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

AOFFICIAL NUM BER 1714 SE Development Credit Agreement (Second Telecommunications Project) between REPUBLIC OF SENEGAL and INTERNATIONAL DEVELOPMENT ASSOCIATION Dated ,00.. 4 1986 CREDIT NUMBER 1714 SE DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated & $0&6ax D-7 , 1986, between REPUBLIC OF SENEGAL (the Borrower) and INTERNATIONAL DEVELOPMENT ASSOCIATION (the Association). WHEREAS (A) the Borrower, having satisfied itself as to the feasibility and priority of the Project described in Schedule 2 to this Agreement, has requested the Association to assist in the foreign exchange financing of the Project; (B)' the Project will be carried out by SONATEL with the Borrower's assistance and, as part of such assistance, the Bor- rower will make available to SONATEL the proceeds of the Credit as provided in this Agreement; and (C) the Borrower intends to contract from Caisse Centrale de Cooperation Economique (CCCE) a loan (the CCCE Loa.< in an amount equivalent to CFAF 7,500,000,000 to assist in financing part of the Project-on the terms and conditions set forth in an agreement (the CCCE Loan Agreement) to be entered into between the Borrower and CCCE; (D) the Borrower intends to contract from the African Development Bank (AfDB) a loan (the AfDB Loan) in an amount equi- valent to approximately CFAF 4,525,000,000 to assist in financing part of the Project on the terms and conditions set forth in an agreement (the AfDB Loan Agreement) to be entered into between the Borrower and AfDB; (E) the Borrower intends to contract from the Banque Ouest- Africaine de Developpement (BOAD) a loan (the BOAD Loan) in an amount equivalent to approximately, CFAF 1,500,000,000 to assist in financing part of the Project on the terms and conditions set forth in an agreement (the BOAD Loan Agreement) to be entered into between the Borrower and BOAD; and 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 set forth in this Agreement and in the Project Agreement of even date herewith between the Association and SONATEL; NOW THEREFORE the parties hereto hereby agree as follows: -2- ARTICLE I General Conditions; Definitions Section 1.01. The "General Conditions Applicable to Develop- ment Credit Agreements" of the Association, dated January 1, 1985, with the deletion of the last sentence of Section 3.02 thereof, (the General Conditions) constitute an integral part of this Agreement. Section 1.02. Unless the context otherwise requires, the several terms defined in the General Conditions and in the Preamble to this Agreement have the respective meanings therein set forth and the following additional terms have tha following meanings: (a) "Project Agreement" means the agreement between the Association and SONATEL of even date herewith, as the same may be amended from time to time, and such term includes all schedules and agreements supplemental to the Project Agreement; (b) "Subsidiary Loan Agreement" means the agreement to be entered into between the Borrower and SONATEL 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; (c) "Special Account" means the account referred to in Section 2.02 (b) of this Agreement; (d) "OPCE" means Office des Postes et de la Caisse d'Epargne, the postal services of the Borrower; (e) "Contrat Plan" in,--as the contract concluded between the Borrower and SONATEL in 1986, setting forth the mutual obligations of the Borrower and SONATEL to achieve SONATEL's operational targets, as the same may be amended from time to time; (f) "CFAF" means the currency of the Borrower; and (g) "entity of the Public Sector" means any entity in which 50% or more of the equity is owned by the Borrower or any sub- division thereof. - 3-F -3- ARTICLE II The Credit Section 2.01. The Association agrees to lend to the Borrower, on the terms and conditions set forth or referred to in the Development Credit Agreement, an amount in various currencies equivalent to nineteen million four hundred thousand Special Drawing Rights (SDR 19,400,000). Section 2.02. (a) 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 Asso- ciation, 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. (b) The Borrower shall, for the purposes of the Project, open and maintain in convertible CFAF a special account in the name of SONATEL in a commercial bank on terms and conditions satisfactory to the Associacion. Deposits into, and payments out of, the Special Account shall be made in accordance with the provisions of Schedule 3 to this Agreement. Section 2.03. The Closing Date shall be June 30, 1993 or such later date as the Association shall establish. The Associa- tion shall promptly notify the Borrower of such later date. Section 2.04. (a) The Borrower shall pay to the Association a commitment charge at the rate of one-half of one per cent (1/2 of 1%) per annum on the principal amount of the Credit not withdrawn from time to time. The commitment charge shall accrue from a date sixty days after the date of the Development Credit Agreement to the respective dates on which amounts shall be withdrawn by the Borrower from the Credit Account or shall be cancelled. (b) The commitment charge shall be paid: (i) at such places as the Association shall reasonably request; (ii) without restrictions of any kind imposed by, or in the territory of, the Borrower; and (iii) in the currency specified in this Agreement for the purposes of Section 4.02 of the General Conditions or in such other eligible currency or currencies as may from time to time be designated or selected pursuant to the provisions of that Section. Section 2.05. The Borrower shall pay to the Association a service charge at the rate of three-fourths of one per cent (3/4 of 1%) per annum on the principal amount of the Credit withdrawn and outstanding from time to time. Section 2.06. Commitment charges and service charges shall be payable semiannually on March 1 and September 1 in each year. Section 2.07. The Borrower shall repay the principal amount of the Credit in semiannual installments payable on each March 1 and September 1 commencing September 1, 1996, and ending March 1, 2036. Each installment to and including the installment payable on March 1, 2006 shall be one-half of one per cent (1/2 of 1%) of such principal amount, and each installment thereafter shall be one and one-half per cent (1-1/2%) of such principal amount. Section 2.08. The currency of the French Republic is hereby specified for the purposes of Section 4.02 of the General Conditions. ARTICLE III Execution of the Project Section 3.01. (a) The Borrower declares its commitment to the objectives of the Project as set forth in Schedule 2 to this Agreement and, to this end, without any limitation or restriction upon any of its other obligations under the Development Credit Agreement, shall cause SONATEL to perform in accordance with the provisions of the Project Agreement all the obligations of SONATEL therein set forth, shall take and cause to be taken all action, including adjustment of telecommunication structures and tariff levels, the provision of funds, facilities, services and other resources, necessary or appropriate to enable SONATEL 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 SONATEL under a subsidiary loan agreement to be entered into between the Borrower and SONATEL, under terms and conditions which shall have been approved by the Association and which shall include a repayment period of twenty years including a grace period of five years and an interest rate per annum equal to the Bank's interest rate prevailing at the date of this Agreement, the foreign exchange risk being borne by SONATEL. -5 - (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. Section 3.02. Except as the Association shall otherwise agree, procurement of the goods, works and consultants' services required for the Project and to be financed out of the proceeds of the Credit shall be governed by the provisions of Schedule 1 to the Project Agreement. Section 3.03. The Borrower and the Association hereby agree that the obligations set forth in Sections 9.03, 9.04, 9.05, 9.06, 9.07 and 9.08 of the Genetal Conditions (relating to in- surance, use of goods and services, plans and schedules, records and reports, maintenance and land acquisition, respectively) shall be carried out by SONATEL pursuant to Section 2.03 of the Project Agreement. ARTICLE IV Other Covenants Section 4.01. The Borrower shall take all necessary measures required on its part to ensure that, with regard to services rendered by SONATEL to the Borrower and its municipalities or any other entity of the Public Sector: (a) all amounts billed and not settled as of March 31, 1986 shall be settled in accordance with the schedule set forth in the Contrat Plan; (b) all bills, from said date onwards, shall be paid within a period of 90 days from the billing date; said period shall be reduced to at most 60 days by June 30, 1987, and to at most 45 days by June 30, 1988; and (c) separate and adequate provision shall be made in its national budget and in the budgets of its municipalities or any other entity of the Public Sector to cover payment of arrears and annual forecasts of billings in respect of the annual use of telecommunications services by all government departments and municipalities or any other entity of the Public Sector. The -6- Borrower shall ensure that no services shall be requested from SONATEL by itself or its municipalities or any other entity of the Public Sector which shall not be covered by said budget provisions, unless a corresponding adequate additional provision shall also have been made in their respective budgets to meet the cost thereof. Section 4.02. The Borrows! shall ensure that: (a) any services rendered by SONATEL to OPCE shall be paid in full by the latter; and (b) the level of the annual subsidy from SONATEL to OPCE shall decline each year and end not later than June 30, 1989. ARTICLE V Remedies of the Association Section 5.01. Pursuant to Section 6.02 (h) of the General Conditions, the following additional events are specified: (a) SONATEL shall have failed to perform any of its obliga- tions under the Project Agreement, the Subsidiary Loan Agreement or the Contrat Plan; (b) the Borrower shall have failed to perform any of its obligations under the Subsidiary Loan Agreement or the Contrat Plan; (c) as a result of events which have occurred after the date of the Development Credit Agreement, an extraordinary situa- tion shall have arisen which shall make it improbable that SONATEL will be able to perform its obligations under the Project Agreement; (d) Law No. 85/36 of July 23, 1985 of the Borrower establishing SONATEL shall have been amended, suspended, abrogated, repealed or waived so as to affect materially and adversely the ability of SONATEL to perform any of its oblikxtions under the Project Agreement; (e) the Borrower or any other authority having jurisdiction shall have taken any action for the dissolution or disestablish- ment of SONATEL or for the suspension of its operations; - 7 - (f) the BOAD Loan Agreement shall have failed to become effective by June 30, 1987, or such later date as the Association may agree; provided, however, that the provisions of this para- graph shall not apply if the Borrower establishes to the satis- faction of the Association that adequate funds for the Project are available to the Borrower from other sources on terms and conditions consistent with the obligations of the Borrower under this Agreement; (g) the Borrower or SONATEL shall have amended, suspended, abrogated, repealed or waived the Contrat Plan without prior approval of the Association; and (h) (i) subject to subparagraph (ii) of this paragraph: (A) the right of the Borrower to withdraw the proceeds of the CCCE Loan, the AfDB Loan or the BOAD Loan made to the Borrower for the financing of the Project shall have been suspended, cancelled or terminated in whole or in part, pursuant to the terms of the agreement providing therefor, or (B) any such loan shall have become due and pay- able prior to the agreed maturity thereof. (ii) Subparagraph (i) of this paragraph shall not apply if the Borrower establishes to the satisfaction of the Association that: (A) such suspension, cancellation, termination or prematuring is not caund by the failure of the Borrower to perform any of its obligations under such agreement; and (B) adequate funds for the Project are available to the Borrower from other sources on terms and conditions consistent with the obligations of the Borrower under this Agreement. Section 5.02. Pursuant to Section 7.01 (d) of the General Conditions, the following additional events are specified: (a) the event specified in paragraphs (a) and (b) of Sec- tion 5.01 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 SONATEL; - 8 - (b) the events specified in paragraphs (d), (e), (f) and (g) of Section 5.01 of this Agreement shall occur; and (c) the events specified in paragraph (h) (i) (B) of Sec- tion 5.01 of this Agreement shall occur, subject to the proviso of paragraph (h) (ii) of that Section. ARTICLE VI Effective Date; Termination Section 6.01. The following events are specified as ad- ditional 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 SONATEL; (b) the consultants services for Part F.1., 2, 3 and 5 of the Project have been contracted for in a manner acceptable to the Association; (c) invitations to bid for goods and services for the Project, to be financed out of the proceeds of the Credit and estimated to cost at least the aggregate equivalent of SDR 9,700,000 have been issued; (d) the CCCE Loan Agreement and the AfDB Loan Agreement have been executed and delivered and all conditions precedent to their effectiveness or to the right of the Borrower to make withdrawals thereunder, except, as the case may be, for the effectiveness of this Agreement, have been fulfilled; (e) the Contrat Plan has been signed by the Borrower and SONATEL; (f) SONATEL has provided the Association with an aging schedule of all its accounts receivable; and (g) the Association has been advised by the Borrower that the opening balance sheet for SONATEL has been agreed upon by the Borrower and SONATEL. -9- Section 6.02. 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 and signed by SONATEL, and is legally binding upon SONATEL in accordance with its terms; and (b) that the Subsidiary Loa.. Agreement has been duly authorized and signed by the Borrower and SONATEL and is legally binding upon the Borrower and SONATEL in accordance with its terms. Section 6.03. The date ninety (90) days after the date of this Agreement is hereby specified for the purposes of Section 12.04 of the General Conditions. Section 6.04. The obligations of the Borrower under Sec- tions 4.01 and 4.02 of this Agreement shall cease and determine on the date on which the Development Credit Agreement shall terminate or on the date 15 years after the date of this Agree- ment, whichever shall be the earlier. ARTICLE VII Representative of the Borrower; Addresses Section 7.01. The Minister of the Borrower responsible for Finance is designated as representative of the Borrower for the purposes of Section 11.03 of the General Conditions. Section 7.02. The following addresses are specified for the purposes of Section 11.01 of the General Conditions: For the Borrower: Ministere de l'Economie et des Finances Rue Charles Laine B. P. 4017 Dakar, Senegal Cable address: Telex: MINIFINANCES 3203 SG Dakar, Senegal - 10 - 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 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. REPUSLIC OF SENEGAL Byf3~ 9O~/4. Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION By A k .Regional Vice President rC Western Africa - 11 - 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 Credit 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 SDR Equivalent) to be Financed (1) Switching equip- 6,175,000 ) ment, including ) installation ) (2) Local cable 2,380,000 ) network and ) subscriber ) material, ) including ) installation ) ) 100% of foreign (3) Transmission 6,525,000 ) expenditures equipment, ) including ) installation ) (4) Power and air-- 625,000 ) conditioning ) equipment ) (5) Tools, instru- 700,000 ) ments and ) specialized ) vehicles ) (6) Technical 350,000 100% assistance (7) Unallocated 2,645,000 TOTAL 19,400,000 - 12 - 2. For the purposes of this Schedule the term "foreign expenditures" means expenditures in the currency of any country other than that of the Borrower for goods or services supplied from the territory of any country other than that of the Borrower; provided, however, that if the currency of the Borrower is also that of another country from the territory of which goods or services are supplied, expenditures in such currency for such goods or services shall be deemed to be "foreign expenditures". 3. Notwithstanding the provisions of paragraph 1 above, no withdrawals shall be made in respect of payments made for expen- ditures prior to the date of this Agreement. - 13 - SCHEDULE 2 Description of the Project The objectives of the Project are to improve operational efficiency and maintenance of the Borrower's telecommunications network, and to increase telecommunications system utilization through rehabilitation of existing equipment and network expan- sion. The Project consists of the following parts, subject to such modifications thereof as the Borrower and the Association may agree upon from time to time to achieve such objectives: Part A: 1. Installation of: (a) about 24,000 lines of mainly electronic switching equipment and associated cable networks and intra- regional junction switching and transmission in the Cap-Vert region; (b) about 3,400 lines of electronic switching equipment and cable networks for eight cities in the Ziguinchor, Kolda and Tambacounda regions, including construction of related buildings and interurban transmission facilities; and (c) about 7,200 lines of electronic switching equipment and cable networks for ten stations in the Thies, Kaolack and Fatick regions, including construction of related building and interurban transmission facilities. 2. Construction of facilities for linking Cap Skiring and Boucote to the national telecommunications network. Part B: Rehabilitation of the "Axe Nord" transmission link (Thies - St. Louis - Richard Toll - Bakel), with branches and associated facilities. Part C: Establishing and equipping within SONATEL of a national maintenance organization for telecommunications installa- tions. - 14 - Part D: Rehabilitation of existing telecommunication installations and cable networks. Part E: Installation of feeder links, multiplex equipment and execution of other telecommunication works in all regions. Part F: 1. Strengthening of SONATEL's medium and long-term telecom- munications sector planning and improvement of its procure- ment and project implementation capacity; 2. establishment of a data processing system for SONATEL's billing and collection, payroll and major accounting oper- ations; 3. establishment of a twnagemeat information system to produce financial and technical reports; 4. Study of the structures and levels of telecommunication tariffs; and 5. improvement of SONATEL's logistics capacity in the areas of supplies, vehicles and workshop facilities. The Project is expected to be completed by June 30, 1992. - 15 - SCHEDULE 3 Special Account 1. For the purposes of this Schedule: (a) the term "eligible Categories" means Categories (1) through (6) set forth in the table in paragraph 1 of Schedule 1 to this Agreement; (b) the term "eligible expenditures" means expenditures 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 allocated from time to time to the eligible Categories in accor- dance with the provisions of Schedule 1 to this Agreement; and (c) the term "Authorized Allocation" means an amount in CFAF equivalent to 1,500,000 dollars to be withdrawn from the Credit Account and deposited in the Special Account pursuant to paragraph 3 (a) of this Schedule. 2. Except as the Association shall otherwise agree, SONATEL's payments out of the Special Account shall be made exclusively for eligible expenditures in accordance with the provisions of this Schedule. 3. After the Association has received evidence satisfactory to it that the Special Account has been duly opened, withdrawals of the Authorized Allocation and subsequent withdrawals to replenish the Special Account may be made as follows: (a) On the basis of a request or requests by the Borrower for a deposit or deposits which add up to the aggregate amount of the Authorized Allocation, the Association shall, on behalf of the Borrower, withdraw from the Credit Account and deposit in the Special Account such amount or amounts as the Borrower shall have requested. (b) The Borrower shall furnish to the Association requests for replenishment of the Special Account at such intervals as the Association shall specify. On the basis of such requests, the Association shall withdraw from the Credit Account and deposit into the Special Account such amounts as shall be required to replenish the Special Account with amounts not exceeding the amount of payments made out of the Special Account for eligible - 16 - expenditures. All such deposits shall be withdrawn by the Asso- ciation from the Credit Account under the respective eligible Categories, and in the respective equivalent amounts, as shall have been justified by the evidence supporting the request for such deposit furnished pursuant to paragraph 4 of this Schedule. 4. For each payment made by SONATEL out of the Special Account for which the Borrower requests replenishment pursuant to para- graph 3 (b) of this Schedule, the Borrower shall furnish to the Association, prior to or at the time of such request, such and other evidence as the Association shall reasonably request, showing that such payment was made for eligible expenditures. 5. (a) Notwithstanding the provisions of paragraph 3 of this Schedule, no further deposit into the Special Account shall be made by the Association when either of the following situations first arises: (i) the Association shall have determined that all further withdrawals should be made directly by the Borrower from the Credit Account in accor- dance with the provisions of paragraph (a) of Section 2.02 of this Agreement; or (ii) the total unwithdrawn amount of the Credit allo- cated to the eligible Categories, minus the amount of any outstanding agreement to reimburse made by the Association and of any outstanding special commitment entered into by the Association pursuant to Section 5.02 of the General Conditions with respect to the Project, shall be equal to the equivalent of twice the amount of the Authorized Allocation. (b) Thereafter, withdrawal from the Credit Account of the remaining unwithdrawn amount of the Credit allocated to the eligible Categories shall follow such procedures as the Associ- ation shall specify by notice to the Borrower and SONATEL. Such further withdrawals shall be made only after and to the extent that the Association shall have been satisfied that all such amounts remaining on deposit in the Special Account as of the date of such notice have been or will be utilized in making payments for eligible expenditures. - 17 - 6. (a) If the Association shall have determined at any time that any payment out of the Special Account: (i) was made for any expenditure or in any amount not eligible pursuant to paragraph 2 of this Schedule, or (ii) was not justified by the evidence furnished pursuant to paragraph 4 of this Schedule, the Borrower shall, promptly upon notice from the Association deposit or cause SONATEL to deposit into the Special Account (or, if the Associa- tion shall so request, refund to the Association) an amount equal to the amount of such payment or the portion thereof not so eligible or justified. No further deposit by the Association into the Special Azcount shall be made until the Borrower or SONATEL has made such deposit or refund. (b) If the Association shall have determined at any time that any amount outstanding in the Special Account will not be required to cover further payments for eligible expenditures, the Borrower shall, promptly upon notice from the Association, refund or cause SONATEL to refund to the Association such outstanding amount for crediting to the Credit Account. 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