Nepal - Third Telecommunications Project : Credit 0799 - Project Agreement - Conformed

CONFORMED COPY CREDIT NUMBER 799 NEP Project Agreement (Third Telecommunications Project) between INTERNATIONAL DEVELOPMENT ASSOCIATION and NEPAL TELECOMMUNICATIONS CORPORATION Dated August 22, 1978 CREDIT NUMBER 799 NEP DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated August 22, 1978, between KINGDOM OF NEPAL (hereinafter called the Borrower) and INTERNATIONAL DEVELOPMENT ASSOCIATION (hereinafter called the Association). WHEREAS (A) the Borrower has requested the Association to assist in the financing of Parts A through D of the Project described in Schedule 2 to this Agreement by extending the Credit as hereinafter provided; (B) the Project will be carried out by Nepal Telecommuni- cations Corporation (hereinafter called NTC) with the Borrower's assistance and, as part of such assistance, the Borrower will make available to NTC the proceeds of the Credit as hereinafter pro- vided; and (C) the Borrower intends to contract a loan or grant in an amount equivalent to $3,000,000, to be made available to NTC, to assist NTC in the financing of Parts E and F of the Project; WHEREAS the Association has agreed, on the basis inter alia of the foregoing, to extend the Credit to the Borrower upon the terms and conditions hereinafter set forth and in the Project Agreement of even date herewith between the Association and NTC; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I General Conditions; Definitions Section 1.01. The parties to this Agreement accept all the provisions of the General Conditions Applicable to Development Credit Agreements of the Association, dated March 15, 1974, with the same force and effect as if they were fully set forth herein (said General Conditions Applicable to Development Credit Agreements of the Association being hereinafter called the General Conditions). Section 1.02. Wherever used in this Agreement, unless the context otherwise requires, the several terms defined in the -2- General Conditions and in the Preamble to this Agreement have the respective meanings therein set forth and the following additional terms have the following meanings: (a) "Project Agreement" means the agreement between the Association and NTC of even date herewith, as the same may be amended from time to time, and such term includes all schedules to the Project Agreement and all agreements supplemental to the Project Agreement; and (b) "Subsidiary Loan Agreement" means the agreement to be entered into between the Borrower and NTC pursuant to Section 3.01 (b) of this Agreement, as the same may be amended from time to time, and such term includes all schedules to the Subsidiary Loan Agreement. ARTICLE II The Credit Section 2.01. The Association agrees to lend to the Bor- rower, on the terms and conditions in the Development Credit Agreement set forth or referred to, an amount in various curren- cies equivalent to fourteen million five hundred thousand dollars ($14,500,000). Section 2.02. The amount of the Credit may be withdrawn from the Credit Account in accordance with the provisions of Schedule 1 to this Agreement, as such Schedule may be amended from time to time by agreement between the Borrower and the Associ- ation, 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. Section 2.03. Except as the Association shall otherwise agree, procurement of the goods and civil works to be financed out of the proceeds of the Credit, shall be governed by the provisions set forth or referred to in the Schedule to the Project Agreement. Section 2.04. The Closing Date shall be June 30, 1984 or such later dato as the Association shall establish. The Asso- ciation shall promptly notify the Borrower of such later date. Section 2.05. The Borrower shall pay to the Association a service charge at the rate of three-fourths of one per cent -3- (3/4 of 1%) per annum on the principal amount of the Credit withdrawn and outstanding from time to time. Section 2.06. Service charges shall be payable semiannually on March 15 and September 15 in each year. Section 2.07. The Borrower shall repay the principal amount of the Credit in semiannual installments payable on each March 15 and September 15 commencing September 15, 1988, and ending March 15, 2028, each installment to and including the installment payable on March 15, 1998, to be one-half of one per cent (1/2 of 1%) of such principal amount, and each installment thereafter to be one and one-half per cent (1-1/2%) of such principal amount. 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. Section 2.09. The General Manager of NTC is designated as representative of the Borrower for the purposes of taking any action required or permitted to be taken under the provisions of Section 2.02 of this Agreement and Article V of the General Conditions. ARTICLE III Execution of the Project Section 3.01. (a) Without any limitation or restriction upon any of its other obligations under the Development Credit Agreement, the Borrower shall cause NTC to perform in accordance with the provisions of the Project Agreement and the Subsidiary Loan Agreement all the obligations therein set forth, shall take and cause to be taken all action necessary or appropriate to enable NTC to perform such obligations, and shall not take or permit to be taken any action which would prevent or interfere with such performance. (b) The Borrower shall relend the proceeds of the Credit to NTC under a subsidiary loan agreement to be entered into between the Borrower and NTC under terms and conditions which shall have been approved by the Association and which shall include, inter alia, a term of twenty years including five years of grace and interest at the rate of 9% per annum. -4- (c) The Borrower shall exercise its rights under the Subsidiary Loan Agreement in such manner as to protect the interests of the Borrower and the Association and to accomplish the purposes of the Credit,, and except as the Association shall otherwise agree, the Borrower shall not assign, amend, abrogate or waive the Subsidiary Loan Agreement or any provision thereof. ARTICLE IV Remedies of the Association Section 4.01. For the purposes of Section 6.02 of the General Conditions the following additional events are specified pursuant to paragraph (h) thereof: (a) NTC shall have failed to perform any covenant, agreement or obligation of NTC under the Project Agreement; (b) the Borrower or NTC shall have failed to perform any of their respective obligations under the Subsidiary Loan Agreement; (c) an extraordinary situation shall have arisen which shall make it improbable that NTC will be able to perform its obli- gations under the Project Agreement or that the Borrower or NTC will be able to perform their respective obligations under the Subsidiary Loan Agreement; (d) a change shall have been made in the Communications Corporation Act, 1972 or Borrower's Order dated June 15, 1975 establishing NTC which will materially and adversely affect the financial condition or operations of NTC; and (e) (i) Subject to subparagraph (ii) of this paragraph: (A) The right of the Borrower or of NTC to with- draw the proceeds of any grant or loan made to the Borrower or to NTC for the financing of the Project shall have been suspended, can- celled or terminated in whole or in part, pursuant to the terms of the agreement pro- viding therefor, or (B) any such loan shall have become due and payable prior to the agreed maturity thereof. -5- (ii) Subparagraph (i) of this paragraph shall not apply if: (A) such suspension, cancellation, termination or prematuring is not caused by the failure of the Borrower or NTC to perform any of its obligations under such agreement, and (B) adequate funds for the Project are available to NTC from other sources on terms and conditions consis- tent with the obligations of the Borrower under this Agreement and of NTC under the Project Agree- ment and the Subsidiary Loan Agreement. Section 4.02 For the purposes of Section 7.01 of the General Conditions, the following additional events are specified pursuant to paragraph (d) thereof: (a) any event specified in paragraphs (a) or (b) of Sec- tion 4.01 of this Agreement shall occur and shall continue for a period of sixty days after notice thereof shall have been given by the Association to the Borrower and NTC; and (b) any event specified in paragraphs (d) or (e) of Secti6n 4.01 of this Agreement shall occur. ARTICLE V Effective Date; Termination; Amendment of Prior Agreements Section 5.01. The following events are specified as addi- tional conditions to the effectiveness of the Development Credit Agreement within the meaning of Section 12.01 (b) of the General Conditions: (a) the Subsidiary Loan Agreement has been executed on behalf of the Borrower and NTC; (b) the Project Agreement has been executed on behalf of NTC; (c) NTC's local tariffs and connection fees have been increased to levels satisfactory to the Association with effect on July 16, 1978; (d) the Borrower has made arrangements, satisfactory to the Association, to employ consultants or experts pursuant to the provisions of Section 2.02 of the Project Agreement; and -6- (e) the Borrower has made arrangements satisfactory to the Association, to obtain and make available to NTC the funds required by NTC to finance Parts E and F of the Project. Section 5.02. The following are specified as additional matters, within the meaning of Section 12.02 (b) of the General Conditions, to be included in the opinion or opinions to be furnished to the Association: (a) that the Project Agreement has been duly authorized or ratified by NTC, and is legally binding upon NTC in accordance with its terms; and (b) that the Subsidiary Loan Agreement has been duly author- ized or ratified by the Borrower and NTC and is legally binding upon the Borrower and NTC in accordance with it, terms. Section 5.03. The date November 20, 1978 is hereby speci- fied for the purposes of Section 12.04 of the General Conditions. Section 5.04. The obligations of the Borrower under para- graphs (b) and (c) of Section 3.01 of this Agreement and the provisions of Section 4.02 of this Agreement shall cease and determine on the date on which the Development Credit Agreement shall terminate or on a date twenty years after the date of this Agreement, whichever shall be the earlier. Section 5.05. (a) For the purpose of this Section, the following terms have the following meanings: (i) "1969 Agreement" means the Development Credit Agreement (Telecommunications Project) between the Borrower and the Association dated November 10, 1969; and (ii) "1973 Agreement" means the Development Credit Agreement (Second Telecommunications Project) between the Borrower and the Association dated June 20, 1973. (b) Section 4.12 (a) (iii) and 4.12 (b) of the 1969 Agree- ment, as amended by Section 8.01 of the 1973 Agreement, and Section 4.06 of the 1973 Agreement are amended to read as Section 4.03 of the Project Agreement provided, however, that the obliga- tions of NTC under the said Section of the Project Agreement shall -7- be deemed to be obligations of the Kingdom of Nepal with regard to NTC as successor to NTB in the said 1969 and 1973 Agreements. ARTICLE VI Representative of the Borrower; Addresses Section 6.01. The Secretary of the Ministry of Finance of the Borrower 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 purpose of Section 11.01 of the General Conditions: For the Borrower: Secretary to His Majesty's Government Ministry of Finance Babar Mahal Kathmandu, Nepal Cable address: ARTHA Kathmandu For the Association: International Development Association 1818 H Street, N.W. - Washington, D.C. 20433 United States of America Cable address: Telex: INDEVAS 440098 (ITT) Washington, D.C. 248423 (RCA) or 64145 (WUI) IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, have caused this Agreement to be signed in their respective names in the District of Columbia, United States of America, as of the day and year first above written. KINGDOM OF NEPAL By /s/ Padma Bahadur Khatri Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION By /s/ W. David Hopper Regional Vice President South Asia -9- 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 Cre.%dit 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 Dollar Equivalent) to be Financed (1) Local exchange equip- 9,600,000 100% of for- ment, distribution eign expendi- network and subscriber tures apparatus (2) Subscriber radio 400,000 100% of for- network eign expendi- tures (3) Long distance fac- 100% of for- ilities: eign expendi- tures (a) Microave UHF/VHF 1,050,000 radio systems, land lines and multiplex equipment (b) Subscriber trunk 1,750,000 dialling equipment (4) Vehicles, training 950,000 100% of for- equipment and mecha- eign expendi- nical aids tures (5) Consultants' services 50,000 100% of for- eign expendi- tures (6) Unallocated 700,000 TOTAL 14,500,000 - 10 - 2. For the purposes of this Schedule, the term "foreign expendi- tures" means expenditures in the currency of any country other than the Borrower and for goods or services supplied from the territory of any country other than the Borrower. 3. Notwithstanding the provisions of paragraph 1 above, no withdrawals shall be made in respect of: (a) payments made for expenditures prior to the date of this Agreement; and (b) payments for taxes levied by, or in the territory of, the Borrower on goods or services, or on the importation, manufac- ture, procurement or supply thereof. 4. Notwithstanding the disbursement percentage set forth in the table in paragraph 1 above, if the Association has reasonably estimated that the amount of the Credit will be insufficient to finance the said percentage of expenditures, the Association may, by notice to the Borrower: (i) reallocate to such Category, to the extent required to meet the estimated shortfall, proceeds of the Credit which are then allocated to another Category and which in the opinion of the Association are not needed to meet other expenditures; and (ii) of such reallocation cannot fully meet the estimated shortfall, reduce the said disbursement percentage in order that further withdrawals may continue until all expenditures under the Project shall have been made. 5. If the Association shall have reasonably determined that the procurement of any item in any Category is inconsistent with the procedures set forth or referred to in this Agreement, no expenditures for such item shall be financed out of the proceeds of the Credit and the Association may, without in any way restric- ting or limiting any other right, power or remedy of the Associ- ation under the Development Credit Agreement, by notice to the Borrower, cancel such amount of the Credit as, in the Associ- ation's reasonable opinion, represents the amount of such expendi- tures which t7ould otherwise have been eligible for financing out of the proceeds of the Credit. - 11 - SCHEDULE 2 Description of the Project The Project, which forms part of NTC's five year (FY 1979- 1982) development program, consists of the following Parts: Part A: Provision and installation of telephone exchange equipment and cable networks to provide for about 20,600 subscriber lines, including provision of about ten automatic exchanges and about eleven manual exchanges and conversion of about six manual exchanges to automatic operation. Part B: Provision and installation of microwave and UHF/VHF radio systems and land lines to serve about fzurteen centers. Part C: Provision and installation of subscribers' radio facilities to about 100 isolated locations. Part D: Provision and installation of Subscriber Trunk Dialing equipment at about 19 automatic exchanges. Part E: Provision and installation of automatic telex exchange facilities to serve about 400 subscribers. Part r,: Construction and equipment of a satellite earth station for international services and provision of facilities to interface with telephone and telex networks. The Project is expected to be completed by December 31, 1983.