Tanzania - Kilombero Sugar Project : Credit 0513 - Project Agreement - Conformed

CONFORMED COPY CREDIT NUMBER 513 TA Project Agreement (Kilombero Sugar Project) BETWEEN INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT AND INTERNATIONAL DEVELOPMENT ASSOCIATION AND KILOMBERO SUGAR COMPANY LIMITED DATED SEPTEMBER 27, 1974 CONFORMED COPY CREDIT NUMBER 513 TA Project Agreement (Kilombero Sugar Project) BETWEEN INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT AND INTERNATIONAL DEVELOPMENT ASSOCIATION AND KILOMBERO SUGAR COMPANY LIMITED DATED SEPTEMBER 27, 1974 AROJECT AGREEMENT AGREEMENT, dated September 27, 1974, between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (hereinafter called the Bank), INTERNATIONAL DEVELOPMENT ASSOCIATION (hereinafter called the Association) and KILOMBERO SUGAR COMPANY LIMITED (hereinafter called Kilombero). WHEREAS by the Loan Agreement of even date herewith between the United Republic of Tanzania (hereinafter called the Borrower) and the Bank, and by the Development Credit Agreement of even date herewith between the Borrower and the Association, the Bank and the Association have agreed to make available to the Borrower an amount in various currencies equivalent to nine million dollars ($9,000,000) each, on the terms and conditions respectively set forth in the Loan Agreement and the Development Credit Agreement, but only on condition that Kilombero agree to undertake such obligations toward the Bank and the Association as hereinafter set forth; WHEREAS by a subsidiary loan agreement to be entered into between the Borrower and Kilombero, the proceeds of the loan and of part of the credit provided for under the Loan Agreement and the Development Credit Agreement will be made available to Kilombero on the terms and conditions therein set forth; and WHEREAS Kilombero, in consideration of the Bank's and the Association's entering into the Loan Agreement and 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 Loan Agreement, in the Development Credit Agreement and in the General Conditions (as defined in each such Agreement) have the respective meanings therein set forth. 4 ARTICLE II Execution of the Project Section 2.01. Kilombero shall carry out the Project described in Schedule 2 to the Development Credit Agreement (except Part I.G of the Project) with due diligence and efficiency and in conformity with appropriate administrative, agricultural, financial and engineering practices. Section 2.02. Except as the Bank and the Association shall otherwise agree, in carrying out the construction of staff housing and community facilities in Part I of the Project, Kilombero shall employ contractors acceptable to the Bank and the Association upon terms and conditions satisfactory to the Bank and the Association. Section 2.03. Except as the Bank and the Association shall otherwise agree, contracts for the purchase of goods or for the carrying out of works or services to be financed out of the proceeds of the Loan and the Credit (other than consultants' services) for Part I of the Project shall be awarded in accordance with the provisions of the Schedule to this Agreement. Section 2.04. (a) Kilombero undertakes to insure, or make adequate provision for the insurance of, the imported goods to be financed out of the proceeds of the Loan and 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 Kilombero to replace or repair such goods. (b) Except as the Bank and the Association may otherwise agree, Kilombero shall cause all goods and services financed out of the proceeds of the Loan and the Credit relent to it by the Borrower to be used exclusively for Part I of the Project. Section 2.05. (a) Kilombero shall furnish to the Bank and to the Association promptly upon their preparation, the plans, specifications, contract documents and construction, work and procurement schedules for the Project (except Part I.G), and any material modifications thereof or additions thereto, in such detail as the Bank or the Association shall reasonably request. (b) Except as regards Part I.G of the Project, Kilombero: (i) shall maintain records adequate to record the progress of the Project (including the cost thereof) and to identify the goods and services financed out of the proceeds of the Loan 5 and the Credit relent to it by the Borrower, nd to disclose the use thereof in the Project; (ii) shall, without limitation upon the provisions of paragraph (c) of this Section, enable the Bank's and the Association's representatives to visit the facilities and construction sites included in the Project, and to examine the goods financed out of such proceeds and any relevant records and documents; and (iii) shall furnish to the Bank and the Association all such information as the Bank or the Association shall reasonably request concerning the Project, the expenditure of the proceeds of the Loan and the Credit so relent to it and the goods and services financed out of such proceeds. (c) Kilombero shall enable the Bank's and the Association's representatives to examine all plants, installations, sites, works, buildings, property and equipment of Kilombero relating to the Project, and any relevant records and documents. Section 2.06. Kilombero shall duly perform all its obligations under the Subsidiary Loan Agreement. Except as the Bank and the Association shall otherwise agree, Kilombero 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. ARTICLE III Management and Operations of Kilombero Section 3.01. Kilombero shall take out and maintain with responsible insurers, or make other provisions satisfactory to the Bank and the Association for, insurance against such risks and in such amounts as shall be consistent with appropriate practice. Section 3.02. Kilombero shall carry on its operations and conduct its affairs in accordance with sound business, industrial, agricultural and financial practices under experienced and competent management. Section 3.03. (a) Kilombero shall, as promptly as required, take all action within its powers to maintain its corporate existence and right to carry on its operations and to retain, acquire and maintain such land and properties and interests therein and such other powers and rights as may be necessary or useful in carrying out its business. (b) Kilombero shall not amend its corporate statutes or articles of association in any way that will materially and adversely affect its ability to perform its obligations under this Agreement. 6 Section 3.04. Kilombero shall at all times operate and maintain its factories, machinery, equipment and other property and from time to time promptly make all necessary repairs and renewals thereof in accordance with sound agricultural, industrial and financial practices. Section 3.05. (a) Kilombero shall employ a qualified and experienced financial controller. (b) After consultation with the Bank and the Association, Kilombero shall also employ an experienced and qualified training officer for a period of at least five years to prepare training curricula and supervise senior and supervisory staff responsible for training. (c) Prior to the expiry of the managing agency agreement referred to in Section 5.01(d) of the Development Credit Agreement, Kilombero shall conclude a new agreement for a managing agency upon terms and conditions satisfactory to the Bank and the Association or shall make alternative arrangements for the management of Kilombero satisfactory to the Bank and the Association. Section 3.06. (a) Kilombero shall conclude agreements with outgrowers to recover fully the costs of Part I.B. and C. of the Project, as well as the recurrent costs of cane transportation. (b) Kilombero shall regularly review the price payable to outgrowers for cane and shall adjust the price so payable whenever necessary in order to assure adequate production incentive. ARTICLE IV Financial Covenants Section 4.01. Kilombero shall maintain records adequate to reflect in accordance with consistently maintained appropriate accounting practices its operations and financial condition. Section 4.02. Kilombero 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 sound auditing principles consistently applied, by independent auditors acceptable to the Bank and the Association; (ii) furnish to the Bank and the Association as soon as available, but in any case not later than six 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 7 audit by said auditors, of such scope and in such detail as the Bank and the Association shall have reasonably requested; and (iii) furnish to the Bank and the Association such other information concerning the accounts and financial statements of Kilombero and the audit thereof as the Bank and 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 Bank, the Association, and of Kilombero thereunder shall terminate on the earlier of the following two dates: (i) the date on which both the Loan Agreement and the Development Credit Agreement shall terminate in accordance with their terms; or (ii) a date twenty-five years after the date of this Agreement. (b) If the Loan Agreement or the Development Credit Agreement terminates in accordance with its terms before the date specified in paragraph (a)(ii) of this Section, the Bank or the Association shall promptly notify Kilombero 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 Loan Agreement or the Development Credit Agreement. 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 8 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 Bank: International Bank for Reconstruction and Development 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: INTBAFRAD Washington, D.C. For the Association: International Development Association 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: INDEVAS Washington, D.C. For Kilombero: Kilombero Sugar Company Limited Box 50 Kidatu United Republic of Tanzania Cable address: KILOSUGAR Dar es Salaam Section 6.02. Kilombero shall furnish to the Bank and the Association sufficient evidence of the authority and the authenticated specimen signature of 9 the person or persons who will, on behalf of Kilombero, take any action or execute any documents required or permitted to be taken or executed by Kilombero pursuant to any of the provisions of this Agreement. 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 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 BANK FOR RECONSTRUCTION AND DEVELOPMENT By /s / S. Shahid Husain Regional Vice President Eastern Africa INTERNATIONAL DEVELOPMENT ASSOCIATION By /s / S. Shahid Husain Regional Vice President Eastern Africa KILOMBERO SUGAR COMPANY LIMITED By /s/ Paul Bomani Authorized Representative 10 SCHEDULE Procurement A. General Procedures 1. Except as provided in Part A.3 hereof, contracts shall be let under procedures consistent with those set forth in the "Guidelines for Procurement under World Bank Loans and IDA Credits" published by the Bank in April 1972, as revised in October 1972 (hereinafter called the Guidelines), on the basis of international competitive bidding. 2. (i) Bidders, except those referred to in Part C. 1(a) of this Schedule, will not be prequalified. (ii) Orders for goods, material and equipment, including equipment for water supply and power transmission facilities, shall be aggregated to the maximum extent possible in placing orders and advertising invitations to bid. 3. Notwithstanding the provisions set forth or referred to in Parts A. 1 and A.2(i) of this Schedule: (i) (A) land preparation, road construction, railbed and track construction, installation of irrigation and water supply equipment and power transmission facilities as well as (B) any building construction estimated to cost the equivalent of $30,000 or less shall be carried out either: (a) under contracts awarded in accordance with the Borrower's usual procurement procedures, or (b) by force account; and (ii) contracts for equipment and material estimated to cost the equivalent of $30,000 or less shall be awarded in accordance with the Borrower's usual procurement procedures. B. Evaluation and Comparison of Bids for Goods: Preference for Domestic Manufacturers 1. For the purpose of evaluation and comparison of bids for the supply of goods: (i) bidders shall be required to state in their bid the c.i.f. (port of entry) 11 price for imported goods, or the ex-factory price for domestically-manufactured goods; (ii) customs duties and other import taxes on imported goods, and sales and similar taxes on domestically-supplied goods, shall be excluded; and (iii) the cost to Kilombero of inland freight and other expenditures incidental to the delivery of goods to the place of their use or installation shall be included. 2. Goods manufactured in the territory of the Borrower (hereinafter called Tanzania) may be granted a margin of preference in accordance with, and subject to, the following provisions: (a) 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. (b) 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 Kilombero, the Bank 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 bids offering goods manufactured in Tanzania. (3) Group C: bids offering any other goods. (c) All evaluated bids in each group shall be first compared among themselves, excluding any customs duties and other import taxes on goods to be imported and any sales or similar taxes on goods to be supplied domestically, to determine the lowest evaluated bid of each group. The lowest evaluated bid of each group 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. (d) If, as a result of the comparison under paragraph (c) 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 c.i.f. 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 12 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 lowest evaluated bid from group C shall be selected. C. Evaluation and Comparison of Bids for Civil Works; Preferences for Domestic Contractors 1. With respect to any contract for civil works included in Part I of the Project, Kilombero may grant a margin of preference of 7-1/2% to domestic contractors, as determined by the Borrower, in accordance with, and subject to, the following provisions: (a) Contractors shall be required to prequalify as provided in Part A of this Schedule and applicants for qualification applying also for such preference shall be asked to provide, as part of the information for qualification, such information, including details of ownership, as shall be required to determine whether, according to the classification established by the Borrower and accepted by the Bank and the Association, a particular firm or group of firms qualifies for a domestic preference. The bidding documents shall clearly indicate the preference and the method that will be followed in the evaluation and comparison of bids to give effect to such preference. (b) After bids have been received and reviewed by Kilombero, responsive bids will be classified into the following groups: (i) bids offered by domestic contractors eligible for preference; and (ii) bids offered by other contractors. For the purpose of evaluation and comparison of bids an amount equal to 7-1/2% of the bid amount shall be added to bids received under group (ii) above. D. Review of Procurement Decisions by the Bank and the Association I. Review of prequalification. Kilombero shall, before qualification is invited, inform the Bank and the Association in detail of the procedure to be followed and shall introduce such modifications in said procedure as the Bank and the Association shall reasonably request. The list of prequalified bidders, together with a statement of their qualifications and, where applicable, of their eligibility for domestic preference under Part C. 1 above and of the reasons for the exclusion of any applicant for prequalification and for such -ligibility shall be furnished by 13 Kilombero to the Bank and the Association for its comments before the applicants are notified, and Kilombero shall make such additions to, deletions from, or modifications in, the said list as the Bank and the Association shall reasonably request. 2. Review of invitation to bid and of proposed awards and final contracts: With respect to all contracts for civil works and equipment and materials estimated to cost the equivalent of $100,000 or more: (a) Before bids are invited, Kilombero shall furnish to the Bank and the Association, for their 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 Bank and the Association shall reasonably request. Any further modification to the bidding documents shall require the Bank's and the Association's concurrence before it is issued to the prospective bidders. (b) After bids have been received and evaluated, Kilombero shall, before a final decision on the award is made, inform the Bank and the Association of the name of the bidder to which it intends to award the contract and the reasons for the intended award and shall furnish to the Bank and the Association, in sufficient time for its review, a detailed report on the evaluation and comparison of the bids received, together with the recommendation for award and such other information as the Bank and the Association shall reasonably request. The Bank and the Association shall, if either determines that the intended award would be inconsistent with the Guid-'ines 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 Bank's and 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 Bank and the Association promptly after its execution and prior to the submission to the Bank or the Association of the first application for withdrawal of funds from the Loan or the Credit Account in respect of such contract. 3. With respect to each contract to be financed out of the proceeds of the Loan or the Credit and not governed by the preceding paragraph, the Borrower shall furnish to the Bank and the Association, promptly after its execution and 14 prior to the submission to the Bank or the Association of the first application for withdrawal of funds from the Loan or the Credit Account in respect of such contract, two conformed copies of such contract, together with the analysis of bids, recommendations for award and such other information as the Bank or the Association shall reasonably request. The Bank or the Association 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.