Mali - Telecommunications Project : Credit 0321 - Project Agreement - Conformed

CONFORMED COPY CREDIT NUMBER 321 MLI Project Agreement (Telecommunications Project) BETWEEN INTERNATIONAL DEVELOPMENT ASSOCIATION AND OFFICE DES POSTES ET TELECOMMUNICATIONS DE LA REPUBLIQUE DU MALI DATED JUNE 28, 1972 CONFORMED COPY CREDIT NUMBER 321 MLI Project Agreement (Telecommunications Project) BETWEEN INTERNATIONAL DEVELOPMENT ASSOCIATION AND OFFICE DES POSTES ET TELECOMMUNICATIONS DE LA REPUBLIQUE DU MALI DATED JUNE 28, 1972 PROJECT AGREEMENT AGREEMENT, dated June 28, 1972, between the INTERNATIONAL DEVELOPMENT ASSOCIATION (hereinafter called the Association) and the OFFICE DES POSTES ET TELECOMMUNICATIONS DE LA REPUBLIQUE DU MALI (hereinafter called the OPTM). WHEREAS by the Development Credit Agreement of even date herewith between the Republic of Mali (hereinafter called the Borrower) and the Association, the Association has agreed to make available to the Borrower an amount in various currencies equivalent to three million six hundred thousand ($3,600,000), on the terms and conditions set forth in the Development Credit Agreement, but only on condition that the OPTM agree to undertake certain obligations toward the Association as hereinafter set forth; WHEREAS by a subsidiary loan agreement to be entered into between the Borrower and the OPTM, the proceeds of the credit provided for under the Development Credit Agreement will be made available to the OPTM on the terms and conditions therein set forth; WHEREAS the OPTM, in consideration of the Association's entering into the Development Credit Agreement with the Borrower, has agreed to undertake the obligations hereinafter set forth; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I Definitions Section 1.01. Wherever used in this Agreement, unless the context shall otherwise require, the several terms defined in the Development Credit Agreement and in the General Conditions (as so defined) have the respective meanings therein set forth. ARTICLE II Execution of the Project Section 2.01. The OPTM shall carry out the Project, described in Schedule 2 to the Development Credit Agreement, with due diligence and efficiency and 4 in conformity with sound administrative, financial and engineering practices, and shall provide, or cause to be provided, promptly as needed, the funds, facilities, services and other resources required for the purpose. Section 2.02. (a) In order to assist the OPTM in the procurement of goods and services required to carry out the Project, the supervision of the works included in the Project and the reorganization of the system of accounting of the OPTM, the OPTM shall employ engineering consultants and financial consultants, both acceptable to the Association and in each case upon terms and conditions satisfactory to the Association. (b) The OPTM shall also employ under terms and conditions satisfactory to the Association three technical advisers acceptable to the Association to advise it on, and assist it in training personnel in, day-to-day operations in the fields of switching, transmission and local networks, for such periods as shall be agreed between the Association and the OPTM. Section 2.03. In carrying out the constructions and works for the facilities included inthe Project, the OPTM shall employ contractors and suppliers acceptable to the Association upon terms and conditions satisfactory to the Association. Such terms and conditions shall include adequate provisions for the training of personnel of the OPTM in the maintenance of such facilities. Section 2.04. Except as the Association shall otherwise agree, the goods and services (other than services of consultants and advisers) required for the Project and to be financed out of the proceeds of the Credit, shall be procured on the basis of international competition under procedures consistent with the Guidelines for Procurement under World Bank Loans and IDA Credits, published by the Bank in April 1972, and in accordance with, and subject to, the provisions set forth in the Schedule to this Agreement. Section 2.05. (a) The OPTM undertakes to insure, or make adequate provision for the insurance of, the goods to be financed out of the proceeds of the Credit relent to it by the Borrower against hazards incident to the acquisition, transportation and delivery thereof to the place of use or installation, and for such insurance any indemnity shall be payable in a currency freely usable by the OPTM to replace or repair such goods. (b) Except as the Association may otherwise agree, the OPTM shall cause all goods and services financed out of the proceeds of the Credit relent to it by the Borrower to be used exclusively for the Project. 5 Section 2.06. (a) The OPTM shall furnish to the Association promptly upon their preparation, the plans, specifications, 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 OPTM: (i) shall maintain records adequate to record the progress of the Project (including the cost thereof) and to identify the goods and services financed out of the proceeds of the Credit relent to it by the Borrower, and to disclose the use thereof in the Project; (ii) shall, without limitation upon the provisions of Section 5.03 of this Agreement, enable the Association's representatives to inspect the Project, the goods financed out of such proceeds and any relevant records and documents; and (iii) shall furnish to the Association all such information as the Association shall reasonably request concerning the Project, the expenditure of the proceeds of the Credit so relent to it and the goods and services financed out of such proceeds. Section 2.07. The OPTM shall duly perform all its obligations under the Subsidiary Loan Agreement. Except as the Association shall otherwise agree, the OPTM shall not take or concur in any action which would have the effect of amending, abrogating, assigning or waiving the Subsidiary Loan Agreement or any provision thereof. ARTICLE III Management and Operations of the OPTM Section 3.01. (a) The OPTM shall at all times conduct its operations in accordance with sound technical, financial and administrative practices and under qualified and experienced management and staff. (b) For the purposes of paragraph (a) of this Section, the OPTM shall employ for three years a qualified and experienced expert in organization and management acceptable to the Association. Section 3.02. For the purposes of Section 3.01 above, the OPTM shall conduct a review of its requirements for personnel and for the training of personnel and shall, at the beginning of 1974, consult and exchange views with the Association on the results thereof with a view to reaching agreement on the implementation of the measures shown by such reviews to be necessary or appropriate. Until such agreement, the OPTM shall not increase the numbers of its non-technical and administrative personnel of its Telecommunications Department. 6 Section 3.03. The OPTM shall, before any transfers of net profit to the Borrower, ensure an adequate level of reserves for future expansion. Section 3.04. The OPTM shall take out and maintain with responsible insurers, or make other provisions satisfactory to the Association for, insurance against such risks and in such amounts as shall be consistent with sound practice. ARTICLE IV Financial Covenants Section 4.01. The OPTM shall maintain records adequate to reflect in accordance with consistently maintained sound accounting practices its operations and financial condition. Accounts and financial statements of the OPTM, beginning with those for the fiscal year 1972, shall show separately the operating results and financial position of the Telecommunications Department. Section 4.02. (a) Beginning in respect of the year 1972, the OPTM shall: (i) have its accounts and financial statements (balance sheets, statements of income and expenses and related statements) for each fiscal year audited, in accordance with sound auditing principles consistently applied, by independent auditors acceptable to the Association; (ii) furnish to the Association as soon as available, but in any case, except as provided in paragraph (b) of this Section, not later than six months after the end of each such year, (A) certified copies of its financial statements for such year as so audited and (B) the report of such 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 the accounts and financial statements of the OPTM and the audit thereof as the Association shall from time to time reasonably request. (b) The documents and information required under paragraph (a) of this Section in respect of the fiscal year 1972 need not be submitted to the Association prior to June 30, 1974. Section 4.03. The OPTM, with the assistance of the financial consultants referred to in Section 2.02 (a), shall, by the end of 1973, reorganize its accounting system, and by the end of June 1973, inventory and revalue its assets and revise its policies and procedures for collections of charges, all in accordance with sound commercial principles of management, budgeting, costing and depreciation of assets based on the useful lives thereof. Section 4.04. During the carrying out of the Project, the OPTM shall not: 7 (a) modify its tariffs applicable to telecommunications services without prior consultation with the Association; or (b) undertake any capital expenditures for telecommunications, other than under the Project, in excess of the equivalent of $75,000 in any year unless the Association shall have approved a financing plan therefor. Section 4.05. Immediately upon the availability of the necessary data resulting from the reorganization carried out pursuant to Section 4.03 above, the OPTM shall review the structure and levels of its domestic telecommunications tariffs in consultation with the Association. Section 4.06. (a) Beginning in respect of the year 1977, the OPTM shall, unless the Association shall otherwise agree, take all steps necessary, including making any appropriate adjustments in its telecommunication tariffs, to provide revenue suff*cient for its Telecommunications Department to produce an annual rate of return of not less than 10%. (b) For the purposes of this Section: (i) the annual rate of return shall be calculated in respect of each fiscal year by relating net income for that year to the average of the net values of fixed assets in operation at the beginning and at the end of that year; (ii) the term "net income" means all telecommunications revenue, except dividend and interest income from long-term investments, less all operating expenses; (iii) the term "operating expenses" includes: direct costs of operation, administration, overhead and adequate maintenance expenses, straight-line depreciation based on the useful life of assets and taxes (if any), but does not include interest and other charges on debt; and (iv) the term "net value of fixed assets in operation" means the gross value of fixed assets in operation less accumulated depreciation, all determined in accordance with methods of valuation and revaluation acceptable to the Association and the OPTM. Section 4.07. In order to ensure the availability as and when needed of funds necessary for the carrying out of the Project and for the importation of materials 8 and supplies for the maintenance of telecommunications equipment, the OPTM shall maintain a special bank account in its own name into which it will deposit quarterly in advance the funds, other than the proceeds of the Credit, necessary for the purpose. Section 4.08. Except as the Association and the OPTM shall otherwise agree, the OPTM shall not incur any debt for its telecommunications operations unless its net revenue from such operations for the fiscal year next preceding such incurrence or for a later twelve-month period ended prior to such incurrence, whichever revenue is the greater, shall be at least one and one-half times the maximum debt service requirement for any succeeding fiscal year on all debt incurred by the OPTM for such operations, including the debt to be incurred. For the purposes of this Section: (i) "Debt" means any debt maturing by its terms more than one year after the date on which it is originally incurred. (ii) Debt shall be deemed to be incurred on the date of execution and delivery of a contract, loan agreement or guarantee agreement providing for such debt. (iii) "Net revenue from telecommunications operations" means gross revenue from all such sources, adjusted to take account of rates for telecommunications services in effect at the time of incurrence of debt even though such rates were not in effect during the fiscal year or twelve months' period to which such revenue relates, less all operating and administrative expenses, including provision for taxes, if any, and transfers of net profits to the Borrower, if any, but before provision for depreciation and interest and other charges on debt. (iv) "Debt service requirement" means the aggregate amount of amortization (including sinking fund contributions, if any), interest and other charges on debt. (v) Whenever for the purposes of this Section it shall be necessary to value, in terms of the currency of the Borrower, debt payable in another currency, such valuation shall be made on the basis of the prevailing lawful rate of exchange at which such other currency is, at the time of such valuation, obtainable by the OPTM for the purpose of servicing such debt. 9 Section 4.09. Except as the Association and the OPTM shall otherwise agree, the OPTM shall not incur any short-term debt for its telecommunications operations if such debt, together with all other outstanding short-term debt for such operations, would exceed three-months' average operating expenses for such operations during the fiscal year next preceding such incurrence or during a later twelve-month period ended prior to such incurrence, whichever is the greater. For the purpose of this Section: (i) "Short-term debt" means any debt, including the use of public checking account funds, maturing by its terms within one year after the date on which it is originally incurred; and (ii) "Operating expenses" means all operating and administrative expenses, including provision for taxes, if any, but before provision for depreciation and interest and other charges on debt. ARTICLE V Consultation, Information and Inspection Section 5.01. The Association and the OPTM shall cooperate fully to assure that the purposes of the Credit will be accomplished. To that end, the Association and the OPTM shall from time to time, at the request of either party, exchange views through their representatives with regard to the performance of their respective obligations under this Agreement, the administration, operations and financial condition of the OPTM and other matters relating to the purpose of the Credit. Section 5.02. The Association and the OPTM shall promptly inform each other of any condition which interferes with, or threatens to interfere with, the accomplishment of the purposes of the Credit, or the performance by either of them of its obligations under this Agreement or the performance by the Borrower and the OPTM of their respective obligations under the Subsidiary Loan Agreement. Section 5.03. The OPTM shall enable the Association's representatives to inspect all plants, sites, works, properties and equipment of the OPTM and any relevant records and documents. ARTICLE VI Effective Date; Termination; Cancellation and Suspension Section 6.01. This Agreement shall come into force and effect on the date upon which the Development Credit Agreement becomes effective. 10 Section 6.02. (a) This Agreement and all obligations of the Association and of the OPTM thereunder shall terminate on the earlier of the following two dates: (i) the date on which the Development Credit Agreement shall terminate in accordance with its terms; or (ii) a date twenty-one years after the date of this Agreement. (b) If the Development Credit Agreement terminates in accordance with its terms before the date specified in paragraph (a) (ii) of this Section, the Association shall promptly so notify the OPTM. Section 6.03. All the provisions of this Agreement shall continue in full force and effect notwithstanding any cancellation or suspension under the Development Credit Agreement. ARTICLE VII Miscellaneous Provisions Section 7.01. Any notice or request required or permitted to be given or made under this Agreement and any agreement between the parties contemplated by this Agreement shall be in writing. Such notice or request shall be deemed to have been duly given or made when it shall be delivered by hand or by mail, telegram, cable, telex or radiogram to the party to which it is required or permitted to be given or made at such party's address hereinafter specified or at such other address as such party shall have designated by notice to the party giving such notice or making such request. The addresses so specified are: For the Association: International Development Association 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: Indevas Washington, D.C. Telex: 440098 (ITT) or 24423 (RCA) 11 For the OPTM Office des Postes et T614communications de la R6publique du Mali Bamako Republic of Mali Cable address: Ofipostel Bamako Telex: 993 Section 7.02. (a) Any action required or permitted to be taken, and any documents required or permitted to be executed, under this Agreement on behalf of the OPTM, and under the Development Credit Agreement by the OPTM on behalf of the Borrower, shall be taken or executed by the Manager of the OPTM or such other person or persons as he shall designate in writing. (b) The OPTM shall furnish to the Association sufficient evidence of the authority, and the authenticated specimen signature, of each person who will act under paragraph (a) of this Section. Section 7.03. This Agreement may be executed in several counterparts, each of which shall be an original, and all collectively but one instrument. IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, have caused this Agreement to be signed in their respective names and delivered in the District of Columbia, United States of America, as of the day and year first above written. INTERNATIONAL DEVELOPMENT ASSOCIATION By /s/ Mohamed Shoaib Vice President OFFICE DES POSTES ET TELECOMMUNICATIONS DE LA REPUBLIQUE DU MALI By /s/ Seydou Traor6 Authorized Representative 12 SCHEDULE Procurement 1. With respect to any contract estimated to cost the equivalent of $50,000 or more: (a) Before bids are invited, the OPTM 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 procedure 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 OPTM 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 Association, in sufficient time for its review, a detailed report, by the engineering consultants referred to in Section 2.02 of this Agreement, on the evaluation and comparison of the bids received, together with the recommendations of the said consultants for award and the reasons for the intended award. The Association shall, if it determines that the intended award would be inconsistent with the procedures set forth or referred to in Section 2.04 of this Agreement, promptly inform the OPTM and state the reasons for such determination. (c) The terms and conditions of the contract shall not, without the Association's concurrence, materially differ from those on which bids were asked. (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 withdrawal of funds from the Credit Account in respect of any such contract. 2. (a) With respect to any other contract, the OPTM 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 any such contract, two conformed copies of such contract, together with the analysis of bids, recommendations for award and such other information as the Association shall reasonably request. The Association shall, if it determines that the award of the contract is not consistent with the procedures set forth or referred to in Section 2.04 of this Agreement, promptly inform the OPTM and state the reasons for such determination. 13 (b) In respect of small quantities of materials, tools and miscellaneous services the costs of which are so low as to be of no interest to foreign suppliers, or where the advantages of international competitive bidding would be outweighed by the administrative burden, the usual procedures of the Borrower for the procurement of goods and services for public utilities shall apply.