Niger - Telecommunications Project : Credit 0634 - Project Agreement - Conformed

CONFORMED COPY CREDIT NumBER 634 NIR PROJECT AGREEMENT (Telecommunications Project) between INTERNATIONAL DEVELOPMENT ASSOCIATION and OFFICE DES POSTES ET TELECOMMUNICATIONS DU NIGER Dated June 11, 1976 PROJECT AGREEMENT AGREEMENT, dated June 11, 1976, between INTERNATIONAL DEVEL- OPMENT ASSOCIATION (hereinafter called the Association) and OFFICE DES POSTES ET TELECOMMUNICATIONS DU NIGER (hereinafter called OPTN). WHEREAS by the Development Credit Agreement of even date herewith between the Republic of Niger (hereinafter called the Borrower) and the Association, the Association has agreed to make available to the Borrower an amount in various currencies equiva- lent to five million two hundred thousand dollars ($5,200,000), on the terms and conditions set forth in the Development Credit Agreement, but only on condition that OPTN agree to undertake such obligations toward the Association as hereinafter set forth; WHEREAS by a subsidiary loan agreement of even date herewith between the Borrower and OPTN, the proceeds of the credit provided for under the Development Credit Agreement will be made available to OPTN on the terms and conditions therein set forth; and WHEREAS OPTN, 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: -2- 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. -3- ARTICLE II Execution of the Project Section 2.01. OPTN shall carry out 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. Section 2.02. In order to secure assistance in (i) the prep- aration of detailed engineering plans, specifications and bidding documents, (ii) bid evaluation, and (iii) the inspection of equip- ment and supervision of the installation thereof, for the Project, OPTN shall either make arrangements satisfactory to the Associa- tion providing for such assistance by qualified and experienced experts, or employ engineering consultants whose qualifications, experience and terms and conditions of employment shall be satis- factory to the Association. Section 2.03. Except as the Association shall otherwise agree, the goods and works for the Project to be financed out of the proceeds of the Credit shall be procured in accordance with the provisions of the Schedule to this Agreement. Section 2.04. (a) OPTN undertakes to insure, or make adequate provision for the insurance of, the imported 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 OPTN to replace or repair such goods. - I ( (b) Except as the Association may otherwise agree, OPTN 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. Section 2.05. (a) OPTN shall furnish to the Association, promptly upon their preparation, the plans, specifications, con- tract documents and work and procurement schedules for the Project, and any material modifications thereof or additions thereto, in such detail as the Association shall reasonably request. (b) OPTN: (i) shall maintain records adequate to record the progress of the Project (including the cost thereof) and to iden- tify the goods, works 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 paragraph (c) of this Section, enable the Asso- ciation's representatives to visit the facilities and construction sites included in the Project and to examine 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, works and services financed out of such proceeds. (c) OPTN shall enable the Association's representatives to examine all plants, installations, sites, works, buildings, prop- erty and equipment of OPTN and any relevant records and documents. -5- Section 2.06. OPTN shall duly perform all its obligations under the Subsidiary Loan Agreement. Except as the Association shall otherwise agree, OPTN 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 2.07. (a) OPTN shall, at the request of the Associa- tion, exchange views with the Association with regard to the prog- ress of the Project, the performance of its obligations under this Agreement and under the Subsidiary Loan Agreement, and other mat- ters relating to the purposes of the Credit. (b) OPTN shall promptly inform the Association of any con- dition which interferes or threatens to interfere with, the prog- ress of the Project, the accomplishment of the purposes of the Credit, or the performance by OPTN of its obligations under this Agreement and under the Subsidiary Loan Agreement. -6- ARTICLE III Management and Operations of OPTN Section 3.01. OPTN shall at all times manage its affairs, maintain its financial position, carry out its telecommunications operations and plan the future expansion thereof in accordance with sound administrative, financial, commercial and public util- ity practices, and under the supervision of qualified and experi- enced management. Section 3.02. Without any limitation upon its obligations under Section 3.01 of this Agreement, OPTN shall: (a) (i) carry out, not later than June 30, 1977, a review of its staff structure and future staffing requirements; and (ii) promptly furnish to the Association for its review and comments the results of said review and, on the basis thereof, establish and thereafter implement a program satisfactory to the Association to increase the productivity of OPTN's telecommunications staff in- cluding specific targets to reduce overstaffing; and (b) review the organization of its planning activities and its future planning requirements and thereafter, on the basis of said review and in consultation with the Association, establish an efficient planning system to be implemented by June 30, 1978. Section 3.03. OPTN shall carry out Part F of the Project, as specified in Sections 4.0l (b), 4.03 and 4.04, respectively, of -7- this Agreement, with the assistance of (a) qualified and experienced experts to be appointed by OPTN under arrangements satisfactory to the Association; or (b) consultants to be employed by OPTN and whose qualifications, experience and terms and conedtions of employment shall be satisfactory to the Association. Section 3.04. (a) OPTN shall operate and maintain its plants, equipment and other property, and shall promptly make all neces- sary repairs and renewals thereof, all in accordance with sound engineering and public utility practices. (b) OPTN shall take all action necessary to acquire, main- tain and renew all rights, powers, privileges and franchises which are necessary or useful in the conduct of its business. Section 3.05. OPTN shall make arrangements satisfactory to the Association for insurance against such risks as shall be con- sistent with appropriate telecommunications practices. Section 3.06. OPTN shall provide for the construction of the microwave link Dosso-Zinder with due diligence and efficiency and in conformity with appropriate abninistrative, financial and engineering practices. -8- ARTICLE IV Financial Covenants Section 4.01. (a) OPTN shall maintain records adequate to re- flect in accordance with consistently maintained appropriate ac- counting practices its operations and financial condition. (b) Without any limitation upon its obligations under para- graph (a) of this Section, OPTN shall establish and thereafter maintain an effective accounting and financial management system based on analytical accounting procedures. Such system shall pro- vide, for the fiscal year ending December 31, 1978, and thereafter, for separate accounts (including balance sheets, statements of income and expenses and related records) and budgets for OPTN's postal/financial operations, and for its telecommunications opera- tions, and shall reflect the internal flow of funds separately for OPTN's telecommunications and its other operations. Section 4.02. Commencing with the fiscal year ending Decem- ber 31, 1977, OPTN shall: (i) have its accounts and financial state- ments (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 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 -9- Association shall have reasonably requested; and (iii) furnish to the Association such other information concerning the accounts and financial statements of OPTN and the audit thereof as the Association shall from time to time reasonably request. Section 4.03. OPTN shall undertake a study of its billing services and, based on the recommendations of said study, imple- ment a reorganization of its billing and collection procedures, including adequate systems of revenue accounting and credit con- trol, by December 31, 1977. Section 4.04. (a) OPTN shall: (i) undertake a study of its telecommunications tariffs, to be completed by December 31, 1978; (ii) review the results of said study in consultation with the Association; and (iii) based on said results and such review intro- duce, not later than July 1, 1979, a new telecommunications rate structure and tariffs which shall (A) generate sufficient revenues to meet the rates of return specified in paragraph (c) of this Section, and (B) be designed to optimize the use of OPTN's telecom- munications network. (b) As long as the new telecommunications rate structure and tariffs referred to in paragraph (a) (iii) of this Section have not been introduced, OPTN shall not change its telecommunications tariffs without prior consultation with the Association. (c) Except as the Association shall otherwise agree, OPTN shall take all measures within its powers (including but not lim- ited to adjustments of its telecommunications rate structure and - 10- tariffs), as shall be necessary or anDropriate to enable it to earn an annual rate of return of not less than eight per cent (8%) in its fiscal year 1980, and of ten per cent (10%) thereafter. (d) For the purposes of this Section: (i) The annual rate of return shall be calculated in respect of each fiscal year by using as the denomi- nator the average of the current value of net fixed telecommunications assets operated by OPTN at the beginning, and at the end of the year in question and, as the numerator, the operating income of OPTN from its telecommunications operations for that year. (ii) The term "current value of net fixed telecommunica- tions assets" means the gross value of fixed tele- conmunications assets as revalued from time to time, less accumulated depreciation, based on appropriate valuation and depreciation methods satisfactory to the Association. (iii) The term "operating income" means the difference between operating revenues and operating expenses. (iv) The term "operating revenues" means all revenues from telecommunications operations and other revenues incidential thereto. - 11 - (v) The term "operating expenses" means all direct costs of operation by OPTN of its telecommunications facilities, including a reasonable portion of over- head costs, adequate maintenance expenses, and an adequate provision for depreciation and taxes, but excluding interest and other charges on debt. Section 4.05. Prior to the completion of the Project, OPTN shall not undertake any capital expenditures for telecommunica- tions, other than those provided for in the OPTN Investment Program, exceeding the equivalent of $250,000 in any one year, unless a financing plan therefor has been agreed between the Association and OPTN. Section 4.06. (a) OPTN shall use funds generated by its tele- communications operations for any of its other operations, or make available such funds for any other purpose, only to the extent that such funds exceed OPTN's financial requirements for its tele- communications operating and administrative expenses (including adequate maintenance and taxes, if any) and after adequate provi- sion has been made for depreciation and investments, including debt service requirements, in respect of its telecommunications operations. (b) For the purposes of this Section: (i) The term "debt service requirement" means the aggregate amount of amortization (including sinking funds payments, if any), interest and other charges on debt. - 12- 0I (ii) The term "debt" means any debt maturing by its terms more than one year after the date on which it is originally incurred. Section 4.07. (a) Except as the Association may otherwise agree, OPTN shall not incur any debt for its telecommunications operations other than pursuant to the Subsidiary Loan Agreement and the financing arrangements for the other parts of the OPTN Investment Program, unless its net revenues from telecommunication operations for the fiscal year next preceding such incurrence or for any later twelve-month period ended prior to such incurrence, whichever revenue is the greater, shall be not less than one and one-half times the maximum debt service requirement for any suc- ceeding fiscal year on all debt incurred by OPTN in respect of such operations, including the debt to be incurred. (b) Except as the Association may otherwise agree, the Borrower shall not incur any short-term debt for its telecom- munications 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. (c) For the purposes of this Section: (i) The term "debt" has the same meaning as under Section 4.06 (b) (ii) of this Agreement. (-13 (ii) The term "incur" with reference to any debt in- cludes any modification of the terms of payment of such debt. Debt shall be deemed to be incurred on the date of execution of a contract, loan agreement or other instrument 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-month period to which such revenue relatEs, less all operating and administrative expenses, including provision for taxes, if any, and transfers of net profits to OPTN, if any, but before provision for deprecia- tion and interest and other charges on debt. (iv) The term "debt service requirement" has the same meaning as under Section 4.o6 (b) (i) of this Agreement. (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 OPTN for the purposes of servicing such debt or, if such other currency is not so obtainable, at the rate of exchange that will be reasonably determined by the Association. (vi) "Short-term debt" means any debt, including the use of funds deposited with OPTN's postal/financial ser- vices maturing by its terms within one year after the date on which it is originally incurred. (vii) "Operating expenses" means all operating and administrative expenses, including provision for taxes, if any, but before provision for deprecia- tion and interest and other charges on debt. Section 4.08. Except as the Association may otherwise agree, OPTN shall not take any action which would have the effect of changing the present investment policy for the funds deposited with OPTN's postal/financial services in such a way that OPTN's return on its liquid funds would be materially and adversely affected. Section 4.09. Except as the Association shall otherwise agree, OPTN shall not create nor permit to be created any mortgage, pledge, charge or other lien on any of its property or assets necessary to its telecommunications operations; provided, however, that the foregoing provision of this Section shall not apply (i) to any lien created on property, at the time of purchase thereof, solely as security for the payment of the purchase price of such property or (ii) to any lien arisinr in the ordinary course of banking transactions and securing a debt maturing not more than one year after the date on which it is originally incurred. -15- 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 OPTN 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 years after the date of this Agreement. (b) If the Development Credit Agreement terminates in ac- cordance with its terms before the date specified in paragraph (a) (ii) of this Section, the Association shall promptly notify OPTN of this event. Section 5.03. All the provisions of this Agreement shall con- tinue in full force and effect notwithstanding any cancellation or suspension under the Development Credit Agreement. 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 sucl oarty's address hereinafter specified or at such other address as such party shall have de- signated 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. For OPTN: Office des Postes et T'lecommunications du Niger Niamey Republique du Niger Cable address: Telex: OFIPOSTEL 5209 NT Niamey -17 Section 6.02. Any action required or permitted to be taken, and any documents required or permitted to be executed, under this Agreement on behalf of OPTN may be taken or executed by the Director General of OPTN or such other person or persons as the Director General shall designate in writing. Section 6.03. OPTN 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 OPTN, take any action or execute any documents required or permitted to be taken or executed by OPTN pursuant to any of the provisions of this Agree- ment. Section 6.04. This Agreement may be executed in several coun- terparts, each of which shall be an original, and all collectively but one instrument. -18- IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, have caused this Agree- ment 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 By /s/ Roger Chaufournier Regional Vice President Western Africa OFFICE DES POSTES ET TELECOMMUNICATIONS DU NIGER By /s/ Illa Salifou Authorized Representative -19 SCHEDULE Procurement A. International Competitive Bidding Except as provided in Part B hereof, the goods and works shall be procured under contracts to be awarded in accordance with pro- cedures consistent with those set forth in Part A of the "Guide- lines for Procurement under World Bank Loans and IDA Credits" published by the Bank in August 1975 (hereinafter called the Guide- lines), on the basis of international competitive bidding. B. Other Procurement Procedures 1. Additional local siitching equipment together with trunk switching equipment for the expansion of the existing telephone exchlnges in Niamey and Maradi and for the signalling system con- version of said exchanges may be procured under negotiated contracts with the original suppliers of the relevant existing switching equip- ment, provided that the terms and conditions of the contracts so negotiated for such equipment shall be satisfactory to the Associ- ation. 2. Contracts for equipment, vehicles and tools estimated to cost less than the equivalent of $20,000 may be let on the basis of competitive bidding advertised locally and in accordance with the Borrower's applicable procurement procedures, provided that the aggregate amount of the contracts let pursuant to this paragraph 2 shall not exceed the equivalent of $150,000. - 20 0 C. Review of Procurement Decisions by the Association 1. Review of invitations to bid and of proposed awards and final contracts: With respect to all contracts estimated to cost the equivalent of $20,000 or more: (a) Before bids are invited, OPTN shall furnish to the Asso- ciation, 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 procedures 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, OPTN shall, before a final decision on the award is made, inform the Associa- tion 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 experts or consultants, as the case may be, referred to in Section 2.02 of this Agreement, on the evaluation and comparison of the bids received, together with the recommendations for award of the said experts or con- sultants and such other information as the Association shall rea- sonably request. The Association shall, if it determines that the intended award would be inconsistent with the Guidelines or this Schedule, promptly inform OPTN and state the reasons for such determination. -21- (c) The terms and conditions of the contract shall not, with- out 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 ard prior to the submission to the Association of the first application for with- drawal of funds from the Credit Account in respect of such contract. 2. With respect to each contract to be financed out of the pro- -eeds of the Credit and not governed by the preceding paragraph, OPTN shall furnish to the Association, promptly after its execution and prior to the submission to the Association of the first applica- tion for withdrawal of funds from the Credit Account in respect of 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 Asso- ciation shall, if it determines that the award of the contract was not consistent with the Guidelines or this Schedule, promptly inform OPTN and state the reasons for such determination.