Senegal - Second Telecommunications Project : Credit 1714 - Project Agreement - Conformed

OFFICIAL CREDIT NUMBER 1714 SE Project Agreement (Second Telecommunications Project) between INTERNATIONAL DEVELOPMENT ASSOCIATION and SOCIETE NATIONALE DES TELECOMMUNICATIONS (SONATEL) Dated , 1986 CREDIT NUMBER 1714 SE PROJECT AGREEMENT AGREEMENT, dated ,CI tr 4P-7 1986, between INTERNATIONAL DEVELOPMENT ASSOCIATION (the Association) and SOCIETE NATIONALE DES TELECOMMUNICATIONS (SONATEL). WHEREAS (A) by the Development Credit Agreement of even date herewith between Republic of Senegal (the Borrower) and the Association, the Association has agreed to make available to the Borrower an amount in various currencies equivalent to nineteen million four hundred thousand Special Drawing Rights (SDR 19,400,000), on the terms and conditions set forth in the Development Credit Agreement, but only on condition that SONATEL agree to undertake such obligations toward the Association as are set forth in this Agreement; (B) by a subsidiary loan agreement to be entered into between the Borrower and SONATEL, the proceeds of the credit provided for under the Development Credit Agreement will be made available to SONATEL on the terms and conditions set forth in said Subsidiary Loan Agreement; and WHEREAS SONATEL, in consideration of the Association's entering into the Development Credit Agreement with the Borrower, has agreed to undertake the obligations set forth in this Agree- ment; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I Definitions Section 1.01. Unless the context otherwise requires, the several terms defined in the Development Credit Agreement, the Preamble to this 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. (a) SONATEL declares its commitment to the objectives of the Project as set forth in Schedule 2 to the Development Credit Agreement and, to this end, shall carry out -2- the Project with due diligence and efficiency and in conformity with appropriate administrative, financial, engineering and telecommunications practices, and shall provide, or cause to be provided, 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, SONATEL shall carry out the Project in accor- dance with the Implementation Program set forth in Schedule 2 to this Agreement, as such Schedule may be amended from time to time by agreement between the Association and SONATEL. Section 2.02. Except as the Association shall otherwise agree, procurement of the goods and works required for the Project and to be financed out of the proceeds of the Credit and of consultants' services required for the Project shall be governed by the provisions of Schedule 1 to this Agreement. Section 2.03. SONATEL shall carry out the obligations set forth in Sections 9.03, 9.04, 9.05, 9.06, 9.07 and 9.08 of the General Conditions (relating to insurance, use of goods and services, plans and schedules, records and reports, maintenance and land acquisition, respectively) in respect of the Project Agreement. Section 2.04. SONATEL shall duly perform all its obligations under the Subsidiary Loan Agreement. Except as the Association shall otherwise agree, SONATEL 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. Section 2.05. (a) SONATEL shall, at the request of the Association, exchange views with the Association with regard to the progress of the Project, the performance of its obligations under this Agreement and under the Subsidiary Loan Agreement, and other matters relating to the purposes of the Credit. (b) SONATEL shall promptly inform the Association of any condition which interferes or threatens to interfere with the progress of the Project, the accomplishment of the purposes of the Credit, or the performance by SONATEL of its obligations under this Agreement and under the Subsidiary Loan Agreement. - 3 - Section 2.06. SONATEL shall: (a) not later than January 1, 1988, furnish to the Association for itr review, the study carried out under Part F.4 of the Project; and (b) not later than July 1, 1988, carry out such recommendations of said study as shall be acceptable to SONATEL, the Borrower and the Association. ARTICLE III Management and Operations of SONATEL Section 3.01. SONATEL shall carry on its operations and conduct its affairs in accordance with sound administrative, financial, and telecommunications practices under the supervision of qualified and experienced management assisted by competent staff in adequate numbers. Section 3.02. SONATEL shall at all times operate and main-, tain its plant, machinery, equipment and other property, and from time to time, promptly as needed, make all necessary repairs and renewals thereof, all in accordance with sound engineering, financial and telecommunications practices. Section 3.03. SONATEL shall take out and maintain with responsible insurers, or make other provision satisfactory to the Association for, insurance against such risks and in such amounts as shall be consistent with appropriate practice. Section 3.04. SONATEL shall: (a) not later than March 31, 1988, and thereafter on March 31 of each year the Project is executed, reach agreement with the Association on performance targets satisfactory to the Association, in the areas of service quality, financial performance, and operating efficiency to be attained by SONATEL in its subsequent fiscal year; and (b) submit, not later than June 30 and December 31 of each year the Project is executed, a report setting forth its performance as measured against said agreed performance targets. ARTICLE IV Financial Covenants Section 4.01. (a) SONATEL shall maintain records and accounts adequate to reflect in accordance with sound accounting practices its operations and financial condition. -4- (b) SONATEL shall: (i) have its accounts and financial statements (balance sheets, statements of income and expenses and related statements) and 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 four months after the end of each such year, the unaudited copies of its financial statements for such year; (iii) furnish to the Association as soon as available, but in any case 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 6uch detail as the Association shall have reasonably requested; and (iv) furnish to the Association such other information concerning said accounts and financial statements as well as the audit thereof and said records, 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 statements of expenditure, SONATEL shall: (i) maintain, in accordance with paragraph (a) of this Section, separate records and accounts reflecting such expenditures; (ii) retain, until at least one year after the Associa- tion 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 -5- (iv) ensure that such sepa ate accounts are included in the annual audit refei red to in paragraph (b) of this Section and that the report thereof contains, in respect of such separate accounts, a separate opinion by said auditors as to whether the pro- ceeds of the Credit withdrawn in respect of such expenditures were used for the purposes for which they were provided. Section 4.02, SONATEL shall, not later than December 31, 1986, write off receivables deemed uncollectible in accordance with established accounting practices. Section 4.03. SONATEL shall not, without the Association's prior approval, undertake any investment in the telecommunica- tions sector that would: (a) increase the cost of its 1986 - 1992 investment program by more than 10% in any year; or (b) in the opinion of the Association substantially alter said investment program. Section 4.04. (a) Except as the Association shall otherwise agree, SONATEL shall produce, for each of its fiscal years during which the Project is executed, starting with its fiscal year ending on June 30, 1987, funds from internal sources equivalent to not less than 50% of the average of SONATEL's capital expenditures ircurred, or expected to be incurred in its current, previous and next following fiscal year. (b) Before March 31 in each of its fiscal years, SONATEL shall, on the basis of forecasts prepared by SONATEL and satisfactory to the Association, review whether it would meet the requirements set forth in paragraph (a) in respect of such year, the preceding year and the next following fiscal year and shall furnish to the Association the results of such review upon its completion. (c) If any such review shows that SONATEL would not meet the requirements set forth in paragraph (a) for SONATEL's fiscal year covered by such review, SONATEL shall promptly take all necessary measures (including, without limitation, adjustments of the structure or levels of its rates) in order to meet such requirements. -6- (d) For the purposes of this Section: (i) The term "funds from internal sources" means the difference between: (A) the sum of revenues from all sources related to operations, consumer deposits and consumer contributions in aid of construction and net non-operating income; and (B) the sum of all expenses related to opera- tions including administration, adequate maintenance and taxes, payments in lieu of taxes and provisions for bad debts, (exclud- ing provision for depreciation and other non-cash operating charges), debt service requirements, all cash dividends and other cash distributions of surplus, and other cash outflows other than capital expenditures. (ii) The term "net non-operating income" means the difference between: (A) revenues from all' sources other than those related to operations; and (B) expenses, including taxes and payments in lieu of taxes, incurred in the generation of revenues in (A) above. (iii) The term "debt service requirements" means the aggregate amount of repayments (including sinking fund payments, if any) of, and interest and other charges on, debt. (iv) The term "capital expenditures" means all expendi- tures incurred on account of long-term fixed assets, including interest charged to construc- tion, if any, related to operations. (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 -7- prevailing lawful rate of exchange at which such other currency is, at the time of such valuation, obtainable for the purposes of servicing such debt, or, in the absence of such rate, on the basis of a rate of exchange acceptable to the Association. ARTICLE V Effective Date; Termination; Cancellation and Suspension Section 5.01. This Agreement shall come into force and effect on the date upon which the Development Credit Agreement becomes effective. Section 5.02. (a) This Agreement and all obligations of the Association and of SONATEL 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) the date 15 years after the date of this Agree- ment. (b) If the Development Credit Agreement terminates in accordance with its terms before the date specified in para- graph (a) (ii) of this Section, the Association shall promptly notify SONATEL of this event. Section 5.03, All the provisions of this Agreement shall continue in full force and effect notwithstanding any cancella- tion or suspension under the General Conditions. ARTICLE VI Miscellaneous Provisions Section 6.01. 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 -8- 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: Telex: INDEVAS 440098 (ITT) Washington, D.C. 248423 (RCA) or 64145 (WUI) For SONATEL: 6, Rue Wagane Diouf B.P. 69 Dakar, Senegal SNT Telex: 950 SG 1296 SG Section 6.02. Any action required or permitted to be taken, and any document required or permitted to be executed, under this Agreement on behalf of SONATEL, may be taken or executed by SONATEL's General Director or such other person or persons as he shall designate in writing, and SONATEL shall furnish to the Association sufficient evidence of the authority and the authenticated specimen signature of each such person. Section 6.03. This Agreement may be executed in several counterparts, each of which shall be an original, and all collectively but one instrument. -9- 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. INTERNATIONAL DEVELOPMENT ASSOCIATION Regional Vice President Western Africa SOCIETE NATIONALE DES TELECOMMUNICATIONS ByizedRepresentativ Authorized Representative - 10 - SCHEDULE 1 Procurement and Consultants' Services Section I. Procurement of Goods and Works Part A. International Competitive Bidding 1. Except as provided in Part D hereof, goods and works shall be procured under contracts awarded in accordance with procedures consistent with those set forth in Sections I and II of the "Guidelines for Procurement under IBRD Loans and IDA Credits" published by the Bank in May 1985 (the Guidelines). 2. To the extent practicable, contracts for goods shall be grouped in packages estimated to cost the equivalent of at least 100,000 dollars each. Part B. Preference for Domestic Manufacturers In the procurement of goods in accordance with the proce- dures described in Part A hereof, goods manufactured in the West African Economic Community may be granted a margin of preference in accordance with, and subject to, the provisions of paragraphs 2.55 and 2.56 of the Guidelines and paragraphs 1 through 4 of Appendix 2 thereto. Part C. Preference for Domestic Contractors In the procurement of works in accordance with the proce- dures described in Part A hereof, SONATEL may grant a margin of preference to domestic contractors in accordance with, and subject to, the provisions of paragraphs 2.55 and 2.56 of the Guidelines and paragraph 5 of Appendix 2 thereto. Part D. Other Procurement Procedures 1. Test instruments, tools and specialized vehicles may be procured under contracts awarded through limited international bidding procedures on the basis of evaluation and comparison of bids invited from a list of at least three qualified suppliers eligible under the Guidelines and in accordance with the proce- dures set forth in Sections I and II of the Guidelines (excluding paragraphs 2.8, 2.9, 2.55 and 2.56 thereof). - 11 - 2. Equipment and spare parts for the improvement of operation and maintenance of existing installations on SONATEL's long distance and regional transmission and switching systems, and for completion or rehabilitation of said installations up to an aggregate amount not to exceed the equivalent of 1,100,000 dollars, may be purchased by direct negotiated purchases from the actual manufacturer or supplier of equipment already in place, if in the opinion of the Association: (a) such items cannot be obtained from another source; and (b) the cost of such items is reasonable. Part E. Review by the Association of Procurement Decisions 1. Review of invitations to bid and of proposed awards and final contracts: (a) With respect to each contract estimated to cost the equivalent of $100,000 or more, the procedures set forth in paragraphs 2 and 4 of Appendix 1 to the Guidelines shall apply. Where payments for such contract are to be made out of the Special Account, such procedures shall be modified to ensure that the two conformed copies of the contract required to be furnished to the Association pursuant to said paragraph 2 (d) shall be furnished to the Association prior to the making of the first payment out of the Special Account in respect of such contract. (b) With respect to each contract not governed by the pre- ceding paragraph, the procedures set forth in paragraphs 3 and 4 of Appendix 1 to the Guidelines shall apply. Where payments for such contract are to be made out of the Special Account, such procedures shall be modified to ensure that the two conformed copies of the contract, together with the other information required to be furnished to the Association pursuant to said paragraph 3, shall be furnished to the Association as part of the evidence to be furnished pursuant to paragraph 4 of Schedule 3 to the Development Credit Agreement. (c) The provisions of the preceding subparagraphs (a) and (b) shall not apply to contracts on account of which the Associa- tion has authorized withdrawals from the Credit Account on the basis of statements of expenditure. Such contracts shall be re- tained in accordance with Section 4.01 (c) (ii) of this Agree- ment. 2. The figure of 15% is hereby specified for purposes of para- graph 4 of Appendix 1 to the Guidelines. - 12 - Section II. Employment of Consultants In order to assist SONATEL in carrying out Part G of the Project, SONATEL shall employ planning, telecommunications, data processing, management information, tariffs and supply logistics, training and regulatory consultants whose qualifications, experience and terms and conditions of employment shall be satis- factory to the Association. When financed out of the proceeds of the Credit, such consultants shall be selected in accordance with principles and procedures satisfactory to the Association on the basis of the "Guidelines for the Use of Consultants by World Bank Borrowers and by the World Bank as Executing Agency" published by the Bank in August 1981. -13 - SCHEDULE 2 Implementation Program FY ending June 30 1985/86 1986/87 1987/88 1988/89 1989/90 1990/91 1991/92 "TELECOM 1"1 1.1 Dakar 1.2 Engineering 1.3 Diourbel 1.4 Ziguinchor 1.5 Kaolack 1.6 M'wave links j Y z "TELECOM 2" f f 2.1 Thies */ B Y 2.2 Laboratory */ Y-- 2.3 CapSkiring */Y 2.4 Dakar Telex B- 4--f -- "TELECOM 3" 3.1 CapVert */ B 3.2 Zig., Kolda, Tamb. */ B X Y q 3.3 L'Axe Nord */ f Y 3.4 Nat. Maint. Plan */ B X. ... .Z "TELECOM 4" 4.1 CapVert */ B- Y 4.2 CTI B Y 4.3 Earth Station B . 4.4 Submarine Cable B XY 4.5 Kaolack, Fatick */ f f B Y "Regional Works" 5.1 Various*/ work----ongoing-Ithroughout -periodi */Part of the Project Legend: B - Invitation to bid X - Official date of contract Y - Delivery in Senegal Z - Provisional acceptance NOTE: "Telecom 1, 2, 3, and 4" and "Regional Works" are titles of groupings in SONATEL's investment program; they do not refer to separate projects. INTERNATIONAL DEVELOPMENT ASSOCIATION CERTIFICATE I hereby certify that the foregoing is a true copy of the original in the archives of the International Development Association. FOR SECRETARY