disbursed and spare parts and civil works for col- lection and market- ing facilities 14 Amount of the Credit Allocated % of (Expressed in Expenditures Category Dollar Equivalent) to be Financed (5) Sub-loans to 700,000 90% of amounts Project Villages disbursed for productive infrastructure (6) Consultants' 1,100,000 100% of foreign services expenditures and and related 90% of local ex- equipment penditures (7) Project Special 30,000 100% of foreign Fund for tech- expenditures and nical assist- 90% of local ex- ance and training penditures (8) Unallocated 3,470,000 TOTAL 10,000,000 2. For the purposes of this Schedule: (a) the term "foreign expenditures" means expenditures for goods or services supplied from, the territory, and in the currency, of any country other than the Borrower; (b) the term "local expenditures" means expenditures in the currency of the Borrower, and for goods or services supplied from, the territory of the Borrower; and (c) the term "incremental cost of seasonal inputs" means such portion of the expenditures for such inputs included in Part B of the Project and to be financed hereunder as the Association shall reasonably determine from time to time to be required by TRDB to finance the purchase of such inputs, over and above any amounts previously disbursed from the Credit Account for such purpose. 3. The disbursement percentages have been calculated in compliance with the policy of the Association that no proceeds of the Credit shall be disbursed on A 15 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 any event occurs which shall affect the amount of any such taxes included in the cost of any item to be financed out of the proceeds of the Credit, the Association may, by notice to the Borrower, correspondingly adjust the disbursement percentage then applicable to such item. 4. Notwithstanding the provisions of paragraph I above, no withdrawals shall be made in respect of: (i) expenditures prior to the date of this Agreement; and (ii) Category 4 until KCU shall have employed an operations manager and a financial controller pursuant to the provisions of Section 3.02(a) of this Agreement and until KCU shall have made its financial reorganization pursuant to the provisions of Section 3.08 of this Agreement. 5. Notwithstanding the allocation of an amount of the Credit or the * disbursement percentages set forth in the table in paragraph 1 above, if the Association has reasonably estimated that the amount of the Credit then allocated to any Category will be insufficient to finance the agreed percentage of all expenditures in that Category, the Association may, by notice to the Borrower: (i) reallocate to such Category to the extent required to meet the estimated shortfall proceeds of the Credit which are then allocated to another Category and which in the opinion of the Association are not needed to meet other expenditures, and (ii) if such reallocation cannot fully meet the estimated shortfall, reduce the disbursement percentage then applicable to such expenditures in order that further withdrawals under such Category may continue until all expenditures thereunder shall have been made. 6. If the Association shall have reasonably determined that the procurement of any item in any Category is inconsistent with the procedures set forth or referred to in this Agreement, no expenditures for such item shall be financed out of the proceeds of the Credit and the Association may, without in any way restricting or limiting any other right, power or remedy of the Association under the Development Credit Agreement, by notice to the Borrower, cancel such amount of the Credit as in the Association's reasonable opinion, represents the amount of such expenditures which would otherwise have been eligible for financing out of the proceeds of the Credit. 16 SCHEDULE 2 Description of the Project The Project is part of the Borrower's program to support village development in its Kigoma Region by improving infrastructure and social services and by providing agricultural credit, training and technical assistance. It consists of the following Parts: Part A: Project Village Infrastructure (to be carried out by KRA) (1) The construction in Project Villages of: (a) water supply systems, such as wells with handpumps, gravity delivery systems or diesel-powered pump systems; (b) education facilities, including classrooms, practical workshops, staff housing, textbooks, desks and tools; and (c) rural health centers and dispensaries, including a pilot pit privy program. (2) The clearing of bush near Project Villages affected by tsetse flies. (3) The construction of feeder roads to join Project Villages to the existing road system in the Kigoma Region. Part B: Credit to Project Villages (1) (to be provided by TRDB directly or through KCU) Sub-loans to Project Villages for production infrastructure, such as godowns, maize mills, beach seine nets and fish processing equipment. (2) (to be provided by TRDB through KCU) Sub-loans to Project Villages for seasonal inputs, such as fertilizers, pesticides and sprayers and related spare parts. 17 Part C. Credit to KCU (to be provided by TRDB) Sub-loans to KCU for the improvement and expansion of its collection and marketing facilities, including the purchase and utilization of lorries, spare parts and related service facilities. Part D: KRA Supporting Services (to be carried out by KRA) (1) The construction and equipping of a rural training center in Kigoma District and the improvement and expansion of the rural training centers at Kasulu and Kibondo. (2) The purchase and installation by KRA or EAPTC of a radio-telephone communications system for Kigoma Region. (3) The construction and equipping of ATTC, including land preparation, classrooms, staff housing and the purchase and utilization of related equipment. (4) The establishment and maintenance of a pilot livestock program near ATTC to demonstrate livestock management and to assist in upgrading local breeding stock. (5) The purchase and utilization of lorries and other vehicles by KRA. (6) Training of staff for ATTC and the rural training centers referred to in paragraphs (1) and (3) of this Part. Part E: Technical Assistance (to be provided to KCU and KRA) (1) The strengthening of KCU by the employment of an operations manager, financial controller and a credit and training supervisor. 18 (2) The employment by KRA of a land-use planner. (3) The employment by ATTC of a training officer and a trials officer. (4) The establishment of the Project Special Fund to assist in Project implementation. (5) The construction of staff housing and the purchase and utilization of vehicles for the persons referred to in paragraphs (1) and (2) of this Part. Part F: Project Evaluation and Preparation (to be carried out by the Borrower) (1) The monitoring and evaluation of Parts A to E of the Project. (2) The preparation of future rural development projects of the Borrower and regional development plans. (3) The provision of staff housing for the persons carrying out paragraph (2) of this Part. * * * P The Project is expected to be completed by December 31, 1979. 19 SCHEDULE 3 Procurement A. General Procedures 1. Ex-,ept as provided in Part A(3) hereof, contracts shall be let under procedures consistent with those set forth in the "Guidelines for Procurement under World Bank Loans and IDA Credits" published by the Bank in April 1972, as revised in October 1972 (hereinafter called the Guidelines), on the basis of international competitive bidding. 2. (i) Bidders will not be prequalified, except as stated in Part D(l)(a) of this Schedule. (ii) TRDB shall procure fertilizers, pesticides and sprayers and spare parts. 3. Notwithstanding the provisions set forth or referred to in Parts A(1) and (2) of this Schedule: (i) building and road construction works and the construction of water supply systems shall be carried out either: (a) under contracts awarded in accordance with the Borrower's usual procurement procedures, or (b) by force account; (ii) contracts for lorries and other vehicles and equipment shall be awarded in accordance with the Borrower's usual procurement procedures; and (iii) pumps and diesel engines for water supply systems shall be purchased from the Borrower's stock for all Regions. B. 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: (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 20 goods; (ii) customs duties and other import taxes 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 information required to establish the eligibility of a bid for such preference and the following methods and stages that will be followed 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 Association 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. (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 evaluated bid of each group. The lowest evaluated bid of each group 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 further comparison only, an amount equal to (i) the amount of customs 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 21 A bid in such further comparison is the lowest, it shall be selected for the award; if not, the lowest evaluated bid from group C shall be selected. C. Preference for Domestic Civil Works Contractors 1. With respect to any contract for civil works included under Categories 1 and 2 of the table set forth in Schedule I to this Development Credit Agreement, the Borrower may grant a margin of preference to domestic contractors, as determined by the Borrower, in accordance with, and subject to, the following provisions: (a) Contractors shall be required to prequalify. The Borrower shall, before qualification is invited, inform the Association in detail of the procedure to be followed and shall introduce such modifications in said procedure as the Association shall reasonably request. Applicants for qualification applying also for such preference shall be asked to provide, as part of the information for qualification, such information, including details of ownership, as shall be required to determine whether, according to the classification established by the Borrower and accepted by the Association, 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. The list of prequalified bidders, together with a statment of their qualifications and, where applicable, of their eligibility for domestic preference under this Part, and of the reasons for the exclusion of any applicant for prequalification and for such eligibility shall be furnished by the Borrower to the Association for its comments before the applicants are notified, and the Borrower shall make such additions to, deletions from, or modifications in, the said list as the Association shall reasonably request. (b) Before bids are invited the Borrower shall furnish to the Association, 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 documents or procedure as the Association shall reasonably request. The bidding documents shall clearly indicate any preference which will be granted and the method that will be followed in the evaluation and comparison of bids to give effect to such preference. Any further modification to the bidding documents shall require the Association's concurrence before it is issued to the prospective bidders. (c) After bids have been received and reviewed by the Borrower, responsive bids will be classified into the following groups: 22 (i) bids offered by domestic contrators 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. (d) After bids have been evaluated, the Borrower shall, before a final decision on the award is made, inform the Association of the name of the bidder to whom it intends to award the contract and shall furnish to the Association, in sufficient time for its review, a detailed report on the evaluation and comparison of the bids received, together with the reasons for the intended award. The Association shall, if it determines that the intended award would be inconsistent with the procedures set forth or referred to in Section 2.03 of this Agreement, promptly inform the Borrower and state the reasons for such determination. (e) The terms and conditions of the contract shall not, without the Association's concurrence, materially differ from those on which bids were asked. (f) Two conformed copies of the contract shall be furnished to the Association promptly after its execution and prior to the submission to the Association of the first application for withdrawal of funds from the Credit Account in respect of any such contract. D. Review of Procurement Decisions by Association 1. Review of invitation to bid and of proposed awards and final contracts: With respect to all contracts for aerial photography, radio-telephone equipment, fertilizers, pesticides and sprayers estimated to cost the equivalent of $30,000 or more: (a) Before bids are invited, the Borrower shall furnish to the Association, 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 documents or procedures as the Association shall reasonably request. Any further modification to the bidding documents shall require the Association's concurrence before it is issued to the prospective bidders. (b) After bids have been received and evaluated, the Borrower shall, before a final decision on the award is made, inform the Association of the name of 23 the bidder to which it intends to award the contract and the reasons for the intended award and shall furnish to the Association, in sufficient time for its review, a detailed report, on the evaluation and comparison of the bids received, together with the recommendation for award and such other information as the Association shall reasonably request. The Association 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. (c) The terms and conditions of the contract shall not, without the Association'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 Association promptly after its execution and prior to the submission to the Association of the first application for withdrawal of funds from the Credit Account in respect of such contract. 2. With respect to each contract to be financed out of the proceeds of the Credit and not governed by the preceding paragraph, the Borrower shall furnish * to the Association, promptly after its execution and prior to the submission to the Association of the first application for withdrawal of funds from the Credit Account in respect of such contract, two conformed copies of such contract, together with the analysis of bids, recommendations for award and such other information as the Association shall reasonably request. The Association 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 determination. 24 SCHEDULE 4 Preparation of Village Site Feasibility Reports (VSFR) Procedures for Selecting Project Villages from New Villages 1. Examination of Aerial Photographs. During the first few months of the Project, aerial photographs shall be taken of those parts of Kigoma Region where village development under the Project might be expected. A complete set of prints of an appropriate scale shall be kept in the Lands Office of Kigoma Region. In analyzing a proposed site, a KRA study team consisting of relevant specialists shall first examine the relevant aerial photographs. The land planner and his staff shall interpret the photographs and prepare sketch maps, as necessary. The KRA study team examination shall provide: (a) reasonably accurate plotting of existing (if any) settlement, infrastructure, roads, trails and fields; (b) preliminary indication of the location and extent of land with soils and topography suitable for sustained cultivation under the Project; (c) in cases where a water supply system has not been developed, preliminary indication of possible water sources and their likely ease or difficulty of development; and (d) indication of special features such as erosion hazards. The examination shall enable the KRA study team to: (i) determine those proposed villages that are obviously unsuitable and (ii) for those sites meriting further study, locate the site precisely and indicate matters that are likely to be significant, thereby facilitating the field examination. 2. Field Examination. A field visit by the KRA study team shall be an integral part of the preparation of the VSFR for each Project Village (whether existing or new). The KRA study team shall begin by assembling the data required to complete the questionnaire on the existing features. To assist in the analysis of possible water supply systems, KRA's water engineer in those areas where a system or previously tried surface wells do not exist shall arrange, where necessary, for the prior sinking, at representative locations in the proposed site, of at least two dug wells, each to a depth of at least 5 meters. Also, to assist in analysis, a sketch map of the site shall be prepared showing existing roads, settlement, water sources, 25 buildings and cultivated fields, and currently uncultivated areas having fertility adequate for development under the Project. 3. Definition of Village Site or Sites. The KRA study team shall for each proposed Project Village identify a possible site or sites and for each site shall prepare a sketch, calculate its carrying capacity (as outlined in paragraph 4 below) and costs and compare its merits with alternative sites. The sketch of each site shall show the location of proposed house plots, water supply, roads and infrastructure. 4. Carrying Capacity. The KRA study team shall calculate the number of additional families that a particular site can support, taking into account the amount of arable land within easy walking distance of the proposed site (usually within 3 km of the edge of the proposed settlement, depending on village layout and topography). This calculation shall take into account the amount of agricultural land required for each family including the need for land periodically to lie fallow. 5. Cost Estimates. The KRA study team shall prepare cost estimates for investment costs and annual recurrent costs for each scheme, taking into account recent experience and expected price changes. For each plan KRA's water engineer shall prepare a preliminary least-cost water supply system, taking into account the results of the dug-wells. 6. Evaluation of Alternative Schemes. The KRA study team would compare on an annual basis the initial investment and annual recurrent costs of each alternative. In calculating such annual costs, the KRA study team shall use an estimated opportunity cost of capital that reflects the alternative return to public investments in Tanzania. 7. Recommendation. The KRA study team shall prepare a signed recommendation stating: (a) whether any further development was warranted at the proposed site; (b) which site is preferable (generally the one having lowest annual cost per family); and (c) the maximum sustainable size of the village in terms of supportable number of families. Procedures for Selecting Project Villages from Existing Villages 1. The purposes in carrying out a VSFR exercise for existing villages for which investments or credits are proposed under the Project are (a) to ensure that these villages would be viable for existing and proposed populations; and (b) to permit a detailed examination of the alternative ways of carrying out the proposed investments. 26 2. The same form of VSFR shall be used for both new and existing villages. In the VSFR, special care shall be required in the calculation of carrying capacity to ensure that existing families would have sufficient agricultural land.