Tanzania - Telecommunications Project : Credit 1173 - Project Agreement - Conformed

Doc I~fREDIT NUMBER 1173 TA Project Agreement (Teleco=unications Project) betveen INTERNATIONAL DEVELOPMENT ASSOCIATION and TANZANIA POSTS AND TELECOMUNICATIONS CORPORATION Dated it Q (f , 1982 CREDIT NUMBER 1173 TA PROJECT AGREEMENT AGREEMENT, dated 10A &X 0 q , 1982, between INTERNATIONAL DEVELOPMENT ASSOCIATION (hereinafter called the Association) and TANZANIA POSTS AND TELECOMMUNICATIONS CORPORATION (hereinafter called TPTC). 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 twenty-two million one hundred thousand Special Drawing Rights (SDR 22,100,000), on the terms and condi- tions set forth in the Development Credit Agreement, but only on condition that TPTC agrees 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 TPTC, the proceeds of the credit provided for under the Development Credit Agreement will be made available to TPTC on the terms and conditions therein set forth; and WHEREAS TPTC, 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. TPTC shall carry out the Project described in Schedule 2 to the Development Credit Agreement with due diligence and efficiency and in conformity with appropriate administrative, engineering, and financial practices. -2- Section 2.02. In order to assist TPTC with the studies under Part J of the Project, TPTC shall employ consultants whose qual- ifications, experience and terms and conditions of employment shall be satisfactory to the Association. 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 the Schedule to this Agreement. Section 2.04. (a) TPTC 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 TPTC to replace or repair such goods. (b) Except as the Association may otherwise agree, TPTC 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 2.05. (a) TPTC shall furnish to the Association, promptly upon their preparation, the plans, specifications, reports, contract documents and work and procurement schedules for the Project, and any material modifications thereof or additions thereto, in such detail as the Association shall reasonably request. (b) TPTC: (i) shall maintain records and procedures adequate to record and monitor the progress 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) shall 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) shall furnish to the Association at regular intervals all such information as the Association shall reasonably request concerning 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. -3- (c) Upon award Zy £PTC of any contract for goods to be financed out of the proceeds of the Credit, the Association may publish a description thereof, the name and nationality of the party to whom the contract was awarded and the contract price. (d) 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 TPTC and the Association, TPTC 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 TPTC and the Association of their respec- tive obligations under the Project Agreement and the accomplish- ment of the purposes of the Credit. (e) TPTC shall enable the Association's representatives to examine such plants, installations, sites, works, buildings, property, equipment, records and documents of TPTC as are relevant to the performance of TPTC's obligations under this Agreement. Section 2.06. TPTC shall duly perform all its obligations under the Subsidiary Loan Agreement. Except as the Association shall otherwise agree, TPTC 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 2.07. (a) TPTC 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) TPTC shall promptly inform the Association of any condition which interferes or threatens to interfere with the progress of the Project, the accomplishment of the purposes of the Credit, or the performance by TPTC of its obligations under this Agreement and under the Subsidiary Loan Agreement. ARTICLE III Management and Operations of TPTC Section 3.01. (a) TPTC shall conduct its operations and affairs and maintain its financial position in accordance with -4- sound engineering, industrial and financial standards and prac- tices, with qualified management and assisted by qualified and competent staff in adequate numbers. (b) TPTC shall take out and maintain with responsible 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. (c) TPTC shall operate and maintain all its equipment and properties, and from time to time make all necessary renewals and replacements thereof in accordance with sound engineering and financial practices. (d) If TPTC establishes or acquires any subsidiary, it shall cause such subsidiary to observe and perform the obligations of TPTC hereunder to the extent to which such obligations shall or can be applicable thereto, as though such obligations were binding upon such subsidiary. ARTICLE IV Financial Covenants Section 4.01. TPTC shall maintain records adequate to reflect in accordance with consistently maintained appropriate accounting practices its operations and financial condition. Section 4.02. (a) TPTC shall: (i) have its accounts and financial statements (balance sheets, statements of income and expenses and related statements) for each fiscal year audited, in accordance 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 eight months for fiscal year 1981, seven months for fiscal year 1982 and six months for fiscal years thereafter, after the end of each such year, (A) certified copies of its financial statements for such year as so audited and (B) the report of such audit by said auditors, of such scope and in such detail as the Association shall have reasonably requested; and (iii) furnish to the Association such other information concerning the accounts and financial statements of TPTC and the audit thereof as the Association shall from time to time reason- ably request. 5- (b) So long as the assets acquired by, and liabilities incurred by, EAPTC and EA EXTELCOMS shall not have been finally allocated among the Borrower, the Republic of Uganda and the Republic of Kenya: (i) such accounts and financial statements may be prepared on a pro forma basis in accordance with such assump- tions as TPTC chooses to make concerning such assets and liabili- ties; (ii) such audit report may be qualified insofar as TPTC's financial statements reflect such assumptions; (iii) all calcula- tions made to ascertain TPTC's compliance with the provisions of this Article shall be based on such accounts and financial state- ments; and (iv) revaluations of assets pursuant to Section 4.03 (b) (ii) shall, insofar as the identity of the assets to be revalued is concerned, be based on the assets reflected in such statements and accounts and shall, insofar as the values to be placed on them is concerned, be regarded as provisional. Section 4.03. (a) Except as the Association shall otherwise agree, TPTC shall take all necessary steps to achieve an annual rate of return of not less than 12% on the revalued net fixed telecommunications assets in operation. (b) For the purposes of this Section: (i) the annual rate of return shall be calculated by relating the net telecommunications operating income for the year in question to the average of revalued net fixed telecommunications assets in operation at the beginning and at the end of that year; (ii) the term "revalued net fixed telecommunications assets in operation" shall mean the gross book value of fixed assets used by TPTC for telecom- munications services, less the amount of accumu- lated depreciation, as valued and revalued from time to time in accordance with sound and consis- tently maintained methods of valuation acceptable to the Association and TPTC. For purposes of this Section, TPTC shall adopt by September 30, 1982 a method of valuation, under accounting principles acceptable to the Association and TPTC, for the fixed telecommunications assets which it owns and of any fixed telecommunications assets acquired by EAPTC which it operates; and TPTC shall thereafter revalue, on the basis of such method, the fixed -6- assets included in its financial statements as at the end of its fiscal year ending December 31, 1982, and each subsequent fiscal year, in the event that as at each such date there is reasonable cause to believe that such assets have appreciated in value by more than ten per cent over the value placed on them at the last such revaluation, whether owing to inflation, changes in the respect- ive values or currencies or other causes; and (iii) the term "net telecommunications operating income" shall mean the difference between: (A) gross operating revenue accruing from TPTC's telecommunications services; and (B) the operating, maintenance and administration expenses, taxes (if any) and adequate provi- sion for depreciation on revalued fixed assets in operation but excluding interest and other charges on debt, all related to telecommunica- tions services. Section 4.04. (a) TPTC shall carry out a study of its tariff structure by June 30, 1983, or such later date as the Associa- tion may agree. The terms of reference for this study shall be acceptable to the Association and TPTC and shall include: (a) the possibility of differentiation in rates between manual and automatic long-distance calls; (b) criteria and methods for determining, and reflecting in TPTC's records, the class of each of its subscribers as between Government, business and private subscribers; and (c) levels of various charges applied to tele- communications services. TPTC shall furnish a copy of such study, together with its comments on the implications of its implementa- tion, to the Association by December 31, 1983, or such later date as the Association may agree. (b) TPTC shall carry out a study of the impact of tele- communications services on economic development by June 30, 1983, or such other date as the Association may agree, in accor- dance with terms of reference satisfactory to the Association. Such study shall include a survey on the usage of telecommunike.- tions services by current and potential customers. -7- Section 4.05. TPTC shall submit a report to the Association for its review and comment not later than September 30, 1982, containing its analysis of and its recommendations for improving TPTC's bill issuance procedures and collection of its receivables. 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 TPTC 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 twenty 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 TPTC 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 hereinafter -8- 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 TPTC: Tanzania Posts and Telecommunications Corporation P.O. Box 9070 Dar es Salaam United Republic of Tanzania Cable address: Telex: TANPOSTEL 41054 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 TPTC may be taken or executed by its Director General or such other person or persons as the Director General shall designate in writing, and TPTC 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. -9- 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 /$ 7Se... W<r"LA Regional Vice President Eastern Africa TANZANIA POSTS AND TELECOMMUNICATIONS CORPORATION Authorized Representative - 10 - SCHEDULE Procurement A. International Competitive Bidding 1. Except as provided in Part C hereof, goods 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 inter- national competitive bidding as described in Part A of the Guide- lines. 2. For goods to be procured on the basis of inter-national competitive bidding, in addition to the requirements of pat)agraph 1.2 of the Guidelines, TPTC 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 in question. TPTC shall provide the necessary information to update such notice annually so long as any goods remain to be procured on the basis of international competitive bidding. 3. 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 the imported goods, or the ex-factory price or off-the-shelf price of other goods, offered in such bid; and (ii) customs duties and other import taxes levied in connection with the importation, or the sales and similar taxes levied in connection with the sale or delivery, pursuant to the bid, of the goods shall not be taken into account in the evaluation of the bids. 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 - 11 - 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 TPTC 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 domestic bids. (3) Group C: bids offering any other goods. 3. In order to determine the lowest evaluated bid of each group, all evaluated bids in each group shall first be compared among themselves, without taking into account customs duties and other import taxes levied in connection with the importation, and sales and similar taxes levied in connection with the sale or delivery, pursuant to the bids, of the goods. 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 evaluated 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 A bid in such further comparison is the lowest, it shall be selected for the award; if not, the bid from group C - 12 - which as a result of the comparison under paragraph 3 is the lowest evaluated bid shall be selected. C. Other Procurement Procedures 1. Contracts for spare parts which do not exceed in the aggre- gate the equivalent of $750,000 may be awarded on the basis of negotiated contracts under procedures satisfactory to the Association. 2. Contracts for vehicles, construction materials and main- tenance equipment which are estimated to cost less than the equivalent of $150,000 each, but which do not exceed in the aggregate the equivalent of $750,000, may be procured in accor- dance with local procurement procedures satisfactory to the Association. D. Review of Procurement Decisions by the Association 1. Review of invitations to bid and of proposed awards and final contracts: With respect to all contracts estimated to cost the equiva- lent of $100,000 or more: (a) Before bids are invited, TPTC 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, TPTC 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 evalua- tion and comparison of the bids received, and such other informa- tion as the Association shall reasonably request. The Association shall, if it determines that the intended award would be inconsis- tent with the Guidelines or this Schedule, promptly inform TPTC and state the reasons for such determination. - 13 - (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 not governed by the preceding paragraph, TPTC 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 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 TPTC and state the reasons for such determination. 3. Before agreeing to any material modification or waiver of the terms and conditions of a contract, or granting an exten- sion 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 by more than 10% of the original price, TPTC 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 TPTC 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 198 -4. FOR SECRETARY