Project Agreement DOCUMNTS.CREDIT NUMBER 860 TA. Dated -, Public Disclosure Authorized. Public Disclosure Authorized

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1 Public Disclosure Authorized DOCUMNTS.CREDIT NUMBER 860 TA Public Disclosure Authorized Project Agreement (Tourism Rehabilitation Project) Public Disclosure Authorized between INTERNATIONAL DEVELOPMENT ASSOCIATION and TANZANIA TOURIST CORPORATION Public Disclosure Authorized Dated -, 1979

2 PROJECT AGREEMENT AGREEMENT, dated 2, 1979, between INTERNATIONAL DEVELOPME T ASSOCIATION (hereinafter called Association) and TANZANIA TOURIST CORPORATION (hereinafter called TTC). WHEREAS by Development Credit Agreement of even date herewith between United Republic of Tanzania (hereinafter called Borrower) and Association, Association has agreed to make available to Borrower an amount in various currencies equivalent to fourteen million dollars ($14,000,000), on terms and conditions set forth in Development Credit Agreement, but, only on condition that TTC agree to undertake such obligations toward Association as are hereinafter set forth; and WHEREAS by a subsidiary loan agreement to be entered into between Borrower and TTC, a portion of proceeds of credit provided for under Development Credit Agreement will be made available to TTC on t.ie terms and conditions rein set forth; and WHEREAS TTC, in consideration of Association's entering into- Development Credit Agreement with Borrower, has. agreed to undertake obligations hereinafter set forth; NOW THEREFORE parties hereto hereby agree as follows: ARTICLE I Definitions Section Wherever used in this Agreement, unless context shall orwise require, several terms defined in Development Credit Agreement and in General Conditions (as so defined) have respective meanings rein set forth and term "subsidiary" means any company of which a majority of outstanding voting stock or or proprietary interest is owned or effectively controlled by TTC or by any one or more subsidiaries of TTC or by TTC and one or more of its subsidiaries. ARTICLE II Execution of Project Section TTC shall carry out Parts A and B of Project described in Schedule 2 to Development Credit

3 -2- Agreement with due diligence and efficiency and appropriate in conformity administrative, with commercial engineering practices. and financial Section TTC shall employ, by April 30, 1979 or such later date as Association may accept, and retain a qualified and experienced specialist to supervise and coordinate hotel rehabilitation program included in Part A of Project. Section Except as Association shall orwise agree, procurement of goods and civil works required for Project and to be financed out of proceeds of Credit, shall be governed by provisions of Schedule to this Agreement. Section All technical assistance required for Parts A and B of Project and to be financed out of proceeds of Credit shall be carried out by qualified and experienced personnel on terms and conditions satisfactory to TTC and Association. Section (a) TTC undertakes to insure, provision or for make adequate insurance of, imported out goods of to be proceeds financed of Credit relent.against to it by hazards Borrower incident to acquisition, delivery transportation reof to and place of use or installation, insurance and any for indemnity such shall be payable in usable a currency by TTC to freely replace or repair such goods. (b) Except as Association may orwise agree, TTC shall cause all goods and services financed out of proceeds of Credit relent to it by Borrower to be used exclusively for Project. Section (a) TTC shall furnish to Association, promptly upon ir preparation, plans, specifications, reports, contract documents and construction and procurement schedules for Parts A and B of Project, and any material modifications reof or additions reto, in such detail as Association shall reasonably request. (b) TTC: (i) shall maintain records and to procedures record and adequate monitor progress of Parts A and (including B of its Project cost and benefits to be derived identify from it), goods to and services financed out of Credit proceeds relent of to it by Borrower, and to disclose ir use

4 -3- in Project; (ii) shall enable Association's accredited representatives to visit facilities and construction sites included in Parts A and B of Project and to examine goods financed out of proceeds of Credit and any relevant records and documents; and (iii) shall furnish to Association at regular intervals all such information as Association shall reasonably request concerning Parts A and B of Project, its cost and, where appropriate, benefits to be derived from it, expenditures of such proceeds and goods and services financed out of such proceeds. (c) Promptly after completion of Project, but in any event not later than six months after Closing Date or such later date as may be agreed for this purpose between Association and TTC, TTC shall prepare and furnish to Association a report, of such scope and in such detail as Association shall reasonably request, on execution and initial operation of Project, its cost and benefits derived and to be derived from it, performance by TTC and Association of ir respective obligations under Credit Agreement and accomplishment of purposes of Credit. (d) TTC shall enable Association's representatives to examine such plants, installations, sites, works, buildings, property and equipment of TTC and such relevant records and documents as Association shall reasonably request. Section TTC shall duly perform all its obligations under Subsidiary Loan Agreement. Except as Association shall orwise agree, TTC shall not take or concur in any action which would have effect of amending, abrogating, assigning or waiving Subsidiary Loan Agreement or any provision reof. Section (a) TTC shall at request of Association, exchange views with Association with regard to progress of Project, performance of its obligations under this Agreement and under Subsidiary Loan Agreement, and or matters relating to purposes of Credit. (b) TTC and Association shall promptly inform each or of any condition which interferes or threatens to interfere with progress of Project, accomplishment of purposes of Credit, or performance by TTC of its obligaticis under this Agreement and under Subsidiary Loan Agreement.

5 ARTICLE III Management and Operations of TTC Section TTC shall carry out its tndertakings under Project and shall. conduct its operations and affairs in conformity with sound administrative, commercial, engineering and financial practices, under qualified and experienced management and staff in adequate numbers..section TTC shall take out and maintain with responsible-insurers, or make or provisions satisfactory to Association for, insurance against such *risks and in such amounts as shall be consistent with appropriate practice. Section TTC shall operate and matntain, repair and replace all facilities, equipment and vehicles financed out of proceeds of Credit relent io Lt, in accordance with appropriate administrative, commercial, engineering and financial practices. Section TTC shall, by December 31, 1981, have reached and reafter maintain an aninal level of repair and maintenance expenditure equivalent to six per cent of its annual hotel sales or two per cent of total current value of its fixed assets, whichever is higher. ARTICLE IV Financial Covenants Section (a) TTC shall maintain records adequate to reflect in accordance with consistently maintained appropriate accounting practices Lts operations and financial condition. Section TTC shall, by December 31, 1979, prepare and submit to Association a study examining feasibility and magnitude of real rate increases at its hotels and lodges and recommending policies and procedures for TTC tariff rate decisions. (b) TTC shall establish and maintain until. co-apletion of Project a separate Project Account for Parts A and B of Project to be used exclusively for purposes of Project and shall record reta all receipts and payments for or in connection with those Parts of Project.

6 -5- Section TTC shall: (a) have its accounts including said Project Account and financial statements (balance sheets, statements of income and expenses and related statements) for each of its subsidiaries, and consolidated financial statement for TTC and its subsidiaries for each fiscal year audited, in accordance with appropriate auditing principles consistently applied, by independent auditors acceptable to Association; (b) furnish to Association as soon as available, but in any case not later than six months after end of each such year, (i) certified copies of its financial statements for such year as so audited and (ii) report of such audit by said auditors, of such scope and in such detail as Association shall have reasonably requested; and (c) furnish to Association such or information concerning such accounts and financial statements of TTC and- audit reof as Association shall from time to time reasonably request. Section TTC shall not undertake any capital expenditures in excess of TShs2,000,000 per fiscal year, except capital expenditures financed through government grants or long-term non-governmental borrowings, if its ratio of current assets to current liabilities, on a consolidated basis after making proposed capital expenditures in question, would fall below 1.1 to 1. The terms "current assets" and "current liabilities" have meanings assigned to m in Section 3.03 (b) of Development Credit Agreement..ARTICLE V Effective Date; Termination; Cancellation and Suspension Section This Agreement shall come into force and effect on date upon which Development Credit Agreement becomes effective. Section (a) This Agreement and all obligations of Association and of TTC hereunder shall terminate on earlier of following two dates: (i) date on which Development Credit Agreement shall terminate in accordance with its terms; or (ii) a date fifteen years after date of this Agreement.

7 (b) If Development Credit Agreement terminates in accordance with its terms before date specified in paragraph (a) (ii) of this Section, Association shall promptly notify TTC of this event. Section All provisions of this Agreement shall continue in full force and effect notwithstanding any cancellation or suspension under General Conditions. ARTICLE VI Miscellaneous Provisions Section Any notice or request required or permitted to be given or made under this Agreement and any agreement between 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 party to which it is required or permitted to be given or made at such party's address hereinafter specified or at such or address as such party shall have designated by notice to party giving such notice or making such request. The addresses so specified are: For Association: International Development Association 1818 H Street, N.W. Washington, D.C United States of America Cable address: INDEVAS Washington, D.C. Telex: (ITT) (RCA) or (WUI) For TTC: Tanzania Tourist Corporation P.O. Box 2485 Dar es Salaam Tanzania

8 7- Cable address: Telex: TANTOURS Dar es Salaam Dar es Salaam Section Any action required or permitted to be taken, and any document required or permitted to be executed, under -this Agreement on behalf of TTC may be taken or executed by its General Manager or such or person or persons as its General Manager shall designate in writing, and TTC shall furnish to Association sufficient evidence of authority and aunticated specimen signature of each such person. Section This Agreement may be executed in several counterparts, each of which shall be an original, and all collectively but one instrument. IN WITNESS WHEREOF, parties hereto, acting through ir representatives reunto duly authorized, have caused this Agreement to be signed in ir respective names in District of Columbia, United States of America, as of day and year first above written. INTERNATIONAL DEVELOPMENT ASSOCIATION By Regional Vice President Eastern Africa TANZANIA TOURIST CORPORATION By Authorized Representative

9 SCHEDULE Procurement A. International Competitive Bidding 1. Except 'as provided in Part D hereof, goods and civil works shall be procured under contracts awarded in accordance with procedures consistent with those set forth in "Guidelines for Procurement under World Bank Loans and IDA Credits" published by Bank in March 1977 (hereinafter called Guidelines), on basis of international competitive bidding as described in Part A of Guidelines. 2. For goods and works to be procured on basis of international competitive bidding, in addition to requirements of paragraph 1.2 of Guidelines, TTC shall prepare and forward to Association as soon as possible, and in any event not later than 60 days prior to date of availability to public of first tender or prequalification documents relating reto, as case may be, a general procurement notice, in such form and detail and containing such information as Association shall reasonably request; Association. will arrange for publication of such notice in order to provide timely notification to prospective bidders of opportunity to bid for goods and works in question. TTC shall provide necessary information to update such notice annually so long as any goods or works remain to be procured on basis of international competitive bidding. 3. Bidders for civil works included in Part A of Project shall be prequalified as described in paragraph 1.3 of Part A of Guidelines. 4. For purpose of evaluation and comparison of bids for supply of goods to be procured on basis of international competitive bidding: (i) bidders shall be required to state in ir bid c.i.f. (port of entry) price for imported goods, or ex-factory price for domestically manufactured goods; (ii) customs duties and or import taxes on imported goods, and sales and similar taxes on domestically supplied goods, shall be excluded; and (iii) cost to TTC of inland freight and or expenditures incidental to delivery of goods to place of ir use or installation shall be included.

10 B. Preference for Domestic Manufacturers In procurement of goods in accordance with procedures described in Part A of this Schedule, goods manufactured in Tanzania may be granted a margin of preference in accordance with, and subject to, following provisions: 1. All bidding documents for procurement of goods shall clearly indicate any preference which will be granted, information required to establish eligibility of a bid for such preference and following methods and stages that will be followed in evaluation and comparison of bids. 2. After evaluation, responsive bids will be classified in one of following three groups: (1) Group A: bids offering goods manufactured in Tanzania if bidder shall have established to satisfaction of Tanzania and Assoclation that manufacturing cost of *such goods includes a value added in Tanzania equal to at least 20% of ex-factory bid price of such goods. (2) Group B: all or bids offering goods manufactured in Tanzania. (3) Group C: bids offering any or goods. 3. All evaluated bids in each group shall be first compared among mselves, excluding any customs duties and or import taxes on goods to be imported and any sales or similar taxes on goods to be supplied domestically, to determine lowest evaluated bid of each group. Such lowest evaluated bids shall n be compared with each or, and if, as a result of this comparison, a bid from group A or group B is lowest, it shall be selected for award. 4. If, as a result of comparison under paragraph 3 above, lowest bid is a bid from group C, all group C bids shall be furr compared with lowest evaluated bid from group A after adding to c.i.f. bid price of imported goods offered in each group C bid, for purpose of this furr comparison only, an amount equal to: (i) amount of customs duties and or import taxes which a non-exempt importer would have to pay for importation of goods offered in such

11 -10- grouy C bid; or (ii) 15% of c.i.f. bid price of such goods if said customs duties and taxes exceed 15% of such price. If group A bid in such furr comparison is lowest, it shall be selected for award; if not, bid from group C which as a result of comparison under paragraph 3 is lowest evaluated bid shall be selected. C. Preference for Domestic Contractors With respect to evaluation of bids for any contract for civil works included under Category (1) of table set forth in Schedule 1 to Development Credit Agreement and to be procured in accordance with procedures described in Part A of this Schedule, TTC may grant a margin of preference of 7-1/2% to domestic contractors, in accordance with, and subject to, following provisions: 1. Contractors shall be required to prequalify as provided in Part A of this Schedule and applicants for qualification applying for such preference shall be asked to provide, as part of data for qualification, such information, including details of ownership, as shall be required to determine wher, according to classification established by Borrower and accepted by Association, a particular firm or group of firms qualifies for a domestic preference. The bidding documents shall clearly indicate preference and method that will be followed in evaluation and comparison of bids to give effect to such preference. 2. After bids have been received and reviewed by TTC, responsive bids will be classified into following groups: (i) bids offered by domestic contractors eligible for preference; and (ii) bids offered by or contractors. For purpose of evaluation and comparison of bids an amount equal to 7-1/2% of bid amount shall be added to bids received under group (ii) above. D. Or Procurement Procedures f1. Contracts for civil works estimated to cost $250,000 equivalent or less may be awarded pursuant to Borrower's applicable

12 competitive-bidding procedures; provided that aggregate value of contracts awarded pursuant to this paragraph shall not exceed $2,400,000 equivalent. 2. Contracts or orders for purchase of goods which cannot be bulked in packages of $100,000 equivalent or more may be awarded pursuant to Borrower's applicable competitive bidding procedures; provided that aggregate value of contracts awarded pursuant to this paragraph shall not exceed $1,500,000 equivalent. 3. Spare parts for existing equipment may be procured directly from equipment manufacturer or distributor; provided that aggregate value of such spare parts shall not exceed $300,000 equivalent. E. Review of Procurement Decisions by Association 1. Review of prequalification. The Borrower or TTC, as case may be, shall, before qualification is invited, inform Association in detail of procedure to be followed, and shall introduce such modifications in said procedure as Association shall reasonably request. The list of prequalified bidders, toger with a statement of ir qualifications and, where applicable, of ir eligibility for domestic preference under Part C above and of reasons for exclusion of any applicant for prequalification and for such eligibility shall be furnished by Borrower or TTC, as case may be, to Association for its comments before applicants are notified of Borrower's or TTC's decision, as case may be, and Borrower or TTC, as case may be, shall make such additions to, deletions from, or modifications in, said list as Association shall reasonably request. 2. Review of invitations to bid and of proposed awards and final contracts: With respect to all contracts for civil works estimated to cost equivalent of $250,000 or more: (a) Before bids are invited, Borrower or TTC, as case may be, shall furnish to Association, for its comments, text of invitations to bid and specifications and or bidding documents, toger with a description of advertising procedures to be followed for bidding, and shall make such modifications in said documents or procedures as

13 Association shall reasonably request. Any furr modification to bidding documents shall require Association's concurrence before it is issued to prospective bidders. (b) After bids have been received and evaluated, rower or Bor- TTC, as case may be, shall, before a final on decision award is made, inform Association of bidder name to of which it intends to award contract and shall to furnish Association, in sufficient time for its review, a detailed report on evaluation and comparison toger of with bids recommendations received, for award and such mation or infor- as Association shall reasonably request. The tion Associa- shall, if it determines that intended award inconsistent would be with Guidelines or this Schedule, promptly Borrower inform or TTC, as case may be, and state reasons such determination. for (c) The terms and conditions of contract shall not, without Association's concurrence, materially differ from those on which bids were asked or prequalification invited. (d) Two conformed copies of contract shall be to furnished Association promptly after its execution and prior submission to to Association of first application withdrawal for of funds from Credit Account in respect contract. of such 3. With respect to each contract not governed by., preceding paragraph, Borrower or TTC, as case may be, shall to furnish Association, promptly after its execution and prior submission to to Association of first application drawal for with- of funds from Credit Account in respect of such tract, con- two conformed copies of such contract, toger analysis with of respective bids, recommendations for award such and or information as Association shall reasonably request. The Association shall, if it determines that award contract of was not consistent with Guidelines Schedule, or this promptly inform Borrower or TTC, as case and may state be, reasons for such determination. 4. Before agreeing to any material modification or of waiver terms and conditions of a contract, or granting extension an of stipulated time for performance of such contract, or issuing any change order under such contract (except of in extreme cases urgency) which would increase cost of contract

14 -13- by more than 10% of original price, Borrower or TTC, as case may be, shall inform Association of proposed modification, waiver, extension or change order and reasons refor. The Association, if it determines that proposal would be inconsistent with provisions of this Agreement, shall promptly inform Borrower or TTC, as case may be, and state reasons for its determination.

15 INTERNATIONAL DEVELOPMENT ASSOCIATION CERTIFICATE I hereby certify that foregoing is a true copy of original in archives of International Development Association. In witness whereof I have signed this Certificate and affixed Seal of Association reunto day of, o FOR SECRETARY