Conformed Copy - C2202 - Petroleum Sector Rehabilitation Project - Project Agreement

Page 1 CONFORMED COPY CREDIT NUMBER 2202 TA (Petroleum Sector Rehabilitation Project) between INTERNATIONAL DEVELOPMENT ASSOCIATION and TANZANIA INVESTMENT BANK Dated June 21, 1991 CREDIT NUMBER 2202 TA PROJECT AGREEMENT AGREEMENT, dated June 21, 1991, between INTERNATIONAL DEVELOPMENT ASSOCIATION (the Association) and TANZANIA INVESTMENT BANK (TIB). WHEREAS (A) by the Development Credit Agreement of even date herewith between United Republic of Tanzania (the Borrower) and the Association, the Association has agreed to make available to the Borrower an amount in various currencies equivalent to thirty-three million seven hundred thousand Special Drawing Rights (SDR 33,700,000) on the terms and conditions set forth in the Development Credit Agreement, but only on condition that TIB agree to undertake such obligations toward the Association as are set forth in this Agreement; (B) by a Subsidiary Agreement to be entered into between the Borrower and TIB, part of the proceeds of the Credit provided for under the Development Credit Agreement will be made available to TIB on the terms and conditions set forth in said Subsidiary Agreement; Page 2 and WHEREAS TIB, in consideration of the Association's entering into the Development Credit Agreement with the Borrower, has agreed to undertake the obligations set forth in this Agreement; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I Definitions Section 1.01. Unless the context otherwise requires, 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. TIB declares its commitment to the objectives of the Project as set forth in Schedule 2 to the Development Credit Agreement and, to this end, shall carry out its obligations under Parts A through F of the Project with due diligence and efficiency and in conformity with appropriate administrative, financial and engineering practices, and shall provide, promptly as needed, the funds, facilities, services and other resources required for the Project. Section 2.02. Except as the Association shall otherwise agree, procurement of the goods, works and consultants' services 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 the Development Credit Agreement. Section 2.03. TIB shall duly perform all its obligations under the Subsidiary Agreement. Except as the Association shall otherwise agree, TIB shall not take or concur in any action which would have the effect of amending, abrogating, assigning or waiving the Subsidiary Agreement or any provision thereof. Section 2.04. (a) TIB shall, at the request of the Association, exchange views with the Association with regard to the progress of Parts A through F of the Project, the performance of its obligations under this Agreement and under the Subsidiary Agreement, and other matters relating to the purposes of the Credit. (b) TIB shall promptly inform the Association of any condition which interferes or threatens to interfere with the progress of Parts A through F of the Project, the accomplishment of the purposes of the Credit, or the performance by TIB of its obligations under this Agreement and under the Subsidiary Agreement. Section 2.05. (a) TIB shall administer the proceeds of the Credit being provided to TPDC and the Oil Companies, and shall make Sub-loans to TPDC and the Oil Companies following the prior clearance by MWEM. (b) TIB undertakes that, unless the Association shall otherwise agree, any Sub-loan shall be made on terms whereby TIB shall obtain rights adequate to protect the interests of the Borrower, the Association and TIB, including the rights set forth in the Schedule to this Agreement. (c) TIB shall exercise its rights in relation to each such Sub-loan in such manner as to: (i) protect the interests of the Borrower, the Association and TIB; (ii) comply with its obligations under this Agreement and the Subsidiary Agreement; and (iii) achieve the purposes of the Project. ARTICLE III Page 3 Management and Operations of TIB Section 3.01. TIB shall carry on its operations and conduct its affairs in accordance with sound administrative and financial practices under the supervision of qualified and experienced management assisted by competent staff in adequate numbers. Section 3.02. TIB shall at all times operate and maintain its equipment and other property, and from time to time, promptly as needed, make all necessary repairs and renewals thereof, all in accordance with sound engineering, financial and administrative practices. Section 3.03. TIB shall take out and maintain with responsible insurers, or make other provision satisfactory to the Association for, insurance against such risks and in such amounts as shall be consistent with appropriate practice. ARTICLE IV Financial Covenants Section 4.01. (a) TIB shall maintain records and accounts adequate to reflect in accordance with sound accounting practices its operations and financial condition. (b) TIB shall: (i) have its records, 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 nine months 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 said records, accounts and financial statements as well as 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 TIB 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) the 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) Page 4 (ii) of this Section, the Association shall promptly notify TIB 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 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 248423 (RCA) Washington, D.C. 64145 (WUI) 197688 (TRT) 82987 (FTCC) For TIB: Tanzania Investment Bank P.O. Box 9373 Dar es Salaam Tanzania Cable address: Telex: INVESTMENTS 41259 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 TIB, or by TIB on behalf of the Borrower under the Development Credit Agreement, may be taken or executed by the General Manager or such other person or persons as the General Manager shall designate in writing, and TIB 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 collectively but one instrument. IN WITNESS WHEREOF, the parties hereto, acting through their duly authorized representatives, 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 /s/ Edward V.K. Jaycox Page 5 Regional Vice President Africa TANZANIA INVESTMENT BANK By /s/ Charles Nyirabu Authorized Representative SCHEDULE Terms and Conditions of Sub-loans 1. Except as the Association shall otherwise agree, all Sub-loans under the Project shall be for a maximum term of 15 years including a grace period of 5 years at an interest rate of at least 9.5% per annum. TPDC and the Oil Companies shall bear the risk resulting from fluctuations in the currencies lent to them. 2. (a) The amount of Sub-loans for each of the Oil Companies out of the proceeds of the Credit shall be as follows: AGIP - $4,600,000 BPT - $6,500,000 CALTEX - $6,400,000 ESSO - $3,300,000 TOTAL - $3,200,000 (b) In addition each Oil Company shall have a share of the $6,600,000 allocated for the construction of the facilities jointly owned by TPDC and the Oil Companies. (c) If any of the Oil Companies is unable to use its share of funds allocated for the jointly owned facilities, PSC may reallocate such amount to any other licensed petroleum marketing company for the purposes of the jointly owned facilities. (d) These and other unallocated amounts shall be reviewed by PSC in consultation with the Association, from time to time and may be reallocated as needed following such reviews. 3. Except as the Association shall otherwise agree, TIB shall obtain, inter alia, in respect of Sub-loans, the right to: (a) require the Oil Companies to carry out and operate with due diligence and efficiency and in accordance with sound technical, financial and managerial standards and to maintain adequate records; (b) require the Oil Companies and TPDC to establish project implementation units headed by experienced project managers; (c) require that (i) the goods and services to be financed out of the proceeds of the Credit shall be purchased in accordance with the provisions of Schedule 3 to the Development Credit Agreement, and (ii) such goods and services shall be used exclusively in the carrying out of the Project; (d) inspect, by itself or jointly with representatives of the Borrower and the Association, if the Borrower or Association shall so request, such goods, works, plants and construction included in the Project, the operation thereof, and any relevant records and documents; (e) require that (i) the Oil Companies shall take out and maintain with responsible insurers such insurance, against such risks and in such amounts, as shall be consistent with sound business practices, and (ii) without any limitation to the acquisition, transportation and delivery of goods financed out of the proceeds of the Credit to the place of use or installation, any Page 6 indemnity thereunder to be made payable in a currency freely usable by the Oil Companies to replace or repair such goods; (f) obtain all such information as the Association or the Borrower shall reasonable request relating to the foregoing and to the administration, operations and financial condition of the Oil Companies; and (g) suspend or terminate the right of an Oil Company to the use of the proceeds of the Credit upon failure by such Oil Company to perform its obligations under its Subsidiary Financing Agreement.