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CONFORMED COPY
CREDIT NUMBER 3546 TA
Development Credit Agreement
(Lower Kihansi Environmental Management Project)
between
THE UNITED REPUBLIC OF TANZANIA
and
INTERNATIONAL DEVELOPMENT ASSOCIATION
Dated July 9, 2001
CREDIT NUMBER 3546 TA
DEVELOPMENT CREDIT AGREEMENT
AGREEMENT, dated July 9, 2001, between UNITED REPUBLIC OF TANZANIA (the 
Borrower) and INTERNATIONAL DEVELOPMENT ASSOCIATION (the Association).
WHEREAS the Borrower, having satisfied itself as to the feasibility and priority 
of the Project described in Schedule 2 to this Agreement, has requested the 
Association to assist in the financing of the Project; 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 set forth in this 
Agreement;
NOW THEREFORE the parties hereto hereby agree as follows:
ARTICLE I
General Conditions; Definitions
Section 1.01. The "General Conditions Applicable to Development Credit 
Agreements" of the Association, dated January 1, 1985 (as amended through October 6, 
1999December 2, 1997), with the modifications set forth below, with the modifications 
set forth below (the General Conditions), constitute an integral part of this 
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Agreement:
(a)
A new paragraph (12) is added to Section 2.01 to read as set forth below, 
and the existing paragraphs (12) through (14) of said Section are accordingly 
renumbered as paragraphs (13) through (15):
"12.
‘Participating Country’ means any country that the Association 
determines meets the requirements set forth in Section 11 of Resolution No. 
194 of the Board of Governors of the Association, adopted on April 8, 1999; 
and ‘Participating Countries’ means, collectively, all such countries."; and
(b)
The second sentence of Section 5.01 is modified to read:
"Except as the Borrower and the Association shall otherwise agree, no 
withdrawals shall be made: (a) on account of expenditures in the territories 
of any country which is not a Participating Country or for goods produced in, 
or services supplied from, such territories; or (b) for the purpose of any 
payment to persons or entities, or for any import of goods, if such payment or 
import, to the knowledge of the Association, is prohibited by a decision of 
the United Nations Security Council taken under Chapter VII of the Charter of 
the 
United Nations."
Section 1.02. 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 following meanings:
(a)
"IAPSO" means the Inter-Agency Procurement Services Office of the United 
Nations;
(b)
"ILFEMP" means Institutional and Legal Framework for Environmental 
Management Project referred to in Part D.2 of Schedule 2 to this Agreement;
(c)
"Kihansi Environmental Center" means the environmental center and 
monitoring station to be based at the Kihansi Gorge, comprising, inter alia, field 
researchers and monitoring experts, referred to in Part A.1 of Schedule 2 and 
paragraph 8 of Schedule 4 to this Agreement;
(d)
"Kihansi Spray Toad" means Nectophrynoides asperginis, a threatened toad 
living in the Kihansi Gorge Ecosystem, referred to in Part A.2 of Schedule 2 to this 
Agreement;
(e)
"MEM" means the Borrower’s Ministry of Energy and Minerals;
(f)
"MNRT" means the Borrower’s Ministry of Natural Resources and Tourism;
(g)
"MOF" means the Borrower’s Ministry of Finance;
(h)
"MTAC" means Multisectoral Technical Advisory Committee, established and 
operating pursuant to the laws of the Borrower, and comprising, inter alia, 
representatives of MNRT, MWLD, MEM, MOF, VPO, NEMC, the Attorney General’s Chambers  
and Tanesco, referred to in paragraph 3 of Schedule 4 to this Agreement;
(i)
"MWLD" means the Borrower’s Ministry of Water and Livestock Development;
(j)
"NEMC" means the National Environmental Management Council, established 
and operating pursuant to the Borrower’s National Environment Management Act No. 19 of 
1983, the project implementation unit, referred to in paragraph 2 of Schedule 4 to 
this Agreement;
(k)
"NGO" means a non-governmental organization;
(l)
"Project Management Report" means each report prepared in accordance with 
Section 4.02 of this Agreement;
(m)
"RBWO" means Rufiji Basin Water Office, established and operating 
pursuant to Water Utilization and Control Act 1974, Number 42, referred to in Part D.1 
of Schedule 2 and paragraphs 3 and 7 of Schedule 4 to this Agreement;
(n)
"Steering Committee" means the steering committee, established and 
operating pursuant to the laws of the Borrower, and comprising, inter alia,  the 
Permanent Secretaries of VPO, MWLD, MNRT, MEM, MOF and the Managing Director of 
Tanesco, or their representatives, referred to in paragraph 2 of Schedule 4 to this 
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Agreement;
(o)
"Special Account" means the account referred to in Section 2.02 (b) of 
this Agreement;
(p)
"Tanesco" means Tanzania Electric Supply Company, a company registered 
and operating under the laws of the Borrower;
(q)
"Tanesco Final Water Right" means the final water right award to be 
granted by the Borrower to Tanesco related to the operation of the Kihansi Gorge 
hydroelectric plant, referred to in Part B of Schedule 2 and paragraph 7 of Schedule 4 
to this Agreement; 
(r)
"Updated Environmental Management Plan" means the updated environmental 
management plan, referred to in Part C of Schedule 2 and paragraph 6 of Schedule 4 to 
this Agreement; and
(s)
"VPO" means the Borrower’s Vice President’s Office.
ARTICLE II
The Credit
Section 2.01. The Association agrees to lend to the Borrower, on the terms and 
conditions set forth or referred to in the Development Credit Agreement, an amount in 
various currencies equivalent to five million Special Drawing Rights (SDR 5,000,000).
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 for 
expenditures made (or, if the Association shall so agree, to be made) in respect of 
the reasonable cost of goods and services required for the Project and to be financed 
out of the proceeds of the Credit.
(b)
The Borrower may, for the purposes of the Project, open and maintain in 
dollars a special deposit account in a commercial bank on terms and conditions 
satisfactory to the Association, including appropriate protection against set-off, 
seizure or attachment. Deposits into, and payments out of, the Special Account shall 
be made in accordance with the provisions of Schedule 5 to this Agreement.
Section 2.03. The Closing Date shall be December 31, 2006 or such later date as 
the Association shall establish. The Association shall promptly notify the Borrower of 
such later date.
Section 2.04. (a) The Borrower shall pay to the Association a commitment charge 
on the principal amount of the Credit not withdrawn from time to time at a rate to be 
set by the Association as of June 30 of each year, but not to exceed the rate of 
one-half of one percent (1/2 of 1%) per annum.
(b)
The commitment charge shall accrue: (i) from the date sixty days after 
the date of this Agreement (the accrual date) to the respective dates on which amounts 
shall be withdrawn by the Borrower from the Credit Account or canceled; and (ii) at 
the rate set as of the June 30 immediately preceding the accrual date and at such 
other rates as may be set from time to time thereafter pursuant to paragraph (a) 
above. The rate set as of June 30 in each year shall be applied from the next date in 
that year specified in Section 2.06 of this Agreement.
(c)
The commitment charge shall be paid: (i) at such places as the 
Association shall reasonably request; (ii) without restrictions 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 2.05. The Borrower shall pay to the Association a service charge at the 
rate of three-fourths of one percent (3/4 of 1%) per annum on the principal amount of 
the Credit withdrawn and outstanding from time to time.
Section 2.06. Commitment charges and service charges shall be payable 
semiannually on April 15 and October 15 in each year.
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Section 2.07. (a) Subject to paragraphs (b), (c) and (d) below, the Borrower 
shall repay the principal amount of the Credit in semiannual installments payable on 
each        April 15 and October 15, commencing October 15, 2011 and ending April 15, 
2041. [Each installment to and including the installment payable on April 15, 2021, 
shall be one percent (1%) of such principal amount, and each installment thereafter 
shall be two percent (2%) of such principal amount. [Each installment to and including 
the installment payable on shall be one and one-fourth percent (1-1/4%) of such 
principal amount, and each installment thereafter shall be two and one-half percent 
(2-1/2%) of such principal amount.
(b)
Whenever: (i) the Borrower's per capita gross national product (GNP), as 
determined by the Association, shall have exceeded for three consecutive years  the 
level established annually by the Association for determining eligibility to access 
the Association's resources; and (ii) the Bank shall consider the Borrower 
creditworthy for Bank lending, the Association may, subsequent to the review and 
approval thereof by the Executive Directors of the Association and after due 
consideration by them of the development of the Borrower's economy, modify the 
repayment of installments under paragraph (a) above by: (A) requiring the Borrower to 
repay twice the amount of each such installment not yet due until the principal amount 
of the Credit shall have been repaid; and (B) requiring the Borrower to commence 
repayment of the principal amount of the Credit as of the first semiannual payment 
date referred to in paragraph (a) above falling six months or more after the date on 
which the Association notifies the Borrower that the events set out in this paragraph 
(b) have occurred, provided, however, that there shall be a grace period of a minimum 
of five years on such repayment of principal.
(c)
If so requested by the Borrower, the Association may revise the 
modification referred to in paragraph (b) above to include, in lieu of some or all of 
the increase in the amounts of such installments, the payment of interest at an annual 
rate agreed with the Association on the principal amount of the Credit withdrawn and 
outstanding from time to time, provided that, in the judgment of the Association, such 
revision shall not change the grant element obtained under the above-mentioned 
repayment modification.
(d)
If, at any time after a modification of terms pursuant to paragraph (b) 
above, the Association determines that the Borrower’s economic condition has 
deteriorated significantly, the Association may, if so requested by the Borrower, 
further modify the terms of repayment to conform to the schedule of installments as 
provided in paragraph (a) above.
Section 2.08. The currency of the United States of America 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 declares its commitment to the objectives of the 
Project as set forth in Schedule 2 to this Agreement and, to this end, shall carry out 
the Project through NEMC with due diligence and efficiency and in conformity with 
appropriate environmental, administrative, financial and economic practices, and shall 
provide, promptly as needed, the funds, facilities, services and other resources 
required for the Project.
(b)
Without limitation upon the provisions of paragraph (a) of this Section 
and except as the Borrower and the Association shall otherwise agree, the Borrower 
shall carry out the Project in accordance with the Implementation Program set forth in 
Schedule 4 to this Agreement.
Section 3.02. Except as the Association shall otherwise agree, procurement of 
the works, goods and consultants’ services 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 AgreementAgreement.
Section 3.03. For the purposes of Section 9.07 of the General Conditions and 
without limitation thereto, the Borrower shall:
(a)
prepare, on the basis of guidelines acceptable to the Association, and 
furnish to the Association not later than six (6) months after the Closing Date, or 
such later date as may be agreed for this purpose between the Borrower and the 
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Association, a plan for the future operation of the Project; and
(b)
afford the Association a reasonable opportunity to exchange views with 
the Borrower on said plan.
ARTICLE IV
Financial Covenants
Section 4.01. (a) The Borrower shall maintain or cause to be maintained records 
and accounts adequate to reflect in accordance with sound 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 records and accounts referred to in paragraph (a) of this 
Section including those for the Special Account for each fiscal 
year audited, in 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 (6) months after the end of each such year, the 
report of such audit by said 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 
records and accounts and the audit thereof as the Association 
shall from time to time reasonably request.
(c)
For all expenditures with respect to which withdrawals from the Credit 
Account were made on the basis of Project Management Reports or statements of 
expenditure, the Borrower shall:
(i)
maintain or cause to be maintained, in accordance with paragraph 
(a) of this Section, records and accounts reflecting such 
expenditures;
(ii)
retain, until at least one year after the Association has received 
the audit report for the fiscal year in which the last withdrawal 
from the Credit Account was made, all records (contracts, orders, 
invoices, bills, receipts and other documents) evidencing such 
expenditures;
(iii)
enable the Association’s representatives to examine such records; 
and
(iv)
ensure that such records and accounts are included in the annual 
audit referred to in paragraph (b) of this Section and that the 
report of such audit contains a separate opinion by said auditors 
as to whether the Project Management Reports or statements of 
expenditure submitted during such fiscal year, together with the 
procedures and internal controls involved in their preparation, 
can be relied upon to support the related withdrawals.
Section 4.02. (a) Without limitation upon the provisions of Section 4.01 of this 
Agreement, the Borrower shall carry out a time-bound action plan acceptable to the 
Association for the strengthening of its financial management system for the Project 
in order to enable the Borrower, not later than eighteen months after the Effective 
Date, or such later date as the Association shall agree, to prepare quarterly Project 
Management Reports, acceptable to the Association, each of which:
(i)
(A) sets forth actual sources and applications of funds for the 
Project, both cumulatively and for the period covered by said 
report, and projected sources and applications of funds for the 
Project for the six-month period following the period covered by 
said report, and (B) shows separately expenditures financed out of 
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the proceeds of the Credit during the period covered by said 
report and expenditures proposed to be financed out of the 
proceeds of the Credit during the six-month period following the 
period covered by said report;
(ii)
(A) describes physical progress in Project implementation, both 
cumulatively and for the period covered by said report, and (B) 
explains variances between the actual and previously forecast 
implementation targets; and
(iii)
sets forth the status of procurement under the Project and 
expenditures under contracts financed out of the proceeds of the 
Credit, as at the end of the period covered by said report.
(b)
Upon the completion of the action plan referred to in paragraph (a) of 
this Section, the Borrower shall prepare, in accordance with guidelines acceptable to 
the Association, and furnish to the Association not later than 45 days after the end 
of each calendar quarter a Project Management Report for such period.
ARTICLE V
Effective Date; Termination
Section 5.01. The following events are specified as additional conditions to the 
effectiveness of the Development Credit Agreement within the meaning of Section 12.01 
(b) of the General Conditions:
(a)
the Borrower has furnished to the Association a Project Implementation 
Manual, in form and substance satisfactory to the Association; and
(b)
the Borrower has established a Project accounting system satisfactory to 
the Association. 
Section 5.02. The date ninety (90) days after the date of this Agreement is 
hereby specified for the purposes of Section 12.04 of the General Conditions.
ARTICLE VI
Representative of the Borrower; Addresses
Section 6.01. The Minister of the Borrower responsible for finance is designated 
as representative of the Borrower for the purposes of Section 11.03 of the General 
Conditions.
Section 6.02. The following addresses are specified for the purposes of Section 
11.01 of the General Conditions:
For the Borrower:
Ministry of Finance
P.O. Box 9111
Dar es Salaam
Tanzania
Cable address:
Telex:
   Facsimile
TREASURY
41329
         (255) 222 11 77 
90
Dar es Salaam
For the Association:
International Development Association
1818 H Street, N.W.
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Washington, D.C. 20433
United States of America
Cable address:
Telex:
   Facsimile:
INDEVAS
248423 (MCI) or      (202) 477 6391
Washington, D.C.
       64145 (MCI)
IN WITNESS WHEREOF, the parties hereto, acting through their duly authorized 
representatives, 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.
THE UNITED REPUBLIC OF TANZANIA
By /s/ Mustafa Nyang’anyi
Authorized Representative
INTERNATIONAL DEVELOPMENT ASSOCIATION
By /s/ Callisto Madavo
Regional Vice President
Africa
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)
 Civil Works
   180,000
90% 
(2)
 Goods and Equipment
   370,000
100% of foreign
expenditures and
90% of local
expenditures
(3)
Consultants’
 3,700,000
100% 
Services and 
Training, 
including
audit fees
(4)
Incremental 
   280,000
90%
Operating Costs
(5)
Unallocated
   470,000
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TOTAL
 5,000,000
2.
For the purposes of this Schedule:
(a)
the term "foreign expenditures" means expenditures in the currency of any 
country other than that of the Borrower for goods or services supplied from the 
territory of any country other than that of the Borrower;
(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; and and
(c)
the term "Incremental Operating Costs" means building, equipment, and 
vehicle maintenance costs, fuel, office supplies, building rental charges, utilities, 
and telecommunications costs, Project support staff,
but excluding salaries of 
officials of the Borrower's civil service. 
3.
Notwithstanding the provisions of paragraph 1 above, no withdrawals shall be 
made in respect of payments made for expenditures prior to the date of this Agreement. 
4.
The Association may require withdrawals from the Credit Account to be made on 
the basis of statements of expenditure: (a) for civil works under contracts not 
exceeding $50,000 equivalent each (other than the first three such contracts to be 
financed under the Credit); (b) for goods and equipment under contracts not exceeding 
$150,000 equivalent each (other than the first three such contracts to be financed); 
(c) for consultants’ services under contracts not exceeding: (i) $100,000 each for 
consulting firms; and (ii) $50,000 each for individual consultants; and (d) for 
training, workshops studies and incremental operating costs, all under such terms and 
conditions as the Association shall specify by notice to the Borrower. 
SCHEDULE 2
Description of the Project
The objective of the Project is to support the Borrower’s efforts to implement a 
series of measures for the long-term conservation of the Kihansi Gorge ecosystem and 
upstream catchment, through the development of a coordinated and consistent legal and 
institutional framework for environmental and water resources management.
The Project consists of the following Parts, subject to such modifications 
thereof as the Borrower and the Association may agree upon from time to time to 
achieve such objectives:
Part A:
Habitat and Species Conservation and Management
1.
Development and implementation of a Kihansi Gorge ecosystem monitoring and 
conservation program, a landscape-wide conservation and catchment management plan, and 
the establishment of the Kihansi Environmental Center, through the provision of 
technical advisory services, civil works, training and the acquisition of computers, 
equipment and vehicles.
2.
Monitoring of captive bred populations of the Kihansi Spray Toad, translocation 
studies, and the development of a plan for the reintroduction of the Kihansi Spray 
Toad to other habitats in Tanzania, through the provision of technical advisory 
services, training and the acquisition of computers and equipment.
3.
Strengthening of the capacity of, inter alia, the University of Dar es Salaam, 
the Tanzania Forestry Research Institute, MNRT, and the Tanzania Wildlife Research 
Institute, to teach and carry out research in conservation biology through the 
provision of technical advisory services, training, and the acquisition of computers 
and equipment.
Part B:
Establishment of Tanesco Final Water Right
1.
Determination of Tanesco’s Final Water Right to operate the Kihansi Gorge 
hydroelectric plant, through a transparent process and the provision of technical 
advisory services, training and the acquisition of computers and equipment. 
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2.
Support to the operation of the MTAC to assist it in establishing and developing 
mechanisms for monitoring and enforcement of the Tanesco Final Water Right, and in 
updating hydrological studies of catchment flows, through the provision of technical 
advisory services, training and the acquisition of computers and equipment.
3.
Monitoring of bypass flows prior to the establishment of the Tanesco Final Water 
Right, through the provision of technical advisory services, civil works, training, 
and acquisition of computers and equipment.
Part C:
Updated Environmental Management Plan
1.
Development of an Updated Environmental Management Plan, through the provision 
of technical advisory services, civil works, training and the acquisition of computers 
and equipment.
2.
Implementation of the Updated Environmental Management Plan through the 
provision of civil works and technical advisory services. 
Part D:
Institutional Strengthening
1.
Preparation and implementation of a program of institutional capacity building 
of, inter alia, NEMC, MWLD, MEM, RBWO, MNRT and Tanesco, with the aim of improving the 
regulatory framework for environmental and water resources management, and awareness 
raising, through the provision of technical advisory services, training and the 
acquisition of computers and equipment.
2.
Implementation of the recommendations and findings of the ILFEMP by the 
Borrower, through the provision of technical advisory services, training and the 
acquisition of computers, equipment and vehicles.
3.
Project coordination and management, through the provision of technical advisory 
services, training and the acquisition of computers and equipment.
* * *
The Project is expected to be completed by December 31, 2006
SCHEDULE 3
Procurement and Consultants’ Services
Section I.
Procurement of Goods and Works
Part A:
General
1.
Goods and works shall be procured in accordance with the provisions of Section I 
of the "Guidelines for Procurement under IBRD Loans and IDA Credits" published by the 
Bank in January 1995 and revised in January and August 1996, September 1997 and 
January 1999 (the Guidelines) and the provisions of the following Parts of this 
Section I.
2.
In paragraphs 1.6 and 1.8 of the Guidelines, the references to "Bank member 
countries" and "member country" shall be deemed to be references, respectively, to 
"Participating Countries" and "Participating Country".
Part B:
International Competitive Bidding
1.
Except as otherwise provided in Part C of this Section, goods and works shall be 
procured under contracts awarded in accordance with the provisions of Section II of 
the Guidelines and paragraph 5 of Appendix 1 thereto.
2.
The following provisions shall apply to goods and works to be procured under 
contracts awarded in accordance with the provisions of paragraph 1 of this Part B.
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Grouping of Contracts
To the extent practicable, contracts for goods shall be grouped in bid packages 
estimated to cost $100,000 equivalent or more each.
Part C:
Other Procurement Procedures
1.
National Competitive Bidding
Civil works estimated to cost less than $150,000 equivalent per contract, up to 
an aggregate amount not to exceed $250,000 equivalent, may be procured under contracts 
awarded in accordance with the provisions of paragraphs 3.3 and 3.4 of the Guidelines.
2.
International or National Shopping
Goods estimated to cost less than $30,000 equivalent per contract, up to an 
aggregate amount not to exceed $400,000 equivalent, may be procured under contracts 
awarded on the basis of international or national shopping procedures in accordance 
with the provisions of paragraphs 3.5 and 3.6 of the Guidelines.
3.
Procurement from UN Agencies
Individual units of office equipment (such as individual fax machines, printers 
and laptop computers) may be procured from IAPSO in accordance with the provisions of 
paragraph 3.9 of the Guidelines.
4.
Procurement of Small Works  
Works estimated to cost less than $50,000 equivalent per contract, up to an 
aggregate amount not to exceed $200,000 equivalent, may be procured under lump-sum, 
fixed-price contracts awarded on the basis of quotations obtained from three (3) 
qualified domestic contractors in response to a written invitation. The invitation 
shall include a detailed description of the works, including basic specifications, the 
required completion date, a basic form of agreement acceptable to the Association, and 
relevant drawings, where applicable. The award shall be made to the contractor who 
offers the lowest price quotation for the required work, and who has the experience 
and resources to complete the contract successfully.
Part D:
Review by the Association of Procurement Decisions
1.
Procurement Planning
Prior to the issuance of any invitations to bid for contracts, the proposed 
procurement plan for the Project shall be furnished to the Association for its review 
and approval, in accordance with the provisions of paragraph 1 of Appendix 1 to the 
Guidelines. Procurement of all goods shall be undertaken in accordance with such 
procurement plan as shall have been approved by the Association, and with the 
provisions of said paragraph 1.
2.
Prior Review
With respect to each civil works contract estimated to cost $50,000 or more; and 
goods and equipment contracts estimated to cost $150,000 or more, the procedures set 
forth in paragraphs 2 and 3 of Appendix 1 to the Guidelines shall apply.
3.
Post Review
With respect to each contract not governed by paragraph 2 of this Part, the 
procedures set forth in paragraph 4 of Appendix 1 to the Guidelines shall apply.
Section II.
Employment of Consultants
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Part A:
General
1.
Consultants’ services shall be procured in accordance with the provisions of the 
Introduction and Section IV of the "Guidelines: Selection and Employment of 
Consultants by World Bank Borrowers" published by the Bank in January 1997 and revised 
in September 1997 and January 1999 (the Consultant Guidelines) and the provisions of 
the following Parts of this Section II.
2.
In paragraph 1.10 of the Consultant Guidelines, the references to "Bank member 
countries" and "member country" shall be deemed to be references, respectively, to 
"Participating Countries" and "Participating Country".
Part B:
Quality- and Cost-Based Selection
1.
Except as otherwise provided in Part C of this Section, consultants’ services 
shall be procured under contracts awarded in accordance with the provisions of Section 
II of the Consultant Guidelines, paragraph 3 of Appendix 1 thereto, Appendix 2 
thereto, and the provisions of paragraphs 3.13 through 3.18 thereof applicable to 
quality- and cost-based selection of consultants.
2.
The following provisions shall apply to services of consultants to be procured 
under contracts awarded in accordance with the provisions of the preceding paragraph. 
The shortlist of consultants for services estimated to cost less than $50,000 
equivalent per contract, may comprise entirely national consultants in accordance with 
the provisions of paragraph 2.7 of the Consultant Guidelines.
Part C:
Other Procedures for the Selection of Consultants 
1.
Selection Based on Consultants’ Qualifications
Services estimated to cost less than $100,000 equivalent per contract may be 
procured under contracts awarded in accordance with the provisions of paragraphs 3.1 
and 3.7 of the Consultant Guidelines.
2.
Single Source Selection
Services may, with the Association's prior agreement, be procured in accordance 
with the provisions of paragraphs 3.8 through 3.11 of the Consultant Guidelines.
3.
Individual Consultants
Services that meet the requirements set forth in paragraph 5.1 of the Consultant 
Guidelines shall be procured under contracts awarded to individual consultants in 
accordance with the provisions of paragraphs 5.1 through 5.3 of the Consultant 
Guidelines.
Part D:
Review by the Association of the Selection of Consultants
1.
Selection Planning
Prior to the issuance to consultants of any requests for proposals, the proposed 
plan for the selection of consultants under the Project shall be furnished to the 
Association for its review and approval, in accordance with the provisions of 
paragraph 1 of Appendix 1 to the Consultant Guidelines.  Selection of all consultants’ 
services shall be undertaken in accordance with such selection plan as shall have been 
approved by the Association, and with the provisions of said paragraph 1.
2.
Prior Review
(a)
With respect to each contract for the employment of consulting firms 
estimated to cost the equivalent of $100,000 or more, the procedures set forth in 
paragraphs 1, 2 (other than the third subparagraph of paragraph 2 (a)) and 5 of 
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Appendix 1 to the Consultant Guidelines shall apply.
(b)
With respect to each contract for the employment of consulting firms 
estimated to cost the equivalent of $50,000 or more, but less than the equivalent of 
$100,000, the procedures set forth in paragraphs 1, 2 (other than the second 
subparagraph of paragraph 2 (a)) and 5 of Appendix 1 to the Consultant Guidelines 
shall apply. 
(c)
With respect to each contract for the employment of individual 
consultants estimated to cost the equivalent of $50,000 or more, the qualifications, 
experience, terms of reference and terms of employment of the consultants shall be 
furnished to the Association for its prior review and approval. The contract shall be 
awarded only after said approval shall have been given.
(d)
Each contract for: (i) the employment of consultants under single source 
selection procedures; (ii) all terms of reference irrespective of the value of the 
contract; (iii) the financial audit of the Project; and (iv) studies, workshops and 
training, shall be furnished to the Association for its prior review and approval.
3.
Post Review
With respect to each contract not governed by paragraph 2 of this Part, the 
procedures set forth in paragraph 4 of Appendix 1 to the Consultant Guidelines shall 
apply.
SCHEDULE 4
Implementation Program
1.
Project Implementation Manual 
(a)
The Borrower shall prepare and furnish to the Association a Project 
Implementation Manual (including a financial manual) in form and substance 
satisfactory to the Association, setting out details of all procedures and guidelines 
(including procurement and/or contract management procedures) to be followed in the 
implementation of the Project.
(b)
The Borrower shall carry out the Project in accordance with the Project 
Implementation Manual and, except as the Association shall otherwise agree, the 
Borrower shall not amend or waive any provision of the Project Implementation Manual 
if, in the opinion of the Association, such amendment or waiver may materially and 
adversely affect the carrying out of the Project or the achievement of the objectives 
thereof.
2.
Implementation of the Project 
NEMC, with the assistance of the MTAC, shall be responsible for the day-to-day 
implementation of the Project, under the overall guidance of the Steering Committee.
3.
The MTAC
The Borrower shall maintain the MTAC. The MTAC shall be responsible for 
providing technical guidance on Project implementation, reporting to the Steering 
Committee through the Director General of NEMC. 
Specifically, the MTAC shall: (a) provide technical guidance and oversee 
implementation of Project activities; (b) undertake sectoral and cross-sectoral 
coordination of specified activities during implementation of the Project; (c) 
organize coordinated discussions on technical issues relevant to the Project; (d) 
assess and recommend technical expertise needed to implement various aspects of the 
Project; and (e) other tasks and functions as may be agreed, from time to time, with 
the Association.
With regard to the establishment of the Tanesco Final Water Right, the MTAC 
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shall: (a) coordinate further investigations of the scope for a modified environmental 
flow regime; (b) make recommendations to NEMC and to the Steering Committee on the 
environmental flow regime and its implications for water rights, operating conditions 
and criteria; (c) make recommendations to the NEMC, the Steering Committee, and the 
RBWO for effective monitoring and enforcement of the Tanesco Final Water Right; and 
(d) make recommendations for the establishment of a transparent mechanism for 
monitoring and enforcing compliance with Tanesco Final Water Right compliance.
4.
Work Programs; Midterm Review 
The Borrower shall: 
(a) 
cause NEMC to: (i) prepare annual work programs satisfactory to the 
Association; and (ii) furnish the said annual work programs no later than March 15 of 
each year, to the Association for its approval.
(b) 
(i) jointly with the Association, carry out, on or before January 31, 
2004, a mid-term review of Project implementation and performance, with particular 
reference to institutional development strategy, project scope, implementation 
arrangements, training and skills transfer; and (ii) thereafter carry out such 
corrective actions as the Borrower and the Association shall determine in accordance 
with a time schedule satisfactory to the Association.
5.
Progress Reports; Performance Indicators
The Borrower shall:
(a)
maintain policies and procedures adequate to enable it to monitor and 
evaluate on an ongoing basis, in accordance with the indicators set forth in Schedule 
6 to this Agreement: (i) the carrying out by the Borrower of the Project; and (ii) the 
achievement of the objectives thereof;
(b)
prepare, under terms of reference satisfactory to the Association, and 
furnish to the Association, no later than August 31 of each year, a report integrating 
the results of the monitoring and evaluation activities performed pursuant to 
paragraph (a) of this Section, on: (i) the progress achieved in the carrying out of 
the Project, during the period preceding the date of said report and setting out the 
measures recommended to ensure the efficient carrying out of the Project; and (ii) the 
achievement of the objectives thereof during the period following such date; and
(c)
review with the Association by September 30 of each year, or such later 
date as the Association shall request, the report referred to in subparagraph (b) of 
this paragraph, and, thereafter, take all measures required to ensure the efficient 
completion of the Project and the achievement of the objectives thereof, based on the 
conclusions and recommendations of the said report and the Association’s views on the 
matter.
6.
Updated Environmental Management Plan 
The Borrower shall, by June 30, 2003, send the Updated Environmental Management 
Plan to the Association for its comments. Upon its adoption by the Borrower, the final 
Updated Environmental Management Plan, satisfactory to the Association, will promptly 
be implemented by the Borrower.
7.
Tanesco Final Water Right
(a)
The Borrower shall issue the Tanesco Final Water Right for operating the  
Kihansi Gorge hydroelectric plant to Tanesco no later than December 31, 2003.  
(b)
The Tanesco Final Water Right, for abstracting up to a maximum of 24.9 
m3/s and for maintaining a minimum environmental bypass flow, shall be determined on 
the basis of intermittent flow studies, ecological studies, economic analysis and 
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other considerations supported under the Project. Such Tanesco Final Water Right shall 
be conditional upon meeting, by Tanesco, of specific downstream environmental flow 
requirements  to be released through the bypass pipe and other outlet works at the dam 
during both dry season and wet season. The recommendations for the dry and wet season 
environmental flow requirements will be made by the Steering Committee.
(c)
The Tanesco Final Water Right shall be granted by RBWO, on behalf of the 
Borrower, on the basis of recommendations by NEMC, which recommendations shall take 
into account (i) the findings of the studies referred to in paragraph 7 (b) above; and 
(ii) inputs from other stakeholders in the scientific and NGO communities.  The NEMC 
recommendations to RBWO shall be verified by the Steering Committee.
(d)
The Borrower shall send the draft Tanesco Final Water Right to the 
Association, for its comments.
(e)
The Tanesco Final Water Right shall not be granted until the Borrower has 
approved the Updated Environmental Management Plan, satisfactory to the Association.
8.
Kihansi Environmental Center
The Borrower shall establish and maintain the Kihansi Environmental Center. The 
Kihansi Environmental Center, under the direction of NEMC
and with the assistance of 
the MTAC, shall have primary responsibility for carrying out environmental monitoring 
and coordination for the Project.
(b)
The Borrower shall employ and assign to PCU a fulltime communications 
officer with qualifications and experience satisfactory to the Association. The 
Communications Officer shall report to PCU’s director and his functions shall include: 
(i) overall responsibility for the management of the Borrower’s strategy under the 
Project; (ii) regular meetings with key personnel of the Borrower to determine 
strategic options and planned actions; and (iii) outsourcing of individual tasks that 
cannot be undertaken in-house, such as opinion research and advertisement production.
SCHEDULE 5
Special Account
1.
For the purposes of this Schedule:
(a)
the term "eligible Categories" means Categories (1) through (4) set forth 
in the table in paragraph 1 of Schedule 1 to this Agreement;
(b)
the term "eligible expenditures" means expenditures in respect of the 
reasonable cost of goods and services required for the Project and to be financed out 
of the proceeds of the Credit allocated from time to time to the eligible Categories 
in accordance with the provisions of Schedule 1 to this Agreement; and
(c)
the term "Authorized Allocation" means an amount equivalent to $250,000 
to be withdrawn from the Credit Account and deposited into the Special Account 
pursuant to paragraph 3 (a) of this Schedule. 
2.
Payments out of the Special Account shall be made exclusively for eligible 
expenditures in accordance with the provisions of this Schedule.
3.
After the Association has received evidence satisfactory to it that the Special 
Account has been duly opened, withdrawals of the Authorized Allocation and subsequent 
withdrawals to replenish the Special Account shall be made as follows:
(a)
For withdrawals of the Authorized Allocation, the Borrower shall furnish 
to the Association a request or requests for deposit into the Special Account of an 
amount or amounts which do not exceed the aggregate amount of the Authorized 
Allocation. On the basis of such request or requests, the Association shall, on behalf 
of the Borrower, withdraw from the Credit Account and deposit into the Special Account 
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such amount or amounts as the Borrower shall have requested.
(b)
(i)
For replenishment of the Special Account, the Borrower shall 
furnish to the Association requests for deposits into the Special 
Account at such intervals as the Association shall specify.
(ii)
Prior to or at the time of each such request, the Borrower shall 
furnish to the Association the documents and other evidence 
required pursuant to paragraph 4 of this Schedule for the payment 
or payments in respect of which replenishment is requested. On the 
basis of each such request, the Association shall, on behalf of 
the Borrower, withdraw from the Credit Account and deposit into 
the Special Account such amount as the Borrower shall have 
requested and as shall have been shown by said documents and other 
evidence to have been paid out of the [respective] Special Account 
for eligible expenditures. All such deposits shall be withdrawn by 
the Association from the Credit Account under the respective 
eligible Categoriy[ies], and in the respective equivalent amounts, 
as shall have been justified by said documents and other evidence.
4.
For each payment made by the Borrower out of the Special Account, the Borrower 
shall, at such time as the Association shall reasonably request, furnish to the 
Association such documents and other evidence showing that such payment was made 
exclusively for eligible expenditures.
5.
Notwithstanding the provisions of paragraph 3 of this Schedule, the Association 
shall not be required to make further deposits into the Special Account:
(a)
if, at any time, the Association shall have determined that all further 
withdrawals should be made by the Borrower directly from the Credit Account in 
accordance with the provisions of Article V of the General Conditions and paragraph 
(a) of Section 2.02 of this Agreement;
(b)
if the Borrower shall have failed to furnish to the Association, within 
the period of time specified in Section 4.01 (b) (ii) of this Agreement, any of the 
audit reports required to be furnished to the Association pursuant to said Section in 
respect of the audit of the records and accounts for the Special Account;
(c)
if, at any time, the Association shall have notified the Borrower of its 
intention to suspend in whole or in part the right of the Borrower to make withdrawals 
from the Credit Account pursuant to the provisions of Section 6.02 of the General 
Conditions; or
(d)
once the total unwithdrawn amount of the Credit allocated to the eligible 
Categories, minus the total amount of all outstanding special commitments entered into 
by the Association pursuant to Section 5.02 of the General Conditions with respect to 
the Project, shall equal the equivalent of twice the amount of the Authorized 
Allocation.
Thereafter, withdrawal from the Credit Account of the remaining unwithdrawn amount of 
the Credit allocated to the eligible Categories shall follow such procedures as the 
Association shall specify by notice to the Borrower.  Such further withdrawals shall 
be made only after and to the extent that the Association shall have been satisfied 
that all such amounts remaining on deposit in the  Special Account as of the date of 
such notice will be utilized in making payments for eligible expenditures.
6.
(a)
If the Association shall have determined at any time that any payment out 
of the Special Account: (i) was made for an expenditure or in an amount not eligible 
pursuant to paragraph 2 of this Schedule; or (ii) was not justified by the evidence 
furnished to the Association, the Borrower shall, promptly upon notice from the 
Association: (A) provide such additional evidence as the Association may request; or 
(B) deposit into the Special Account (or, if the Association shall so request, refund 
to the Association) an amount equal to the amount of such payment or the portion 
thereof not so eligible or justified.  Unless the Association shall otherwise agree, 
no further deposit by the Association into the Special Account shall be made until the 
Borrower has provided such evidence or made such deposit or refund, as the case may 
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be.
(b)
If the Association shall have determined at any time that any amount 
outstanding in the Special Account will not be required to cover further payments for 
eligible expenditures, the Borrower shall, promptly upon notice from the Association, 
refund to the Association such outstanding amount.
(c)
The Borrower may, upon notice to the Association, refund to the 
Association all or any portion of the funds on deposit in the Special Account.
(d)
Refunds to the Association made pursuant to paragraphs 6 (a), (b) and (c) 
of this Schedule shall be credited to the Credit Account for subsequent withdrawal or 
for cancellation in accordance with the relevant provisions of this Agreement, 
including the General Conditions.
SCHEDULE 6
Performance Indicators
1.
Development and implementation of a Kihansi Gorge ecosystem monitoring program 
which, among other things, develops technical standards for monitoring flora and fauna 
populations in the Gorge, evaluates the effectiveness of various mitigation measures 
already under implementation, and which recommends new mitigation measures as needed.
2.
Development and implementation of measures to improve the conservation status of 
the Kihansi Gorge ecosystem, and to restore critical habitats where this is possible 
and cost-effective.
3.
Establishment of the criteria and the mechanisms for reintroducing threatened 
endemic species, such as the Kihansi Spray Toad, to the Kihansi Gorge, or to other 
appropriate habitats.
4.
Preparation of a landscape-wide conservation and catchment area management plan 
which considers upstream catchment protection and its impact on the Kihansi Gorge.
5.
Strengthening of the capacity and the institutional basis for conserving 
threatened habitats and species in Tanzania, and for training future researchers, 
natural resource managers, and decision makers in conservation biology.
6.
Determination of Tanesco's final right to use water from the Kihansi river, 
through a transparent process on the basis of scientific inputs and representations 
from various stakeholders.
7.
Establishment and implementation of a framework for monitoring and enforcing 
compliance with the final water right.
8.
Preparation of an updated Environmental Management Plan, to be implemented as a 
condition of the final water right, and which accounts for threatened endemic species 
in the Kihansi Gorge ecosystem.
9.
Finalization and dissemination of proposed national environmental impact 
assessment guidelines.
10.
Prioritizing and addressing capacity-building needs which are identified as a 
result of a capacity needs assessment with respect to environmental decision making 
specific to the question of water resources and the environment.
11.
Strengthening of the institutional and regulatory framework for environmental 
management, in particular, by improving the capacity for implementing Environment 
Impact Assessment (EIA) regulations, and for monitoring, regulating, and enforcing 
legal provisions related to environmental quality objectives.
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