Afghanistan - Aviation Project : Credit 0374 - Project Agreement - Conformed

CONFORMED COPY CREDIT NUMBER 374 AF Project Agreement (Aviation Project) BETWEEN INTERNATIONAL DEVELOPMENT ASSOCIATION AND AFGHAN AIR AUTHORITY DATED MAY 2, 1973 CONFORMED COPY CREDIT NUMBER 374 AF Project Agreement (Aviation Project) BETWEEN INTERNATIONAL DEVELOPMENT ASSOCIATION AND AFGHAN AIR AUTHORITY DATED MAY 2, 1973 PROJECT AGREEMENT AGREEMENT, dated May 2, 1973, between INTERNATIONAL DEVELOPMENT ASSOCIATION (hereinafter called the Association) and AFGHAN AIR AUTHORITY (hereinafter called AAA). WHEREAS by the Development Credit Agreement of even date herewith between Kingdom of Afghanistan (hereinafter called the Borrower) and the Association, the Association has agreed to make available to the Borrower an amount in various currencies equivalent to two million five hundred thousand dollars ($2,500,000), on the terms and conditions set forth in the Development Credit Agreement, but only on condition that AAA agree to undertake such obligations toward the Association as hereinafter set forth; WHEREAS by a subsidiary loan agreement to be entered into between the Borrower and AAA, parts of the proceeds of the credit provided for under the Development Credit Agreement will be made available to AAA on the terms and conditions therein set forth; WHEREAS it is agreed that the Borrower shall establish Air Navigation Services (hereinafter called ANS), as a separate entity within the framework of AAA; and WHEREAS AAA, 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. 4 ARTICLE II Execution of the Project Section 2.01. (a) AAA shall carry out Part C, and, until such time as ANS is established and operational, Parts A and B of the Project described in Schedule 2 to the Development Credit Agreement with due diligence and efficiency and in conformity with appropriate administrative, financial and engineering practices. (b) ANS shall, from such time as it is established and operational, carry out Parts A and B of the Project with due diligence and efficiency and in conformity with appropriate administrative, financial and engineering practices. Section 2.02. In order to assist AAA in carrying out Parts A and C of the Project, AAA shall employ consultants mutually satisfactory to AAA and the Association upon terms and conditions satisfactory to the Association. Section 2.03. (a) In carrying out Part B of the Project, AAA shall employ specialists mutually satisfactory to AAA and the Association, upon terms and conditions satisfactory to the Association. (b) The specialists referred to in paragraphs (c) through (f) of the Annex to Schedule 2 to the Development Credit Agreement shall be employed not later than December 31, 1973. Section 2.04. In carrying out Part A of the Project, AAA shall employ contractors acceptable to the Association upon terms and conditions satisfactory to AAA and the Association. Section 2.05. Except as the Association shall otherwise agree, the goods and services (other than services of consultants) 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, as revised in October 1972, and in accordance with, and subject to, the provisions set forth in Schedule I to this Agreement. Section 2.06. (a) AAA undertakes to insure, or make adequate provision for the insurance of, the imported goods to be financed out of the proceeds of the Credit made available to it by the Borrower against hazards incident to the acquisition, transportation and delivery thereof to the place of use or installation, 5 and for such insurance any indemnity shall be payable in a currency freely usable by AAA to replace or repair such goods. (b) Except as the Association may otherwise agree, AAA shall cause all goods and services financed out of the proceeds of the Credit made available to it by the Borrower to be used exclusively for the Project. Section 2.07. (a) AAA shall furnish to the Association promptly upon their preparation, the plans, specifications, reports, contract documents and construction and procurement schedules for the Project, and any material modifications thereof or additions thereto, in such detail as the Association shall reasonably request. (b) AAA: (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 made available 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 examine 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 made available to it and the goods and services financed out of such proceeds. Section 2.08. AAA shall duly perform all its obligations under the Subsidiary Loan Agreement. Except as the Association shall otherwise agree and subject to the provisions of Section 3.02(ii) of this Agreement, AAA 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 Undertakings of AAA and ANS Section 3.01. Until such time as ANS is established and operational, and the equipment and assets referred to in Section 3.02(i) transferred to ANS, AAA shall: (i) levy and collect such users charges for Air Traffic Control and Flight Information Center as shall be mutually acceptable to AAA and the Association. 6 (ii) maintain in accordance with appropriate engineering practice the Flight Information Center and Air Traffic Control equipment and its related assets in good working order at all times. At the end of each year, AAA shall furnish to the Association a written statement from an independent engineer certifying the state of the said equipment. (iii) 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 appropriate practice. Section 3.02. At such time as ANS shall be established and operational: (i) AAA shall transfer to ANS, and ANS shall take over, the assets of AAA directly related to the responsibilities of ANS, as defined in Section 3.01(b) of the Credit Agreement, including inter alia, the Flight Information Center and Air Traffic Control equipment; (ii) AAA shall assign and transfer to ANS, and ANS shall assume, the rights and obligations of AAA under the Subsidiary Loan Agreement; (iii) ANS shall assume, with regard to the execution of Parts A and B of the Project, the obligations of AAA set forth or referred to in this Agreement, the Credit Agreement and the Subsidiary Loan Agreement. ARTICLE IV Management of ANS Section 4.01. ANS shall be managed and operated on a commercial basis; to this end, ANS shall establish, not later than March 22, 1974, modern commercial and management accounting systems, satisfactory to the Association, which shall be adequate to reflect in accordance with consistently maintained appropriate accounting practices the operations and financial condition of ANS. Section 4.02. ANS shall: (i) have the accounts and financial statements of ANS (balance sheets, statements of income and expenses and related statements) for each fiscal year audited, in accordance with sound auditing principles 7 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 four months after the end of each such year, (A) certified copies of such 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 ANS and the audit thereof as the Association shall from time to time reasonably request. Section 4.03. ANS shall derive its operating revenues from the users charges for the Flight Information Center and Air Traffic Control. To this end, AAA and ANS shall make arrangements whereby AAA shall continue to levy, and ANS shall collect, such charges as are referred to in Section 3.01(i) of this Agreement. Section 4.04. ANS shall pay its employees such salaries as shall be necessary to attract and hold qualified and experienced personel. Section 4.05. ANS shall contain a procurement section, to purchase and distribute maintenance supplies for equipment for air traffic control and the flight information center, using simplified procurement and warehousing methods. ARTICLE V Consultation and Information Section 5.01. The Association, AAA and ANS shall cooperate fully to assure that the purposes of the Credit will be accomplished. To that end, the Association, AAA and ANS 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 and the Subsidiary Loan Agreement, the administration, operations and financial condition of AAA or ANS and other matters relating to the purpose of the Credit. Section 5.02. The Association, AAA and ANS shall promptly inform each other of any condition which interferes with, or threatens to interfere with, the accomplishment of the purposes of the Credit, the performance by either of them of its obligations inder this Agreement or the performance by the Borrower, AAA or ANS of their respective obligations under the Subsidiary Loan Agreement. Section 5.03. AAA and ANS shall enable the Association's representatives to examine all their plants, sites, works, properties and equipment and any relevant records and documents. 8 ARTICLE VI Effective Date; Termination; Cancellation and Suspension Section 6.01. This Agreement shall come into force and effect on the date upon which the Development Credit Agreement becomes effective. Section 6.02. (a) This Agreement and all obligations of the Association, AAA and ANS 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 ten years after the date of this Agreement. (b) If the Development Credit Agreement terminates in accordance with its terms before the date specified in paragraph (a)(ii) of this Section, the Association shall promptly notify AAA and ANS of this event. 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. Promptly upon the establishment of ANS and the start of its operations, AAA shall furnish to the Association (i) evidence that ANS has assumed the obligations mentioned or referred to in Section 3.02 of this Agreement and (ii) the addresses of ANS for the purposes of Section 7.02 of this Agreement. Section 7.02. 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: 9 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. For AAA: Afghan Air Authority Kabul Afghanistan Cable address: MOHAR Kabul Section 7.03. (a) Any action required or permitted to be taken, and any documents required or permitt-d to be executed, under this Agreement on behalf of AAA may be taken or executed by its President or such other person or persons as he shall designate in writing. (b) Any action required or permitted to be taken, and any documents required or permitted to be executed, under this Agreement on behalf of ANS may be taken or executed by its Director General or such other person or persons as he shall designate in writing. Section 7.04. AAA and ANS shall furnish to the Association sufficient evidence of the authority and the authenticated specimen signature of the person or persons who will, on behalf of AAA or ANS, take any action or execute any documents required or permitted to be taken or executed by AAA or ANS pursuant to any of the provisions of this Agreement. Section 7.05. This Agreement may be executed in several counterparts, each of which shall be an original, and all collectively but one instrument. 10 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/ Munir P. Benjenk Regional Vice President Europe, Middle East and North Africa AFGHAN AIR AUTHORITY By /s/ Abdullah Malikyar Authorized Representative 11 SCHEDULE 1 Procurement A. Contracts Governed by Guidelines 1. Goods and services included in Part A of the Project, except as noted below, in Part B of this Schedule, will be provided under a turnkey contract. 2. With respect to the said turnkey contract, and any contract for goods and services included in the Project estimated to cost the equivalent of $20,000 or more: (a) If bidders are required to prequalify, AAA shall, before qualification is invited, inform the Association in detail of the procedure to be followed and shall introduce such modifications in said procedure as the Association shall reasonably request. The list of prequalified bidders, together with a statement of their qualifications and of the reasons for the exclusion of any applicant for prequalification, shall be furnished by AAA to the Association for its comments before the applicants are notifiea and AAA shall make such additions to or deletions from the said list as the Association shall reasonably request. (b) Before bids are invited, AAA 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 Associations concurrence before it is issued to the prospective bidders. (c) After bids have been received and evaluated, AAA shall, before a final decision on the award is made, inform the Association of the name of the bidder to whom it intends to award the contract and shall furnish to the Association, in sufficient time for its review, a detailed report on the evaluation and comparison of the bids received, together with 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 AAA and the Borrower, and state the reasons for such determination and advise the Borrower and AAA of any cancellation pursuant to the provisions of paragraph 3(c) of Schedule 1 to the Development Credit Agreement. 12 (d) The terms and conditions of the contract shall not, without the Association's concurrence, materially differ from those on which bids were asked. (e) Two conformed copies of the contract shall be furnished to the Association promptly after its execution and prior to the delivery to the Association of the first application for withdrawal of funds from the Credit Account in respect of any such contract. 3. With respect to any other contract for goods and services included in the Project, AAA shall furnish to the Association, promptly after its execution and prior to the delivery 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 Borrower and AAA and state the reasons for such determination and advise the Borrower and AAA of any cancellation pursuant to the provisions of paragraph 3(c) of Schedule 1 to the Development Credit Agreement. B. Contract not governed by the Guidelines 1. The Air Traffic Control simulator required for Part A of the Project shall be procured through normal commercial and trade channels.