Tanzania - Tourism Rehabilitation Project : Credit 0860 - Project Agreement - Conformed

DOCUMNTS .CREDIT NUMBER 860 TA Project Agreement (Tourism Rehabilitation Project) between INTERNATIONAL DEVELOPMENT ASSOCIATION and TANZANIA TOURIST CORPORATION Dated -, 1979 PROJECT AGREEMENT AGREEMENT, dated 2 , 1979, between INTERNATIONAL DEVELOPME T ASSOCIATION (hereinafter called the Association) and TANZANIA TOURIST CORPORATION (hereinafter called TTC). WHEREAS by the Development Credit Agreement of even date herewith between the United Republic of Tanzania (hereinafter called the Borrower) and the Association, the Association has agreed to make available to the Borrower an amount in various currencies equivalent to fourteen million dollars ($14,000,000), on the terms and conditions set forth in the Development Credit Agreement, but, only on condition that TTC agree to undertake such obligations toward the Association as are hereinafter set forth; and WHEREAS by a subsidiary loan agreement to be entered into between the Borrower and TTC, a portion of the proceeds of the credit provided for under the Development Credit Agreement will be made available to TTC on t.ie terms and conditions therein set forth; and WHEREAS TTC, in consideration of the Association's entering into- the Development Credit Agreement with the Borrower, has . agreed to undertake the obligations hereinafter set forth; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I Definitions Section 1.01. Wherever used in this Agreement, unless the context shall otherwise require, the several terms defined in the Development Credit Agreement and in the General Conditions (as so defined) have the respective meanings therein set forth and the term "subsidiary" means any company of which a majority of the outstanding voting stock or other proprietary interest is owned or effectively controlled by TTC or by any one or more subsidiaries of TTC or by TTC and one or more of its subsidiaries. ARTICLE II Execution of the Project Section 2.01. TTC shall carry out Parts A and B of the Project described in Schedule 2 to the Development Credit -2- Agreement with due diligence and efficiency and in conformity with appropriate administrative, commercial engineering and financial practices. Section 2.02. TTC shall employ, by April 30, 1979 or such later date as the Association may accept, and retain a qualified and experienced specialist to supervise and coordinate the hotel rehabilitation program included in Part A of the Project. Section 2.03. Except as the Association shall otherwise agree, procurement of the goods and civil works required for the Project and to be financed out of the proceeds of the Credit, shall be governed by the provisions of the Schedule to this Agreement. Section 2.04. All technical assistance required for Parts A and B of the Project and to be financed out of the proceeds of the Credit shall be carried out by qualified and experienced personnel on terms and conditions satisfactory to TTC and the Association. Section 2.05. (a) TTC undertakes to insure, or make adequate provision for the insurance of, the imported goods to be financed out of the proceeds of the Credit relent to it by the Borrower .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 TTC to replace or repair such goods. (b) Except as the Association may otherwise agree, TTC shall cause all goods and services financed out of the proceeds of the Credit relent to it by the Borrower to be used exclusively for the Project. Section 2.06. (a) TTC shall furnish to the Association, promptly upon their preparation, the plans, specifications, reports, contract documents and construction and procurement schedules for Parts A and B of the Project, and any material modifications thereof or additions thereto, in such detail as the Association shall reasonably request. (b) TTC: (i) shall maintain records and procedures adequate to record and monitor the progress of Parts A and B of the Project (including its cost and the benefits to be derived from it), to identify the goods and services financed out of the proceeds of the Credit relent to it by the Borrower, and to disclose their use -3- in the Project; (ii) shall enable the Association's accredited representatives to visit the facilities and construction sites included in Parts A and B of the Project and to examine the goods financed out of the proceeds of the Credit and any relevant records and documents; and (iii) shall furnish to the Association at regular intervals all such information as the Association shall reasonably request concerning Parts A and B of the Project, its cost and, where appropriate, the benefits to be derived from it, the expenditures of such proceeds and the goods and services financed out of such proceeds. (c) Promptly after completion of the Project, but in any event not later than six months after the Closing Date or such later date as may be agreed for this purpose between the Associa- tion and TTC, TTC shall prepare and furnish to the Association a report, of such scope and in such detail as the Association shall reasonably request, on the execution and initial operation of the Project, its cost and the benefits derived and to be derived from it, the performance by TTC and the Association of their respective obligations under the Credit Agreement and the accomplishment of the purposes of the Credit. (d) TTC shall enable the Association's representatives to examine such plants, installations, sites, works, buildings, property and equipment of TTC and such relevant records and documents as the Association shall reasonably request. Section 2.07. TTC shall duly perform all its obligations under the Subsidiary Loan Agreement. Except as the Association shall otherwise agree, TTC shall not take or concur in any action which would have the effect of amending, abrogating, assigning or waiving the Subsidiary Loan Agreement or any provision thereof. Section 2.08. (a) TTC shall at the request of the Associa- tion, exchange views with the Association with regard to the progress of the Project, the performance of its obligations under this Agreement and under the Subsidiary Loan Agreement, and other matters relating to the purposes of the Credit. (b) TTC and the Association shall promptly inform each other of any condition which interferes or threatens to inter- fere with the progress of the Project, the accomplishment of the purposes of the Credit, or the performance by TTC of its obliga- ticis under this Agreement and under the Subsidiary Loan Agreement. ARTICLE III Management and Operations of TTC Section 3.01. TTC shall carry out its tndertakings under the Project and shall. conduct its operations and affairs in conformity with sound administrative, commercial, engineering and financial practices, under qualified and experienced man- agement and staff in adequate numbers. .Section 3.02. TTC shall take out and maintain with respon- sible-insurers, or make other provisions satisfactory to the Association for, insurance against such *risks and in such amounts as shall be consistent with appropriate practice. Section 3.03. TTC shall operate and matntain, repair and replace all facilities, equipment and vehicles financed out of the proceeds of the Credit relent io Lt, in accordance with appropriate administrative, commercial, engineering and financial practices. Section 3.04. TTC shall, by December 31, 1981, have reached and thereafter maintain an aninal level of repair and mainte- nance expenditure equivalent to six per cent of its annual hotel sales or two per cent of the total current value of its fixed assets, whichever is higher. Section 3.05. TTC shall, by December 31, 1979, prepare and submit to the Association a study examining the feasibility and magnitude of real rate increases at its hotels and lodges and recommending policies and procedures for TTC tariff rate deci- sions. ARTICLE IV Financial Covenants Section 4.01. (a) TTC shall maintain records adequate to reflect in accordance with consistently maintained appropriate accounting practices Lts operations and financial condition. (b) TTC shall establish and maintain until. co-apletion of the Project a separate Project Account for Parts A and B of the Project to be used exclusively for purposes of the Project and shall record thereta all receipts and payments for or in connec- tion with those Parts of the Project. -5- Section 4.02. TTC shall: (a) have its accounts including the said Project Account and financial statements (balance sheets, statements of income and expenses and related statements) for each of its subsidiaries, and consolidated financial statement for TTC and its subsidiaries for each fiscal year audited, in accordance with appropriate auditing principles consistently applied, by independent auditors acceptable to the Association; (b) furnish to the Association as soon as available, but in any case not later than six months after the end of each such year, (i) certified copies of its financial statements for such year as so audited and (ii) the report of such audit by said auditors, of such scope and in such detail as the Association shall have reasonably requested; and (c) furnish to the Association such other information concern- ing such accounts and financial statements of TTC and- the audit thereof as the Association shall from time to time reasonably request. Section 4.03. TTC shall not undertake any capital expendi- tures in excess of TShs2,000,000 per fiscal year, except capital expenditures financed through government grants or long-term non-governmental borrowings, if its ratio of current assets to current liabilities, on a consolidated basis after making the proposed capital expenditures in question, would fall below 1.1 to 1. The terms "current assets" and "current liabilities" have the meanings assigned to them in Section 3.03 (b) of the Development Credit Agreement. .ARTICLE V Effective Date; Termination; Cancellation and Suspension Section 5.01. This Agreement shall come into force and effect on the date upon which the Development Credit Agreement becomes effective. Section 5.02. (a) This Agreement and all obligations of the Association and of TTC hereunder shall terminate on the earlier of the following two dates: (i) the date on which the Development Credit Agreement shall terminate in accordance with its terms; or (ii) a date fifteen years after the date of this Agreement. (b) If the Development Credit Agreement terminates in accordance with its terms before the date specified in paragraph (a) (ii) of this Section, the Association shall promptly notify TTC of this event. Section 5.03. All the provisions of this Agreement shall continue in full force and effect notwithstanding any cancellation or suspension under the General Conditions. ARTICLE VI Miscellaneous Provisions Section 6.01. Any notice or request required or permitted to be given or made under this Agreement and any agreement between the parties contemplated by this Agreement shall be in writing. Such notice or request shall be deemed to have been duly given or made when it shall be delivered by hand or by mail, telegram, cable, telex or radiogram to the party to which it is required or permitted to be given or made at such party's address herein- after specified or at such other address as such party shall have designated by notice to the party giving such notice or making such request. The addresses so specified are: For the Association: International Development Association 1818 H Street, N.W. Washington, D.C. 20433 - United States of America Cable address: Telex: INDEVAS 440098 (ITT) Washington, D.C. 248423 (RCA) or 64145 (WUI) For TTC: Tanzania Tourist Corporation P.O. Box 2485 Dar es Salaam Tanzania 7- Cable address: Telex: TANTOURS . 41061 Dar es Salaam Dar es Salaam Section 6.02. Any action required or permitted to be taken, and any document required or permitted to be executed, under -this Agreement on behalf of TTC may be taken or executed by its General Manager or such other person or persons as its General Manager shall designate in writing, and TTC shall furnish to the Association sufficient evidence of the authority and the authenti- cated specimen signature of each such person. Section 6.03. This Agreement may be executed in several counterparts, each of which shall be an original, and all collec- tively but one instrument. IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, have caused this Agreement 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. INTERNATIONAL DEVELOPMENT ASSOCIATION By Regional Vice President Eastern Africa TANZANIA TOURIST CORPORATION By Authorized Representative SCHEDULE Procurement A. International Competitive Bidding 1. Except 'as provided in Part D hereof, goods and civil works shall be procured under contracts awarded in accordance with procedures consistent with those set forth in the "Guidelines for Procurement under World Bank Loans and IDA Credits" published by the Bank in March 1977 (hereinafter called the Guidelines), on the basis of international competitive bidding as described in Part A of the Guidelines. 2. For goods and works to be procured on the basis of inter- national competitive bidding, in addition to the requirements of paragraph 1.2 of the Guidelines, TTC shall prepare and forward to the Association as soon as possible, and in any event not later than 60 days prior to the date of availability to the public of the first tender or prequalification documents relating thereto, as the case may be, a general procurement notice, in such form and detail and containing such information as the Association shall reasonably request; the Association. will arrange for the publica- tion of such notice in order to provide timely notification to prospective bidders of the opportunity to bid for the goods and works in question. TTC shall provide the necessary information to update such notice annually so long as any goods or works remain to be procured on the basis of international competitive bidding. 3. Bidders for civil works included in Part A of the Project shall be prequalified as described in paragraph 1.3 of Part A of the Guidelines. 4. For the purpose of evaluation and comparison of bids for the supply of goods to be procured on the basis of international competitive bidding: (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 on imported goods, and sales and similar taxes on domestically supplied goods, shall be excluded; and (iii) the cost to TTC of inland freight and other expenditures incidental to the delivery of goods to the place of their use or installation shall be included. B. Preference for Domestic Manufacturers In the procurement of goods in accordance with the procedures described in Part A of this Schedule, goods manufactured in Tanzania may be granted a margin of preference in accordance with, and subject to, the following provisions: 1. 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. 2. 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 Tanzania and the Assoclation 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. 3. 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. 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. 4. If, as a result of the comparison under paragraph 3 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 -10- grouy 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 3 is the lowest evaluated bid shall be selected. C. Preference for Domestic Contractors With respect to the evaluation of bids for any contract for civil works included under Category (1) of the table set forth in Schedule 1 to the Development Credit Agreement and to be procured in accordance with the procedures described in Part A of this Schedule, TTC may grant a margin of preference of 7-1/2% to domestic contractors, in accordance with, and subject to, the following provisions: 1. Contractors shall be required to prequalify as provided in Part A of this Schedule and applicants for qualification applying for such preference shall be asked to provide, as part of the data 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. 2. After bids have been received and reviewed by TTC, 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. D. Other Procurement Procedures f1. Contracts for civil works estimated to cost $250,000 equiva- lent or less may be awarded pursuant to the Borrower's applicable - 11 - competitive-bidding procedures; provided that the aggregate value of contracts awarded pursuant to this paragraph shall not exceed $2,400,000 equivalent. 2. Contracts or orders for the purchase of goods which cannot be bulked in packages of $100,000 equivalent or more may be awarded pursuant to the Borrower's applicable competitive bidding procedures; provided that the aggregate value of contracts awarded pursuant to this paragraph shall not exceed $1,500,000 equivalent. 3. Spare parts for existing equipment may be procured directly from the equipment manufacturer or distributor; provided that the aggregate value of such spare parts shall not exceed $300,000 equivalent. E. Review of Procurement Decisions by the Association 1. Review of prequalification. The Borrower or TTC, as the case may be, shall, before qualification is invited, inform the Asso- ciation in detail of the procedure to be followed, and shall introduce such modifications in said procedure as the Association shall reasonably request. The list of prequalified bidders, together with a statement of their qualifications and, where applicable, of their eligibility for domestic preference under Part C above and of the reasons for the exclusion of any applicant for prequalification and for such eligibility shall be furnished by the Borrower or TTC, as the case may be, to the Association for its comments before the applicants are notified of the Borrower's or TTC's decision, as the case may be, and the Borrower or TTC, as the case may be, shall make such additions to, deletions from, or modifications in, the said list as the Association shall reason- ably request. 2. Review of invitations to bid and of proposed awards and final contracts: With respect to all contracts for civil works estimated to cost the equivalent of $250,000 or more: (a) Before bids are invited, the Borrower or TTC, as the case may be, 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 - 12 - 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 Bor- rower or TTC, as the case may be, shall, before a final decision on the award is made, inform the Association of the name of the bidder to which 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 recommendations for award and such other infor- mation as the Association shall reasonably request. The Associa- tion shall, if it determines that the intended award would be inconsistent with the Guidelines or this Schedule, promptly inform the Borrower or TTC, as the case may be, 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. 3. With respect to each contract not governed by.,the preceding paragraph, the Borrower or TTC, as the case may be, shall furnish to the Association, promptly after its execution and prior to the submission to the Association of the first application for with- drawal of funds from the Credit Account in respect of such con- tract, two conformed copies of such contract, together with the analysis of the respective 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 or TTC, as the case may be, and state the reasons for such determination. 4. Before agreeing to any material modification or waiver of the terms and conditions of a contract, or granting an extension of the stipulated time for performance of such contract, or issuing any change order under such contract (except in cases of extreme urgency) which would increase the cost of the contract -13- by more than 10% of the original price, the Borrower or TTC, as the case may be, shall inform the Association of the proposed modification, waiver, extension or change order and the reasons therefor. The Association, if it determines that the proposal would be inconsistent with the provisions of this Agreement, shall promptly inform the Borrower or TTC, as the case may be, and state the reasons for its determination. INTERNATIONAL DEVELOPMENT ASSOCIATION CERTIFICATE I hereby certify that the foregoing is a true copy of the original in the archives of the Interna- tional Development Association. In witness whereof I have signed this Certifi- cate and affixed the Seal of the Association thereunto the day of, o 1974. FOR SECRETARY