Tanzania - Grain Storage And Milling Project : Credit 1015 - Project Agreement - 2 - Conformed

OFFIC'AL Dcu CEDIT NWMER 1015 TA Agreement Providing for Amendment and Restatement of Project Agreement (Grain Storage and Milling Project) between INTERNATIONAL DEVELOPMENT ASSOCIATION and NATIONAL MILLING CORPORATION Dated 0 m1985 CREDIT NUMBER 1015 TA PROJECT AGREEMENT AGREEMENT, dated , --6 , 1985, between INTERNATIONAL DEVELOPMENT ASSOCIATION (hereinafter called the Association) and NATIONAL MILLING CORPORATION (hereinafter called NMC). WHEREAS by the AGREEMENT providing for AMENDEMENT and RESTATEMENT OF DEVELOPMENT CREDIT AGREEMENT of even date herewith between United Republic of Tanzania (hereinafter called the Borrower) and the Association, the Association has agreed to amend and restate the Development Credit Agreement between the Borrower and the Association dated April 15, 1981 (hereinafter called the Development Credit Agreement) in the manner therein set forth; and WHEREAS the Association and NMC have agreed to amend the Project Agreement between the Association and NMC also dated April 15, 1981 (hereinafter called the Project Agreement) in the manner hereinafter set forth; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I Section 1.01. The Project Agreement is hereby amended and restated in its entirety so as to read as set forth in the Annex hereto. Section 1.02. The Agreement providing for Amendment and Restatement of Project Agreement shall come into force and effect on the date upon which the Agreement Providing for Amendment and Restatement of Development Credit Agreement becomes effective. -2- 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 Regional Vice President Eastern and Southern Africa NATIONAL MILLING CORPORATION By Authorized Representative ANNEX To Agreement providing for Amendment and Restatement of Project Agreement dated April 15, 1981 CREDIT NUMBER 1015 TA AMENDED AND RESTATED PROJECT AGREEMENT (Grain Storage and Milling Project) between INTERNATIONAL DEVELOPMENT ASSOCIATION and NATIONAL MILLING CORPORATION Dated April 15, 1981 As amended and restated on OX ), 1 1985 ANNEX Page 1 PROJECT AGREEMENT AS AMENDED AND RESTATED AGRMENT, dated April 15, 1981, as amended and restated on 0 c , 1985 between INTERNATIONAL DEVELOPMENT ASSOCIATION (hereinafter called the Association) and NATIONAL MILLING CORPORATION (hereinafter called NMC). WHEREAS by the Development Credit Agreement of even date herewith between 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 forty-three million dollars ($43,000,000), on the terms and conditions set forth in the Development Credit Agree- ment, but only on condition that NMC agree to undertake such obligations toward the Association as are hereinafter set forth; and WHEREAS NMC, 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. NMC 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 Parts A through C and E through G of the Project described in said Schedule with due diligence and efficiency and in conformity with appropriate administrative, managerial, agricultural, financial and engineering practices. ANNEX Page 2 Section 2.02. In order to assist NMC in carrying out Parts A through C and E through G of the Project, NMC shall employ a procurement expert and the consultants and experts set forth in the Schedule to this Agreement and shall ensure that their quali- fications, experience and terms and conditions of employment shall be satisfactory to the Association, such consultants and experts to be selected in accordance with principles and pro- cedures satisfactory to the Association on the basis of 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 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 Schedule 3 to the Development Credit Agreement. Section 2.04. (a) NMC undertakes to insure, or make adequate provision for the insurance of, the imported goods to be financed out of the proceeds of the Credit made available to it by the Borrower against hazards incident to the acquisition, transporta- tion 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 NMC to replace or repair such goods. (b) Except as the Association may otherwise agree, NMC shall cause all goods and services financed out of the proceeds of the Credit made available to it by the Borrower to be used exclusively for the Project until its completion. Section 2.05. (a) NMC shall furnish to the Association, promptly upon their preparation, the plans, specifications, reports, contract documents and procurement schedules for the Project, and any material modifications thereof or additions thereto, in such detail as the Association shall reasonably request. (b) NMC shall: (i) 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) enable the Asso- ciation's representatives to visit the facilities and construc- tion sites included in the Project and to examine the goods ANNEX Page 3 financed out of the proceeds of the Credit and any relevant records and documents; and (iii) 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. (c) 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 NMC and the Association, NMC 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 NMC and the Association of their respec- tive obligations under the Project Agreement and the accomplish- ment of the purposes of the Credit. (d) NKC shall enable the Association's representatives to examine all plants, installations, sites, works, buildings, pro- perty and equipment of NMC and any relevant records and docu- ments. Section 2.06. NMC shall, not later than March 31, 1986, pre- pare and furnish to the Association for its review and approval, a detailed program for the rehabilitation of its storage and silo facilities, including an economic and financial analysis of each facility with an estimated cost of more than the equivalent of $100,000, and shall implement such program. Section 2.07. NMC shall, not later than March 31, 1986, pre- pare and furnish to the Association for its approval, a construc- tion program, including detailed designs, for the new storage facilities included in Part A (2) of the Project. Section 2.08. NMC shall, not later than March 31, 1986, pre- pare and furnish to the Association for its approval, a detailed program for the rehabilitation of mills under Part C (3) of the Project. Section 2.09. NMC shall, not later than March 31, 1986, pre- pare and furnish to the Association, a detailed program for the training of its staff, which shall include in-service training for pest control staff. ANNEX Page 4 Section 2.10. NMC shall, as soon as the new maize mill to be constructed under Part C (1) of the Project is in routine opera- tion, close its Pugu Road Maize Mill. Section 2.11. NMC shall, not later than December 31, 1985, submit to the Association for its review, a study of the profitability of the continued operation of the Canning Site Maize Mill, in order to determine whether it should be closed or rehabilitated. ARTICLE III Management and Operations of NMC Section 3.01. NMC shall carry out its undertakings under the Project and shall conduct its operations and affairs in conformity with sound administrative, managerial, agricultural, financial, technical and commercial practices, under qualified and experienced management and staff in adequate numbers. Section 3.02. NMC shall take out and maintain with respon- sible 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. Section 3.03. NMC shall at all times operate and maintain its facilities, equipment and other property, and promptly as required make all necessary repairs and renewals thereof, all in accordance with sound agricultural, business and engineering practices. Section 3.04. NMC shall: (a) take all action necessary on its part to ensure the prompt employment of all its key staff, as provided for in Section 2.02 and the Schedule to this Agreement; and (b) assign qualified and experienced counterpart staff in adequate numbers to work with said staff. Section 3.05. NMC shall, not later than September 30, 1986, prepare and furnish to the Association for its review and com- ments, a detailed program of preventative maintenance for its mills, godowns and godown equipment, an'. shall thereafter carry out such program. ANNEX Page 5 ARTICLE IV Financial Covenants Section 4.01. (a) NMC shall maintain records including separate accounts adequate to reflect, in accordance with consistently maintained appropriate accounting practices, its operations and financial condition. (b) Without limitation to the foregoing, NMC 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 expen- diture; (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 with- drawals are requested from the Credit Account on the basis of statements of expenditure; and (iii) enable the Association's representatives to examine such records. Section 4.02. NMC shall: (i) have its accounts and finan- cial statements (balance sheets, statements of income and expenses and related statements) and the separate records and accounts referred to in Section 4.01 (b) of this Agreement for each fiscal year audited, in accordance with appropriate auditing principles consistently applied, by independent auditors accept- able 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 copies of its financial statements and separate records and accounts referred to in Sec- tion 4.01 (b) of this Agreement 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 re- quested, including, without limitation to the foregoing, separate opinions by said auditors in respect of the expenditures and records referred to in Section 4.01 (b) of this Agreement, as to whether the proceeds of the Credit withdrawn from the Credit Account on the basis of certificiates of expenditures have been used for the purpose for which they were provided; and (iii) furnish to the Association such other information concerning the accounts and financial statements of NMC and said separate accounts, records and expenditures and audit thereof as the Asso- clation shall from time to time reasonably request. ANNEX Page 6 ARTICLE V Other Covenants Section 5.01. Except as the Association shall otherwise agree, NMC shall take all necessary steps as shall be required to ensure that its short term debt does not exceed Tsh 400 million plus twice the framgate value of current season stocks on hand. For the purposes of this Section the term "short term debt" means all debt, including overdrafts, incurred in the ordinary course of business and maturing by its terms on demand or less than one year after its incurrence. Section 5.02. NMC shall, not later than December 31, 1985, prepare and furnish to the Borrower and the Association, a detailed cost reduction proposal reflecting but not limited to, a reduction in staff numbers and the geographical coverage of its operations. Section 5.03. NMC shall prepare and submit to the Borrower and the Association by no later than December 31, 1985 and thereafter by no later than April 1, of each year, beginning April 1, 1986, a procurement plan which shall indicate, inter alia: (a) the quantity of each crop by region that NMC expects to purchase in the following year (June 1 - May 31); (b) corresponding regional and crop cost structures; and (c) projected overdraft requirement by month. Section 5.04. NMC shall, not later than June 30, 1987, com- plete a survey on insect damage to purchased and stored grain, and submit to the Association for its review and comments, a plan of action for minimizing such damage, and shall thereafter carry out such plan of action. Section 5.05. NMC shall, commencing June 30, 1986 carry out a three year program of controlled open storage to monitor losses due to insect or other damage. ANNEX Page 7 ARTICLE VI Effective Date; Termination; Cancellation and Suspension Section 6.01. This Agreement shall come into force and effect on the date upon which the Development Credit Agreement becomes effective. Section 6.02. (a) This Agreement and all obligations of the Association and of NMC thereunder shall terminate on the earlier of the following two dates: (i) the date on which the Development Credit Agreement shall terminate in accotIdance with its terms; or (ii) a 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) (ii) of this Section, the Association shall promptly notify NMC of this event. Section 6.03. All the provisiojas of this Agreement shall continue in full force and effect n&itwithstanding any cancella- tion or suspension under the General Conditions. ARTICL VII Miscellaneias Provisions Section 7.01. 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: ANNEX Page 8 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 NMC: National Milling Corporation P.O. Box 9502 Dar es Salaam United Republic of Tanzania Cable address: Telex: CHAKULA 41343 Dar es Salaam 41480 Section 7.02. Any action required or permitted to be taken, and any document required or permitted to be executed, under this Agreement on behalf of NMC may be taken or executed by the General Manager of NMC or such other person or persons as the General Manager shall designate in writing, and NMC shall furnish to the Association sufficient evidence of the authority and the authenticated specimen signature of each such person. Section 7.03. This Agreement may be executed in several counterparts, each of which shall be an original, and all collectively but one instrument. ANNEX Page 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 Is/ Willi A. Wapenhans Regional Vice President Eastern Africa NATIONAL MILLING CORPORATION By Is! Paul Bomani Authorized Representative ANNEX Page 10 SCHEDULE Consultants and Experts to be employed by NMC 1. NMC shall, by December 31, 1985, appoint the following: (a) A training expert to assist in the training of NMC's staff. (b) A senior milling engineer to assist NMC in the imple- mentation of new mill construction, and rehabilitation of exist- ing mills. (c) A construction engineer to review the design of, con- tracts for and supervision of construction and rehabilitation of mills. 2. NMC shall, by March 31, 1986, appoint the following: (a) A storage management expert to assist NMC in the estab- lishment of operational procedures, policies and criteria for appropriate grain handling practices. (b) A maintenance engineer to establish a building main- tenance schedule, and to supervise building maintenance including movable and ancillary equipment. (c) A director of finance, chief accountant, chief internal auditor and cost accountant to establish an adequate accounting system in NMC. (d) Five accountants and five auditors to assist in the preparation of acounts for NMC's operations outside headquarters. 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 e12 day of 198S. FOR SECRETARY