Conformed Copy - C3184 - Tax Administration Project - Supplemental Letter 1

Page 1 August 4, 1999 His Excellency Mustafa Nyang’anyi Embassy of the United Republic of Tanzania 2139 R Street N.W. Washington, D.C. 20008 Credit No. 3184-TA (Tax Administration Project) Preference for Domestic Contractors Dear Sir: 1. We refer to the Development Credit Agreement of even date herewith between United Republic of Tanzania (the Borrower) and International Development Association (the Association) and to the provisions of Part B.2 (b) of Section I of Schedule 3 thereof for the grant of 7.5% margin of preference to eligible domestic contractors bidding for construction contracts to be financed out of the proceeds of the above Credit. 2. We wish to confirm that in order to be accepted by the Association, the criteria for classification of domestic contractors eligible for such preference must include at least the following: (a) domestic bidders shall be eligible provided that they: (i) are registered in Tanzania; (ii) have majority ownership by nationals of Tanzania; and (iii) have not subcontracted more than 50% of the contract works measured in terms of value to foreign contractors; and (b) joint ventures between domestic and foreign firms shall be eligible for the margin of preference provided: (i) the domestic partner or partners individually satisfy the criteria for eligibility set forth above; (ii) the domestic partner or partners would not be qualified for the contract works in question on technical or financial grounds without the foreign participation; and (iii) the domestic partner or partners will, under the arrangements proposed, carry out at least 50% of the contract works measured in terms of value. For the purpose of this paragraph, the term “foreign firm