Tanzania - Sao Hill Forestry Project- Phase II : Credit 1229 - Credit Agreement - Conformed

OFFICIAL )0CUMENT81 CREDIT MUBER 1229 TA Development Credit Agreement (Sao Hill Forestry Project - Phase II) between UNITED REPUBLIC OF TANZANIA and INTERNATIONAL DEVELOpENT ASSOCIATION Dated ,1982 CREDIT NUKEER 1229 TA DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated /AOL 19 , 1982, between UNITED REPUBLIC OF TANZANII (hereinafter called the Borrower) and INTERNATIONAL DEVELOPMENT ASSOCIATION (hereinafter called the Association). 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 June 30, 1980, 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). 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 and the term: "Forest Division" means the Forest Division within the Ministry of Natural Resources and Tourism of the Borrower. 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 five hundred thousand Special Drawing Rights (SDR 10,500,000). 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 The amount of the Credit may be withdrawn from the Credit Account in accordance with the provisions of Schedule 1 to this Agreement, ae such Schedule may be amended from time to time by agreement between the Borrower and the Association, 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. -2- 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 Schedule 3 to this Agree- ment. Section 2.04. The Closing Date shall be December 31, 1987 or such later date as the Association shall establish. The Associa- tion shall promptly notify the Borrower of such later date. Section 2.05. (a) The Borrower shall pay to the Association a commitment charge at the rate of one-half of one per cent (1/2 of 1%) per annum on the principal amount of the Credit not withdrawn from time to time. The commitment charge shall accrue from a date sixty days after the date of the Development Credit Agreement to the respective dates on which amounts shall be withdrawn by the Borrower from the Credit Account or shall be cancelled. (b) The commitment charge shall be paid: (i) at such places as the Association shall reasonably request; (ii) without restrictions of any kind imposed by, or in the territory of, the Borrower; and (iii) in the currency specified in this Agreement for the purposes of Section 4.02 of the General Conditions or in such other eligible currency or currencies as may from time to time be designated or selected pursuant to the provisions of that Section. Section 2.06. 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 2.07. Service charges shall be payable semiannually on March I and September 1 in each year. Section 2.08. The Borrower shall repay the principal amount of the Credit in semiannual installments payable on each March 1 and September 1 commencing September 1, 1992, and ending March 1, 2032, each installment to and including the installment payable on March 1, 2002, 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. -3- Section 2.09. 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. ARTICLE III Execution of the Project Section 3.01. The Borrower shall carry out the Project through the Forest Division with due diligence and efficiency and in conformity with appropriate financial, economic and forestry practices, and shall provide, promptly as needed, the funds, facilities, services and other resources required for the pur- pose. Section 3.02. (a) In order to assist the Borrower in the carrying out of Part E of the Project, the Borrower shall employ an Assistant Project Manager, Finance and Planning, a Workshop Manager and, not later than December 31, 1982, or such other date as may be agreed between the Borrower and the Association, a Work-Study Specialist, whose selection, qualifications, expe- rience and terms and conditions of employment shall be satis- factory to the Association in accordance with the principles and procedures described in the "Guidelines for the Use of Consultants by World Bank Borrowers and by the World Bank as Executing Agency" published by the Bank in August 1981. (b) In order to assist the Borrower in the carrying out of Part F of the Project, the Borrower shall employ consultants whose selection, qualifications, experience and terms and condi- tions of employment shall be satisfactory to the Association in accordance with the principles and procedures described in the "Guidelines for the Use of Consultants by World Bank Borrowers and by the World Bank as Executing Agency" published by the Bank in August 1981. Section 3.03. The Borrower shall assign counterpart staff with appropriate qualifications and experience to the Assistant Project Manager, Finance and Planning, to the Work-shop Manager and to the Work-study Specialist, promptly upon their employment, to assist them in the implementation of Part E of the Project. Section 3.04. The Borrower shall keep the position of Pro- ject Manager filled at all times with a person whose qualifica- tions and experience are satisfactory to the Association. -4- Section 3.05. The Borrower shall employ, not later than December 31, 1982, or such other date as may be agreed between the Borrower and the Association, six additional forest assis- tants with appropriate qualifications and experience to assist in the implementation of Parts A and B of the Project. Section 3.06. The Borrower shall, in consultation with the Association and not later than June 30, 1983, or such other date as may be agreed between the Borrower and the Association, take all measures necessary to ensure that the harvesting and logging of all forest resources under the Project shall be coordinated between the major users of said forest resources, including the Sao Hill saw mill and the Mufindi pulp and paper mill. Section 3.07. The Borrower shall: (i) carry out the study included in Part F.2 of the Project, under terms of reference agreed between the Lorrower and the Association, to estimate the appropriate level of stumpage rates for its plantation forestry resources; (ii) furnish it to the Association for it3 review and comments, not later than June 30, 1983, or such other date as may be agreed between the Borrower and the Association; and (iii) take promptly thereafter all measures as shall be agreed between the Borrower and the Association based on the findings of said study. Section 3.08. (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 Credit 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 replace or repair such goods. (b) The Borrower shall cause all goods and services financed out of the proceeds of tha Crelit to be used exclusively for the purposes of the Project. Section 3.09. (a) The Borrower shall furnish to the Associa- tion, 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. -5- (b) The Borrower: (i) shall maintain records and procedures adequate to record and monitor the progress of the Project (including its cost and the benefits tm 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 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 expenditure of the proceeds of the Credit and the goods and ser- vices financed out of such proceeds. (c) Upon the award by the Borrower of any contract for goods, works or services 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 the Borrower and the Association, the Borrower 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 the Bor- rower and the Association of their respective obligations under the Development Credit Agreement and the accomplishment of the purposes of the Credit. Section 3.10. The Borrower shall take all such action as shall be necessary to acquire as and when needed all such land and rights in respect of land as shall be required for carrying out the Project and shall furnish to the Association, promptly after such acquisition, evidence satisfactory to the Association that such land and rights in respect of land are available for purposes related to the Project. Section 3.11. Except as the Bank shall otherwise agree, the Borrower shall take all measures necessary to ensure that the land assigned for forest plantation under the Project shall not be encroached upon or used for other purposes. -6- ARTICLE IV Otther Covenants Section 4.01. (a) The Borrower shall maintain or cause to be maintained records adequate to reflect in accordance with consistently maintained appropriate 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) Without limitation to the foregoing, the Borrower shall: (i) maintain or cause to be maintained separate accounts reflecting all expenditurEs on account of which withdrawals are requested from the Credit Account on the basis of statements of expenditure; (ii) retain, until. one year after the Closing Date, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing the expenditures on account of which withdrawals are requested from the Credit Account on the basis of statements of expenditure; and (iii) enable the Association's representatives to examine such records. (c) The Borrower shall: (i) have the accounts referred to in paragraph (b) of this Section 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 six months after the end of each such year, a certified copy of the report of such audit by such 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 statements of expenditure have been used for the purpose for which they were provided; and (iii) furnish to the Association such other information concerning said separate accounts, records and expenditures and the audit thereof as the Association shall from time to time reasonably request. Section 4.02. The Borrower shall: (i) prepare and furnish to the Association for its review and comments, not later than July 31, 1983 and every five years thereafter, a work plan for all plantations under the Project which is based on detailed plantation inventories and which specifies for each plantation -7- compartment all works to be undertaken in the next five years, including: pruning, thinning, clear felling and replanting; and (ii) implement such work plan promptly after review by the Association, taking into account the Association's comments. 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 make available sufficient funds for such purposes. ARTICLE V Effective Date; Termination Section 5.01. The following event is specified as an additional condition to the effectiveness of the Development Credit Agreement within the meaning of Section 12.01 (b) of the General Conditions, namely that the Assistant Project Manager, Finance and Planning, and the Workshop Manager referred to in Section 3.02 (a) hereof have been appointed in accordance with the provision of such Section. Section 5.02. The following is specified as an additional matter, within the meaning of Section 12.02 (b) of the General Conditions, to be included in the opfiion or opinions to be furnished to the Association, namely, that an area of not less than 10,000 hectares has been exclusively reserved for the establishment of forest plantations under Part B of the Project in accordance with the laws of the Borrower and that no further action shall be required to permit the immediate planting of the area. Section 5.03. The date, L41, mv, is hereby specified for the purposes of Settion 12.04 of the General Conditions. Section 5.04. The obligations of the Borrower under Article IV of this Agreement shall cease and determine on the date on which the Development Credit Agreement shall terminate or on a date twenty years after the date of this Agreement, whichever shall be the earlier. -8- ARTICLE VI Representatives of the Borrower; Addresses Section 6.01. The Minister of the Borrower responsible for Finance is designated as representative of the Borrower for the purposes of Section 11.03 of the General Conditions. Section 6.02. The following addresses are specified for the purposes of Section 11.01 of the General Conditions: For the Borrower: The Principal Secretary Ministry of Finance P. 0. Box 9111 Dar es Salaam, Tanzania Cable address: Telex: TREASURY 41329 Dar es Salaam 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) 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. UNITED REPUBLIC OF TANZANIA By Isi / Pe 2 Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION By/s, 9 4,e C < Regional Vice President Eastern Africa -10- 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 Catr'gory and the percentage of expenditures for items so to be financed in each Category: Amount of the Credit Allocated % of (Expr Ased in Expenditures Category SDR Equivalent) to be Financed (1) (a) Vehicles, 1,350,000 100% of foreign and equipment expenditures and spare parts and 75% of local expenditures (b) fire fighting 140,000 100% of foreign equipment expenditures and 75% of local expenditures (2) Civil Works 1,140,000 75% (3) Consultants' 790,000 100% of foreign Services and expenditures and Study Tours 75% of local expenditures (4) Afforestation 4,800,000 100% of foreign expenditures and 75% of local expenditures (5) Staff salaries 700,000 75% of local ex- and wages penditures up to an aggregate dis- bursed amount of SDR 350,000, there- after 60% of local expenditures up to an aggregate dis- bursed amount of SDR 525,000; and thereafter 40% of local expenditures - 11 - Amount of the Credit Allocated % of (Expressed in Expenditures Category SDR Equivalent) to be Financed (6) Administrative 1,140,000 100% of foreign expenses and expenditures and vehicle oper- 75% of local ating costs expenditures (7) Unallocated 440,000 TOTAL 10,500,000 2. For the purposes of this Schedule: (a) the term "foreign expenditures" 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; and (b) the term "local expenditures" means expenditures in the currency of the Borrower or for goods or services supplied from the territory of the Borrower. 3. The disbursement percentages have been calculated in compli- ance with the policy of the Association that no proceeds of the Credit shall be disbursed on 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 the amount of any such taxes levied on or in respect of any item to be financed out of the proceeds of the Credit decreases or increases, the Association 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 Association. 4. Notwithstanding the provisions of paragraph 1 above, no withdrawals shall be made in respect of: (a) payments made for expenditures prior to the date of this Agreement, except that withdrawals, in an aggregate amount - 12 - not exceeding the equivalent of SDR 700,000 may be made on account of payments made for such expenditures before that date but after December 31, 1981; (b) payments made for expenditures in respect of Category (1) (b) above unless the fire-fighting equipment included in said Category shall have been acquired in accordance with detailed proposals for the specifications and design of such equipment, satisfactory to the Association. 5. Notwithstanding the allocation of an amount of the Credit or the disbursement percentages set forth in the table in para- graph 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 expend- itures 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 Associa- tion's reasonable opinion, represents the amount of such expendi- tures which would otherwise have been eligible for financing out of the proceeds of the Credit. - 13 - SCHEDULE 2 Description of the Project The Project consists of the following Parts: Part A: Further development of about 18,000 hectares of existing forest plantations established under the first Sao Hill Forestry Project for production of saw logs and pulpwood. Part B: Establishment and development of about 10,000 hectares of new forest plantations for production of saw logs and pulpwood. Part C: Construction of about 160 kilometers of secondary forest roads and of about 725 kilometers of tracks and upgrading of about 120 kilometers of secondary forest roads to primary forest roads. Part D: Construction of about 60 staff houses, and about 20 adminis- tration buildings and other structures. Part E: Strengthening the Forest Division's operations, especially its financial management, cost accounting and planning procedures and mechanical engineering services with the assistance of con- sultants and through the provision of short study tours for selected staff. Part F: 1. Review of the fire protection system in the plantations under the Project. - 14 - 2. Study to estimate the appropriate level of stumpage rates and prices for forestry products. 3. Review of the measures undertaken to solve the die-back problem in the plantations under Part A above. 4. Formulation of a National Village Afforestation program. The Project is expected to be completed by June 30, 1987. - 15 - SCEDULE 3 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 current edition of 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 to be procured on the basis of international com- petitive bidding, in addition to the requirements of paragraph 1.2 of the Guidelines, the Borrower 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 publication of such notice in order to provide timely notifica- tion to prospective bidders of the opportunity to bid for the goods and works in question. The Borrower 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 interna- tional competitive bidding. 3. To the extent practicable contracts for vehicles, tractors, machinery and equipment shall be grouped to form adequate bid packages. Bidders shall be required to maintain in the territory of the Borrower adequate after sales services and spare parts inventories. 4. For the purpose of evaluation and comparison of bids for the supply of goods to be procured on the basis of international com- petitive 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; (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 - 16 - in the evaluation of the bids; and (iii) the cost of inland freight and other expenditures incidental to the delivery of the goods to the place of their use or installation shall be in- cluded. B. Preference for Domestic Manufacturers In the procurement of goods in accordance with the procedure 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 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 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 evalu- ated 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 - 17 - 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 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 the purchase of vehicles, tractors, machinery and equipment estimated to cost less than $100,000 each may be awarded on the basis of competitive bidding advertised locally, in accordance with local procedures acceptable to the Association, provided that the aggregate value of such contracts shall not exceed $300,000. 2. Civil works may be carried out by the Borrower by force account, in accordance with the Borrower's standards and designs acceptable 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 for goods estimated to cost the equivalent of $150,000 or more: (a) Before bids area 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. - 18 - (b) After bids have been received and evaluated, the Bor- rower 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, 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 was 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 with- drawal of funds from the Credit Account in respect of such con- tract. 2. With respect to each contract 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 .he analysis of the respective bids, recommendations for award and such other infor- mation as the Association shall reasonably request. The Associa- tion 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. 3. 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 by more than 20% of the original price, the Borrower 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 pro- visions of this Agreement, shall promptly inform the Borrower 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. FOR SECRETARY