Tanzania - Sao Hill Forestry Project : Loan 1307 - Loan Agreement - Conformed

77 .. CONFORMED COPY LOAN NUMBER 1307 TA LOAN AGREEMENT (Sao Hill Forestry Project) between UNITED REPUBLIC OF TANZANIA and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Dated July 12, 1976 LOAN AGREEMENT AGREEMENT, dated July 12, 1976, 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. -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 seven million dollars ($7,000,000). 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 The amount of the Loan may be withdrawn from the Loan Account in accordance with the provisions of Schedule 1 to this Agreement, as such Schedule may be amended fran time to time by agreement between the Borrower and the Bank, for ex- penditures 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, goods and civil works to be financed out of the proceeds of the Loan shall be purchased and carried out, respectively, in accor- dance with the provisions of Schedule 4 to this Agreement. Section 2.04. The Closing Date shall be June 30, 1982 or such later date as the Bank shall establish. The Bank shall promptly notify the Borrower of such later date. 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charge at the rate of three-fourths of one per cent (3/4 of 1%) per annum on the principal amount of the Loan not withdrawn from time to time. 14 Section 2.06. The Borrower shall pay interest at the rate of eight and eighty-five hundredths per cent (8.85%) 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 April 15 and October 15 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. -5- ARTICLE III Execution of the Project Section 3.01. The Borrower shall carry out the Project with due diligence and efficiency and in conformity with sound forestry, financial and administrative practices, and shall pro- vide, promptly as needed, the funds, facilities, services and other resources required for the purpose. Section 3.02. The Borrower shall employ, after consultation with the Bank, and until the completion of the Project, a Project Manager, a Financial Controller, a silviculturist/forest economist and a roads/mechanical engineer; the Financial Controller and the roads/mechanical engineer to be employed by November 15, 1976 or such later date as the Borrower and the Bank shall agree. Section 3.03. In order to assist the Borrower in carrying out Part E.3 and 4, the Borrower shall employ experts whose quali- fications, experience and terms and conditions of employment shall be satisfactory to the Bank. Section 3.04. The Borrower shall carry out, or cause to be carried out, during the execution of the Project, detailed surveys, including soil surveys, of all plantable areas included in the Project area. - 6 - Section 3.05. (a) The Borrower undertakes to insure, or make adequate provision for the insurance of, the imported goods to be 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, all goods and services financed out of the proceeds of the Loan shall be used exclusively for the Project until its completion. Section 3.06. (a) The Borrower shall furnish to the Bank, promptly upon their preparation, the plans, specifications, reports, contract documents and construction and procurement schedules for the Project, and any material modifications thereof or additions thereto, in such detail as the Bank shall reasonably request. (b) The Borrower: (i) shall maintain records adequate to reflect 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 rele- vant records and documents; and (iii) shall furnish to the Bank, all such information as the Bank shall reasonably request con- cerning the Project, the expenditure of the proceeds of the Loan and the goods and services financed out of such proceeds. 7- Section 3.07. The Borrower shall provide adequate replacements before transferring key staff employed in carrying out or operating 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 transactions 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 Com- munity (hereinafter called the Community) securing a debt of the Community where the amount of the debt service on such debt in any financial year together with other debt service on other debt of -9- 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 incurrence. 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 records ade- quate to reflect in accordance with consistently maintained sound accounting practices the operations, resources and expenditures, in respect of the Project, of the departments or agencies of the Borrower responsible for carrying out the Project or any part thereof. (b) The Borrower shall: (i) have the accounts referred to in paragraph (a) hereof for each fiscal year audited, in accor- dance with sound auditing principles consistently applied, by - 10 - the Auditor General; (ii) furnish to the Bank as soon as avail- able, but in any case not later than six months after the end of each such year, (A) certified copies of such accounts for such year as so audited and (B) the report of such audit by the Auditor General, 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 cause the roads, firebreaks and other civil works and facilities included in the Project to be maintained in accordance with sound engineering, forestry and financial principles and practices, and shalL .,Lake iv.. .,ble sf ficient funds for such purposes. Section 4.04. Except as the Bank shall otherwise agree, the Borrower shall charge or cause to be charged stumpage rates in industrial forest plantations, starting on January 1, 1985 for eucalyptus and on January 1, 1992 for pine, at such levels as shall reflect, at least, the plantation establishment cost and enable such plantations to become financially self-supporting. Section 4.05. Except as the Bank shall otherwise agree, the Borrower shall take all measures necessary to ensure that tne land assigned for forest plantation under the Project shall not be encroached upon or used for other purposes. - 11 - ARTICLE V Effective Date; Termination Section 5.01. The following events are specified as additional conditions to the effectiveness of the Loan Agreement within the meaning of Section 12.01 (c) of the General Conditions: (a) that the Project Manager and the silviculturist/forest economist re- ferred to in Section 3.02 hereof have been employed in accordance with such provision; and (b) that not less than 60,000 hectares have been reserved exclusively for forest plantation under the Project. Section 5.02. The following is specified as an additional matter, within the meaning of Section 12.02 (c) of the General Conditions, to be included in the opinion or opinions to be fur- nished to the Bank, namely, that all steps required to reserve not less than 60,000 hectares for forest plantation under the Project have been taken. Section 5.03. The date October 12, 1976, is hereby specified for the purposes of Section 12.04 of the General Conditions. - 12 - ARTICLE VI Representative of the Borrower; Addresses Section 6.01. The Minister of the Borrower at the time re- sponsible for Finance is designated as representative of the Bor- rower for the purposes of Section 11.03 of the General Conditions. Section 6.02. The following addresses are sCtecified for the purposes of Section 11.01 of the General Conditions: For the Borrower: The Principal Secretary 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/ Stanley Please Acting Regional Vice President Eastern Africa - 14- 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) Vehicles and 1,200,000 100% of foreign Equipment expenditures or 75% of local expenditures (2) Civil Works 1,000,000 75% (3) Research, Trials, 1,000,000 100% of fcreign Training and expenditures Studies or 75% of local expenditures (4) Project Admin- 1,000,000 75% istration (5) Afforestation 2,000,000 100% of foreign expenditures or 75% of local expenditures (6) Unallocated 800,000 TOTAL 7,000,000 - 15 - 2. For the purposes of this Schedule, the term "foreign expendi- tures" 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. 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 o. services, or on the importation, manufacture, procurement or supply thereof; to that end, if the amount 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 $25,000, may be made in respect of Category 3 on account of payments made for such expenditures before that date but after June 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, - 16 - 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. - 17 - SCHEDULE 2 Description of the Project The Project is part of the Borrower's afforestation pro- gram designed to develop about 65,000 ha in the Sao Hill area, located almost entirely in the Mufindi District, in the Iringa Region. The Project consists of: Part A: Establishment of about 15,750 ha of pulpwood plantations. This includes surveying the area to be planted, estab- lishment of nurseries, ground preparation, weeding, silvicultural treatment and disease control, and con- struction and maintenance of firebreaks. Part B: Maintenance of about 8,800 ha of existing pulpwood plantations and of about 2,500 ha of sawlog plantations until December 31, 1981. Part C: Construction and maintenance of about 165 km of primary and secondary roads and about 395 kn of tracks. Part D: Construction of housing (about 44 units for staff and about 170 for labor), and about 20 buildings for administrative and social purposes. - 18 - Part E: 1. Forest research and trials on different species, both at high and low elevations, establishment and cultural techniques and fertilizer use. 2. A training program in methods of establishment of large-scale plantations, and in forest management and engineering. 3. A study of water availability in the Project area. 4. An engineering study of the best alignment of a road connecting the Project area with the site for a pro- posed pulp mill. 5. Aerial photography of the Project area and areas se- lected for expansion of the plantations included above. The Project i xpected to be completed by December 31, 1981. - 19 - SCHEDULE 3 Amortization Schedule Payment of Principal Date Payment Due (expressed in dollars)* October 15, 1981 65,000 April 15, 1982 70,000 October 15, 1982 70,000 April 15, 1983 75,000 October 15, 1983 80,000 April 15, 1984 85,000 October 15, 1984 85,000 April 15, 1985 90,000 October 15, 1985 95,000 April 15, 1986 95,000 OctoDer 15, 1986 105,000 Apri. 1. 'ff7 105,000 October 15, 1987 115,000 April 15, 1988 115,000 October 15, 1988 120,000 April 15, 1969 130,000 October 15, 1989 130,000 April 15, 1990 140,000 October 15, 1990 145,000 April 15, 1991 150,000 October 15, 1991 160,000 April 15, 1992 165,000 October 15, 1992 170,000 April 15, 1993 180,000 October 15, 1993 190,000 April 15, 1994 195,000 October 15, 1994 205,000 April 15, 1995 215,000 October 15, 1995 225,000 April 15, 1996 230,000 October 15, 1996 245,000 April 15, 1997 255,000 October 15, 1997 265,000 - 20 - Payment of Principal Date Payment Due (expressed in dollars)* April 15, 1998 280,000 October 15, 1998 290,000 April 15, 1999 300,000 October 15, 1999 315,000 April 15, 2000 330,000 October 15, 2000 345,000 April 15, 2001 375,000 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. I - 21 - 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 1.05% More than three years but not more than six years before maturity 2.10% More than six years but not more than eleven years before maturity 3.90% More than eleven years but nor more than sixteen years before maturity 5.65% More than sixteen years but not more than twenty-one years before maturity 7.45% More than twenty-one years but not more than twenty-three years before maturity 8.15% - 22 - Time of Prepayment Premium More than twenty-three years before maturity 8.85% 1 - 23 - SCHEDULE 4 Procurement A. International Competitive Bidding 1. Except as provided in Parts B and C hereof, contracts 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 Guidelines), on the basis of international competitive bidding. 2. To the extent possible, goods and works shall be grouped together to encourage international competition. B. Other Procurement Procedures Civil works, and goods estimated to cost less than the equivalent of $80,000, shall be procured in accordance with the Borrower's normal procedures. C. Procurement without Contracting Civil works may be carried out by the Borrower by force account. - 24 -I D. 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 for goods estimated to cost the equivalent of $80,000 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 on the evaluation and comparison of the bids received, 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. (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. - 25 - (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.