Tanzania - Dar Es Salaam Sewerage And Sanitation Project : Credit 1312 - Credit Agreement - Conformed

CREDIT NUMBER 1312 TA Development Credit Agreement (Dar es Salaam Sewerage and Sanitation Project) between UNITED REPUBLTC OF TANZANIA and INTERNATIONAL DEVELOPMENT ASSOCIATION Dated , 1983 CREDIT NUMBER 1312 TA DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated /7 a,,L, 1983, between UNITED REPUBLIC OF TANZANIA (hereinafter called the Borrower) and INTERNATIONAL DEVELOPMENT ASSOCIATION (hereinafter called the Association). WHEREAS (A) the Borrower has requested the Association to assist in the financing of the Project described in Schedule 2 to this Agreement by extending the Credit as hereinafter provided; and (B) Part of the Project will be carried out by the Dar es Salaam City Council (hereinafter called DCC) with the Borrower's assistance and, as part of such assistance, the Borrower will make available to DCC part of the proceeds of the Credit as hereinafter provided; and WHEREAS the Association has agreed, on the basis, inter alia, of the foregoing, to extend the Credit to the Borrower upon the terms and conditions hereinafter set forth and in the Project Agreement of even date herewith between the Association and DCC; NOW THEREFORE the parties hereto hereby agree as follows: 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 Agree- ments 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 following additional terms have the follo-ing meanings: (a) "Project Agreement" means the Agreerent between the Association and DCC of even date herewith, as the same may be amended from time to time, and such term includes all schedules -2- to the Project Agreement and all agreements supplemental to the Project Agreement; (b) "Transfer Agreement" means the Agreement to be entered into between the Borrower and DCC pursuant to Section 3.01 (c) of this Agreement, as the same may be amended from time to time, and such term includes all schedules to the Transfer Agreement; (c) "ARDHI" means the Borrower's Ministry responsible for lands, housing and urban development; (d) "DSSD" means the Dar es Salaam Sewerage and Sanitation Department, a department to be established under the Project within the Dar es Salaam City Council and to be responsible for the sewerage and sanitation services in the City of Dar es Salaam; (e) "NUWA" means the National Urban Water Authority, a body corporate established by the Urban Water Supply Act of 1981; (f) "TANESCO" means the Tanzania Electric Supply Company Limited, a company limited by shares established and operating under the laws of Tanzania; and (g) "Project Preparation Advance" means the project prep- ration advance granted by the Association to the Borrower pur- suant to an exchange of letters dated March 5, 1979 and July 10, 1979 between the Borrower and the Asscciation. ARTICLE II The Credit Section 2.01. The Association agrees to lend to the Bor- rower, on the terms and conditions in the Development Credit Agreement set forth or referred to, an amount in various curren- cies equivalent to twenty million six hundred thousand Special Drawing Rights (SDR 20,600,000). Section 2.02. (a) The amount of the Credit may be withdrawn from the Credit Account, in accordance with the provisions of Schedule 1 to this Agreement as such Schedule may be amended from time to time by agreement between the Borrower and the Asso- ciation, for expenditures made (or, if the Association shall so agree, to be made) in respect of the reasonable cost of goods and -3- services required for the Project and to be financed out of the proceeds of the Credit. (b) Promptly after the Effective Date, the Association shall, on behalf of the Borrower, withdraw from the Credit Account and pay to itself the amount required to repay the prin- cipal amount of the Project Preparation Advance withdrawn and outstanding as of such date and to pay all unpaid charges there- on. The unwithdrawn balance of the authorized amount of the Pro- ject Preparation Advance shall thereupon be cancelled. 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 Asso- ciation 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 with- drawn from time to time. The commitment charge shall accrue from a date sixty days after the date of the Development Credit Agree- ment 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 re- strictions 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. Commitment charges and service charges shall be payable semiannually on March 15 and September 15 in each year. -4- Section 2.08. The Borrower shall repay the principal amount of the Credit in semiannual installments payable on each March 15 and September 15 commencing March 15, 1993, and ending Septem- ber 15, 2032, each installment to and including the installment payable on September 15, 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 prin- cipal amount. 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. (a) The Borrower shall: (i) through ARDHI carry.out Parts A, B, C (except for Parts C.1 and C.5 which shall be carried out -by D4C in accordance with the provisions of the Project Agreement), D and E.2 of the Project; and (ii) cause NUWA and TANESCO to carry out Parts E.1 and E.3, respectively, all with due diligence and efficiency and in conformity with appro- priate administrative, financial, engineering and public utility practices, and shall provide, promptly as needed, the funds, facilities, services and other resources required for the pur- pose. (b) Without any limitation or restriction upon any of its other obligations under the Development Credit Agreement, the Borrower shall cause DCC to perform in accordance with the provi- sions of the Project Agreement all the obligations therein set forth, shall take or cause to be taken all action, including the provision of funds, facilities, services and other resources, necessary or appropriate to enable DCC to perform such obliga- tions, and shall not take or permit to be taken any action which would prevent or interfere with such performance. (c) The Borrower shall enter into a Transfer Agreement with DCC satisfactory to the Association, providing, inter alia, for: (i) the transfer to DCC of the works, facilities and equipment constructed or acquired with the proceeds of the Credit under Parts A, B and C of the Project and the records in connection therewith; (ii) the assignment of the experts to assist DCC in carrying out Part C.1 of the Project; and (iii) the repayment by -5- DCC to the Borrower of such amounts as the Borrower shall have withdrawn from the Credit Account in connection with the con- struction or acquisition of the said works, facilities and equip- ment on terms and conditions which shall provide for a repayment period of 25 years, including 5 years of grace and an interest rate of not less than 11%. (d) The Borrower shall exercise its rights under the Trans- fer Agreement in such manner as to protect the interests of the Borrower and the Association and to accomplish the purposes of the Credit, and except as the Association shall otherwise agree, the Borrower shall not assign, amend, abrogate or waive the Transfer Agreement or any provision thereof. SectIon 3.02. In order to assist the Borrower in carrying out the Project, the Borrower shall employ experts whose selec- tion, qualifications, experience and terms and conditions 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 the August 1981. Section 3.03. (a) The Borrower shall maintain until the completion of the Project: (i) the Project Implementation Unit established within the Sewerage and Drainage Division of ARDHI with responsibility for, inter alia, procurement, administration of contracts and project accounts; and (ii) the Project Manage- ment Committee, responsible for policy matters. (b) The Borrower shall at all times, keep in the Project Implementation Unit the positions of Project Manager, Low Cost Sanitation Engineer and Project Accountant filled with qualified and experienced personnel. Section 3.04. The Borrower shall: (i) monitor closely the quality of the waters receiving sewerage from the Dar es Salaam central sewerage system and other systems, such as the ocean waters around the sea outfall and the stabilization ponds and connected local streams; and (ii) based on the results of such ongoing monitoring, adjust, when necessary, the present operating procedures for sewerage disposal and draw up proposals for future designs. Section 3.05. The Borrower shall complete, not later than December 31, 1983, the survey of service connections for -6- sewerage, water supply and electricity required under part D.3 of the Project. Section 3.06. The Borrower shall: (i) complete and furnish to the Association, not later than June 30, 1984, a study under terms of reference satisfactory to the Association, comparing the costs involved in servicing different categories of users of sewerage services; (ii) prepare proposals, not later than Decem- ber 31, 1984, for a new tariff structure for sewerage services, based on the recommendations of said study and afford the Asso- ciation the opportunity to comment thereon; and (iii) take promptly thereafter all necessary steps within its power to establish and implement said tariff structure taking into account the Association's comments. Section 3.07. (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 inci- dent 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 fi- nanced out of the proceeds of the Credit to be used exclusively for the purposes of the Project. Section 3.08. (a) The Borrower shall furnish to the Associa- tion, promptly upon their preparation, the plans, specifications, reports, contract documents and construction and procurement schedules for the Project, and any material modifications thereof or additions thereto, in such detail as the Association shall reasonably request. (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 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) 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, -7- where appropriate, the benefits to be derived from it, the expen- diture of the proceeds of the Credit and the goods and services 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 Bor- rower, DCC and the Associatio., 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 execu- tion and initial operation of the Project, its cost and the bene- fits derived and to be derived from it, the performance by the Borrower, DCC and the Association of their respective obligations under the Development Credit Agreement and the Project Agreement and the accomplishment of the purposes of the Credit. Section 3.09. The Borrower shall take or cause to be taken all such action as shall be necessary to acquire as and when needed but in any case not later than June 30, 1983, 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. ARTICLE IV Other Covenants Section 4.01. (a) The Borrower shall maintain or cause to be maintained separate accounts adequate to reflect in accor- dance 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) The Borrower shall: (i) have the accounts referred to in paragraph (a) of this Section for each fiscal year audited, in -8- 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; 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. ARTICLE V Remedies of the Association Section 5.01. For the purposes of Section 6.02 of the General Conditions the following additional events are specified pursuant to paragraph (h) thereof: (a) DCC shall have failed to perform any of its obligations under the Project Agreement; (b) An extraordinary situation shall have arisen which shall make it improbable that DCC will be able to perform its obligations under the Project Agreement; (c) Legislation of the Borrower pertinent to the execution of the Project shall have been amended, suspended, abrogated, repealed or waived so as to affect materially and adversely the ability of DCC to perform any of its obligations under the Pro- ject Agreement; (d) The Borrower or any other authority having jurisdiction shall have taken any action for the dissolution or disestablish- ment of DCC or for the suspension of its operations, and alterna- tive institutional arrangements satisfactory to the Association have not been made for the implementation of the Project and the provision, operation and maintenance of sewerage and sanitation services in the Dar es Salaam area. Section 5.02. For the purposes of Section 7.01 of the General Conditions, the following additional events are specified pursuant to paragraph (d) thereof: -9- (a) The event specified in paragraph (a) of Section 5.01 of this Agreement shall occur and shall continue for a period of sixty days after notice thereof shall have been given by the Association to the Borrower and DCC; and (b) Any event specified in paragraphs (c) and (d) of Sec- tion 5.01 of this Agreement shall occur. ARTICLE VI Effective Date; Termination Section 6.01. The following events are specified as addi- tional conditions to the effectiveness of the Development Credit Agreement within the meaning of Section 12.01 (b) of the General Conditions: (a) the Transfer Agreement has been executed on behalf of the Borrower and DCC; and (b) the experts to be assigned to DCC pursuant to Section 3.01 (c) (ii) of this Agreement have been appointed. Section 6.02. The following are specified as additional matters, within the meaning of Section 12.02 (b) of the General Conditions, to be included in the opinion or opinions to be furnished to the Association: (a) that the Project Agreement has been duly authdrized or ratified by. DCC, and is legally binding upon DCC in accordance with its terms; and (b) that the Transfer Agreement has been duly authorized or ratified by the Borrower and DCC and is legally binding upon the Borrower and DCC in accordance with its terms. Section 6.03. The date T / is hereby specified for the purposes of Section 12.04 of the General Condi- tions. Section 6.04. The obligations of the Borrower under Sections 3.03 (b) and 3.04 of this Agreement shall cease and determine on - 10 - the date on which the Development Credit Agreement shall termi- nate or on a date 20 years after the date of this Agreement, whichever shall be the earlier. ARTICLE VII Representative of the Borrower; Addresses Section 7.01. The Minister of the Borrower at the time re- sponsible for Finance is designated as representative of the Borrower for the purposes of Section 11.03 of the General Conditions. Section 7.02. The following addresses are specified for the purpose of Section 11.01 of the General Conditions: For the Borrower: Ministry of Finance P.O. Box 9111 Dar es Salaam United Republic of 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) - 11 - 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 Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION By Regional Vice President Eastern Africa - 12 - 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 Category and the percentage of expenditures for items so to be financed in each Category: Amount of the Credit Allocated % of (Expressed in Expenditures Category SDR Equivalent) to be Financed (1) Equipment, fur- 3,200,000 100% of for- nishings and eign expendi- vehicles except tures and 50% for Part E.1 of of local the Project expenditures (2) Civil works 7,870,000 100% of for- eign expendi- tures and 80% of local expenditures (3) Consultants' 5,500,000 100% of for- services, eign expendi- technical tures and 80% assistance of local and training expenditures except for Part E.1 of the Project (4) Technical 1,470,000 100% of for- assistance eign expendi- and equipment tures and 80% under Part E.1 of local of the Project expenditures (5) Refunding of 910,000 Amount due Project Preparation Advance - 13 - Amount of the Credit Allocated % of (Expressed in Expenditures Category SDR Equivalent) to be Financed (6) Unallocated 1,650,000 TOTAL 20,600,000 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 com- pliance 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 dis- bursement 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 payments made for ex- penditures prior to the date of this Agreement, except that with- drawals, in an aggregate amount not exceeding the equivalent of SDR 475,000, may be made in respect of Category 3 on account of payments made for such expenditures before that date but after December 31, 1981. 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 - 14 - 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 expen- ditures 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 expen- ditures for such item shall be financed out of the proceeds of the Credit and the Association may, without in any way restrict- ing or limiting any other right, power or remedy of the Associa- tion 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. - 15 - SCHEDULE 2 Description of the Project The Project is the first stage of the Borrower's long range program to improve and extend sanitation in Dar es Salaam to meet appropriate standards of public health and adequate levels of efficiency. The Project consists of the following Parts: Part A: Sewerage Rehabilitation and Upgrading 1. Rehabilitation and, where necessary, replacement of about 130 km of sewers and pumping mains. 2. Repair of sea outfall and construction of a screenhouse bypass and an intake structure. 3. Rehabilitation of about 17 pumping stations. 4. Repair and improvement of about nine waste stabiliza- tion pond systems covering about 27 hectares. 5. Construction of about 600 new sewer connections.. 6. Acquisition of equipment, materials, vehicles and spare parts required for the rehabilitation, operation and maintenance of the sewerage system. Part B: Low Cost Sanitation 1. Construction or upgrading of about 3,600 pit latrines at residences and about 100 at schools. 2. Construction of about five new dumping stations for pit emptying vehicles and rehabilitation of the existing dumping station. 3. Rehabilitation of about 14 pit emptying vehicles and acquisition of about 16 new ones, including spare parts and acquisition of about nine vehicles and four motorcycles for administrative purposes. - 16 - Part C: Dar es Salaam Sanitation and Sewerage Department 1. Establishment of DSSD and development of its staff including specialized training, locally and abroad, for selected professional and technical staff. 2. Construction of a headquarters building for DSSD, including basic laboratory facilities, temporary office facili- ties and about eight staff houses. 3. Construction of a facility to accommodate the workshop and storage needs of DSSD's mechanical and electrical division. 4. Acquisition of equipment for DSSD's central workshop and for its mechanical and electrical division. 5. Establishment of a management information system and a billing and collection system following TANESCO's manage- ment information, billing and collection procedures and using TANESCO's main computer. 6. Upgrading and expansion of three existing maintenance depots. 7. Construction of a field office for the low cost sanitation program. Part D: Studies 1. Preparation of studies on issues related to the sewerage and sanitation sector, such as a tariff structure for sewerage, solid waste management and pollution caused by the present sewerage system. 2. Review of legislation pertinent to the sewerage and sanitation sector. 3. Survey of existing connections for sewerage, water supply and electricity, including an aerial survey and mapping of the city of Dar es Salaam. 4. Detailed design for sewerage systems under the next phase of the Borrower's sewerage and sanitation program. - 17 - PART E: NUWA, ARDHI, TANESCO 1. Strengthening of NUWA by providing assistance in the selection of personnel, the introduction of new management systems and initial management training. 2. Strengthening of ARDHI's public health education and sanitation extension services including the provision of training, educational materials and consultants' services. 3. Increasing TANESCO's computer capacity to accommodate additional computer use in connection with the management information, billing and collection procedures to be introduced by DSSD. The Project is expected to be completed by June 30, 1987. - 18 - SCHEDULE 3 Procurement A. International Competitive Bidding 1. Except as provided in Part D, goods and civil works 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 Cre- dits" 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 and works to be procured on the basis of interna- tional competitive bidding, and 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 no- tice, 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 notification to prospective bidders of the opportunity to bid for the goods and works in question. The Borrower shall pro- vide the necessary information to update such notice annually so long as any goods or works remain to be procured on the basis of international competitive bidding. 3. Contracts for equipment and vehicles shall be grouped, to the extent practicable, in appropriate bid packages. 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 of- fered in such bid; (ii) customs duties and other import taxes levied in connection with the importation, or the sales and simi- lar taxes levied in connection with the sale or delivery, pur- suant to the bid, of the goods shall not be taken into account 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 included. 19 - B. Preference for Domestic Manufacturers In the procurement of goods in accordance with the proce- dures 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 Associa- tion 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 eval- uated 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 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 fur- ther comparison only, an amount equal to: (i) the amount of - 20 - 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. Preference for Domestic Contractors With respect to the evaluation of bids for any contract for civil works included under Category 2 of the table set forth in Schedule 1 to this Agreement and to be procured in accordance with the procedures described in Part A of this Schedule, the Borrower may grant a margin of preference of 7-1/2% to domestic contractors, in accordance with, and subject to, the following provisions: 1. Contractors applying for such preference shall be asked to provide, as part of the data for qualification, such informa- tion, including details of ownership, as shall be required to determine whether, according to the classification accepted by 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. 2. After bids have been received and reviewed by the Borrower, 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. - 21 - D. Other Procurement Procedures 1. Contracts for civil works estimated to cost less than $1,000,000 equivalent each, may be awarded on the basis of com- petitive bidding advertised locally, in accordance with local procedures acceptable to the Association, provided that the aggregate value of such contracts shall not exceed $6,000,000. 2. Contracts for equipment or furniture estimated to cost less than $50,000 equivalent 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 $500,000. E. 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 civil works estimated to cost the equivalent of $700,000 or more and for goods estimated to cost the equivalent of $150,000 or more: (a) Before bids are 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. (b) After bids have been received and evaluated, the Borrower 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 Associa- tion, in sufficient time for its review, a detailed report, by the consultants referred to in Section 3.02 of this Agreement, on the evaluation and comparison of the bids received, together with the recommendations for award of the said consultants 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, proiptly inform the Borrower and state the reasons for such determination. -22- (c) The terms and conditior' of the contract shall not, without the Association's concur :e, 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 preced- ing 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 the analysis of the res- pective bids, recommendations for award and such other informa- tion as the Association shall reasonably request. 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. 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 issu- ing any change order under such contract (except in cases of extreme urgency) which would increase the cost of the contract by more than 25% 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 L7 day of 198-3 FOR SECRETARY