Tanzania - Smallholder Tea Consolidation Project : Credit 1037 - Project Agreement - Conformed

- CREDIT NUMBER 1037 TA Project Agreement (Smallholder Tea Consolidation Project) between INTERNATIONAL DEVELOPMENT ASSOCIATION and TANZANIA TEA AUTHORITY Dated ,A 2-1 1980 CREDI! NUMBER 1037 TA PROJECT AGREEMENT AGREEMENT, dated k4tt. ?d , 1980, between INTERNATIONAL DEVELOPMENT ASSOCIATION (hereinafter called the Association) and TANZANIA TEA AUTHORITY (hereinafter called TTA). WHEREAS by the Development Credit Agreement of even date herewith between 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 TTA agree to undertake such obligations toward the Association as are hereinafter set forth; WHEREAS by a subsidiary loan agreement to be entered into between the Borrower and TTA, a portion of the proceeds of the credit provided for under the Development Credit Agreement will be made available to TTA on the terms and conditions therein set forth; and WHEREAS TTA, 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. ARTICLE II Execution of the Project Section 2.01. TTA shall carry out Parts A through F of the Project described in Schedule 2 to the Development Credit Agree- ment, and shall assist TRDB in carrying out Part H of the Project as appropriate, with due diligence and efficiency and in con- formity with appropriate administrative, financial, agricultural and engineering practices. -2- Section 2.02. (a) In order to assist TTA in the construction of factories, TTA shall continue to employ a Chief Engineer. (b) In order to assist TTA in the operation of the Project factories, TTA shall by not later than December 31, 1980, employ two Resident Engineers to be stationed in Katumba and Lupembe factories, respectively, and contirie to employ a Factory Super- intendent at TTA's headquarters. (c) In order to assist TTA in the improvement of its manage- ment and accounting systems, organization structure, standard of tea manufacture and crop husbandry, TTA shall employ consultants, if a determination is made by TTA and the Association that such consultants are required. (d) The qualifications and experience of the staff and consultants referred to in sub-sections (a), (b) and (c) above, and their terms and conditions of employment shall be satisfactory to the Borrower and the Association. Any successors to the above- mentioned staff shall be employed in accordance with the pro- visions of this sub-cection. Section 2.03. Except as the Association shall otherwise agree, procurement of the goods and civil works to be financed out of the proceeds of the Credit, shall be governed by the provisions of Schedule 3 to the Development Credit Agreement. Section 2.04. (a) TTA 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 TTA to replace or repair such goods. (b) Except as the Association may otherwise agree, all goods and services financed out of the proceeds of the Credit relent to TTA by the Borrower shall be used exclusively for the Project until its completion. Section 2.05. Prior to the establishment of the fuelwood plantation in Bukoba, TTA shall carry out a soil survey to estab- lish the suitability of the proposed site or other alternative sites, and shall by not later than December 31, 1980, submit the report of such survey to the Association for its review and comments. -3- Section 2.06. TTA shall maintain separate records to reflect the operating costs of its vehicles, including those referred to in Part D of the Project and shall establish operating procedures to ensure that such vehicles, in particular, those referred to in Part D.3 of the Project, are used efficiently. Section 2.07. (a) TTA shall furnish to the Association, promptly upon their preparation, the plans, specifications, reports, contract documents and construction and procurement schedules for the Project (excluding Parts E through H thereof), and any material modifications thereof or additions thereto, in such detail as the Association shall reasonably request. (b) TTA shall: (i) maintain records and procedures adequate to record and monitor the progress of Parts A through F 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, and to disclose their use in the Project; (ii) enable the Association'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 Credit and any relevant records and documents; and (iii) furnish to the Association at regular intervals all such information as the Association shall reasonably request concerning Parts A through F 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 TTA and the Association, TTA 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 Parts A through F of the Project, its cost and the benefits derived and to be derived from it, the performance by the Bor- rower, TTA, and the Association of their respective obligations under the Development Credit Agreement, the Project Agreement and other related agreements and the accomplishment of the purposes of the Credit. (d) TTA shall enable the Association's representatives to examine all plants, installations, sites, works, buildings, property and equipment of TTA and any relevant records and docu- ments. -4- Section 2.08. TTA shall duly perform all its obligations under the TTA Subsidiary Loan Agreement. Except as the Association shall otherwise agree, TTA shall not take or concur in any action which would have the effect of amending, abrogating, assigning or waiving the TTA Subsidiary Loan Agreement or any provision there- of. Section 2.09. (a) TTA 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 TTA Subsidiary Loan Agreement, and other matters relating to the purposes of the Credit. (b) TTA shall promptly inform the Association of any condi- tion which interferes or threatens to interfere with the progress of the Project, the accomplishment of the purposes of the Credit, or the performance by TTA of its obligations under this Agreement and under the TTA Subsidiary Loan Agreement. ARTICLE III Management and Operations of TTA Section 3.01. TTA shall carry out its undertakings under the Project and shall conduct its operations and affairs in conformity with sound administrative, agricultural, financial, technical and commercial practices, under qualified and experi- enced management and staff in adequate numbers. Section 3.02. Except as the Association shall otherwise agree, TTA shall at all times take all steps necessary on its part to acquire, maintain and renew all rights, powers and privileges which are necessary or useful in its operations. Section 3.03. TTA 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 3.04. TTA shall continue to operate, maintain, and repair its factories, equipment, properties, facilities and vehicles, including those financed under the Project, all in accordance with appropriate administrative, engineering and financial practices, and shall make appropriate provision in its annual budget for the funds required for that purpose. -5- Section 3.05. TTA shall by not later than March 31, 1981, appoint an Operations Director. Prior to such appointment, TTA shall hold' consultations with the Association on the qualifica- tions and experience of the proposed candidate. Section 3.06. TTA shall promptly employ as and when required, the incremental staff referred to in Part E (3) of the Project. ARTICLE IV Financial Covenants Section 4.01. (a) TTA shall maintain records adequate to reflect in accordance with consistently maintained appropriate accounting practices its operations and financial condition and the operations, resources and expenditures in respect of Parts A through F of the Project, including, without limitation to the foregoing, separate accounts reflecting all expenditures on account of which withdrawals are requested from the Credit Account under Categories (6), (7), and (8) of the table in paragraph I of Schedule 1 to the Development Credit Agreement on the basis of certificates of expenditure. (b) TTA shall retain, until one year after the Closing Date, all records (orders, invoices, bills, receipts and other documents) evidencing the expenditures on account of which with- drawals are requested from the Credit Account on the basis of certificates of expenditure and shall enable the Association's accredited representatives to examine such records. (c) TTA shall: (i) have its accounts and financial state- ments (balance sheets, statements of income and expenses and related statements) and the separate accounts referred to in the foregoing paragraph (a) for each fiscal year audited, in accord- ance with appropriate 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 copy of the report of such audit by said auditors, of such scope and in such detail as the Association shall have reasonably requested including, without limitation to the foregoing, a separate opinion by said auditors in respect of the expenditures and records referred to in paragraph (b) of this Section as to whether the proceeds of the Credit withdrawn from the Credit Account on the basis of certificates of expenditure have been used for the -6- purpose for which they were provided; and (iii) furnish to the Association such other information concerning such separate accounts, records and expenditures and the audit thereof as the Association shall from time to time reasonably request. 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 TTA thereunder 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 20 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 TTA 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 -~ 77- -7- 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 TTA: Tanzania Tea Authority P.O. Box 2663 Dar es Salaam United Republic of Tanzania Cable address: Telex: TANTEA 41130 TANTEA 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 TTA may be taken or executed by the General Manager of TTA or such other person or persons as the General Manager shall designate in writing, and TTA shall furnish to the Association sufficient evidence of the authority and the authenticated 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 8- of Columbia, United States of America, as of the day and year first above written. INTERNATIONAL DEVELOPMENT ASSOCIATION By By , Regional Vice President Eastern Africa TANZANIA TEA AUTHORITY By Authorized Representative 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 v day of 19 9Q1. FOR SECRETARY