Upper Volta - Second Telecommunications Project : Credit 0431 - Project Agreement - Conformed

CONFORMED COPY CREDIT NUMBER 431 UV Project Agreement (Second Telecommunications Project) BETWEEN INTERNATIONAL DEVELOPMENT ASSOCIATION AND OFFICE DES POSTES ET TELECOMMUNICATIONS DE HAUTE VOLTA DATED SEPTEMBER 28, 1973 CONFORMED COPY CREDIT NUMBER 431 UV Project Agreement (Second Telecommunications Project) BETWEEN INTERNATIONAL DEVELOPMENT ASSOCIATION AND OFFICE DES POSTES ET TELECOMMUNICATIONS DE HAUTE VOLTA DATED SEPTEMBER 28, 1973 PROJECT AGREEMENT AGREEMENT, dated September 28, 1973, between INTERNATIONAL DEVELOPMENT ASSOCIATION (hereinafter called the Association) and OFFICE DES POSTES ET TELECOMMUNICATIONS DE HAUTE VOLTA (hereinafter called the Office). WHEREAS by the Development Credit Agreement of even date herewith between the Republic of Upper Volta (hereinafter called the Borrower) and the Association, the Association has agreed to make available to the Borrower an amount in various currencies equivalent to four million and five hundred thousand dollars ($4,500,000), on the terms and conditions set forth in the Development Credit Agreement, but only on condition that the Office agree to undertake such obligations toward the Association as hereinafter set forth; WHEREAS by a subsidiary loan agreement between the Borrower and the Office, the proceeds of the credit provided for under the Development Credit Agreement will be made available to the Office on the terms and conditions therein set forth; WHEREAS by a development credit agreement No. 141-UV dated February 18, 1969, between the Borrower and the Association, the Association granted to the Borrower a credit in various currencies equivalent to eight hundred thousand dollars ($800,000) to assist in financing of a telecommunications project; WHEREAS the Office and the Association have entered into a project agreement dated February 18, 1969 for the purpose of the First Development Credit Agreement; and WHEREAS the Office, 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 4 set forth, and the term "Remittances to the Borrower's Treasury" means the remittance established pursuant to Article 25 of Decree No. 68-135 of June 28, 1968 as the same may be amended from time to time. ARTICLE II Execution of the Project Section 2.01. The Office 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, engineering and public utility standards and practices. Section 2.02. In order to assist the Office in the preparation of plans and specifications for the Project, in the preparation of bidding documents for the Project, in the bid evaluation for such Project and in the supervision of the construction of the Project, the Office shall employ qualified and experienced engineering consultants acceptable to the Association upon terms and conditions satisfactory to the Association. Section 2.03. In carrying out Part H of the Project the Office shall, no later than May 31, 1974 (or such other date as may be agreed by the Association) employ qualified and experienced telecommunication tariffs and financial specialists acceptable to the Association, upon terms and conditions satisfactory to the Association. Section 2.04. In carrying out Parts A and D of the Project, the Office shall employ contractors acceptable to the Association upon terms and conditions satisfactory to 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 1 to this Agreement. Section 2.06. (a) The Office 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 5 such insurance any indemnity shall be payable in a currency freely usable by the Office to replace or repair such goods. (b) Except as the Association may otherwise agree, all goods and services financed out of the proceeds of the Credit relent to the Office by the Borrower shall be used exclusively for the Project until its completion. Section 2.07. (a) The Office shall furnish to the Association promptly upon their preparation, the plans, specifications, reports, contract 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) The Office: (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 relent 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 relent to it and the goods and services financed out of such proceeds. Section 2.08. The Office shall duly perform all its obligations under the Subsidiary Loan Agreement. Except as the Association shall otherwise agree, the Office 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 Management and Operations of the Office Section 3.01. (a) The Office shall at all times manage its affairs, maintain its financial position and carry on its telecommunications operations, in accordance with sound business, financial and public utility practices, and under the supervision of competent and experienced management. (b) Before appointing a Director, Chief Financial Officer or Chief Engineer for its telecommunications operations, the Office shall consult with the Association and give due consideration to the views expressed by the Association with respect to the qualifications and experience of the persons proposed for such appointments. 6 (c) The Office shall take all measures required to institute and maintain adequate telecommunications personnel recruitment and training policies and, in particular, shall provide funds and facilities necessary for the training of its vocational and higher level personnel, with due regard to the development needs of the Office, and in accordance with sound management and financial practices. (d) The Office shall by June 30, 1975 establish and subsequently implement and maintain a program satisfactory to the Association to increase the productivity of its telecommunications staff. Section 3.02. (a) Except as the Association shall otherwise agree, the Office shall at all times maintain its existence and right to carry on its telecommunications operations and shall take all steps necessary to acquire, maintain and renew all rights, powers, privileges and franchises which are necessary or useful in the conduct of its business. (b) The Office shall no later than December 31, 1974, reorganize and thereafter maintain its plant and equipment maintenance services in a form satisfactory to the Association. (c) The Office shall at all times operate and maintain its plants, equipment and other property and shall promptly make all necessary repairs and renewals thereof, in accordance with sound engineering and public utility practice. (d) The Office shall not, without the prior approval of the Association, sell, lease, transfer or otherwise dispose of any of its property or assets which shall be required for efficient telecommunications operations. Section 3.03. The Office shall 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. ARTICLE IV Financial Covenants Section 4.01. The Office shall maintain records adequate to reflect in accordance with consistently maintained appropriate accounting practices its operations and financial condition. Section 4.02. The Office's existing accounting and financial management systems as it may be revised from time to time in a form satisfactory to the 9 7 Association and upon request from the Association shall be maintained as provided in Section 2.04(d) of the First Project Agreement. Such system shall continue to provide for separate accounts for the Office's postal operations, and for its telecommunications operations, and it shall show separately the internal flow of funds for each of these operations. Section 4.03. The Office shall: (i) have its accounts and financial statements (balance sheets, statements of revenue 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 Association shall have reasonably requested; and (iii) furnish to the Association such other information concerning the accounts and financial statements of the Office and the audit thereof as the Association shall from time to time reasonably request. Section 4.04. On the basis of the recommendations of the financial specialists referred to under Section 2.03 of this Agreement, the Office shall review, with the Borrower, its budgeting procedures and shall establis.i by Jantary 1, 1975 (or such other date as shall be agreed by the Association) and thereafter implement at all times new budgeting procedures satisfactory to the Association. Such budgeting proce. dures shall provide for a separate budget for the Office's telecommunications and postal operations. Section 4.05. (a) The Office shall not effect any changes in its telecommunications tariffs without prior consultation with the Association until completion of the report of the telecommunications tariffs specialists referred to under Section 2.03 of this Agreement and until an implementation program has been agreed to with the Association on the basis of the recommendations contained in such report which is to be completed no later than June 30, 1975 (or such other date as the Association may agree). (b) Except as the Association shall otherwise agree, the Office shall establish and thereafter maintain, a telecommunications rate structure and tariffs which shall provide to the Office revenue sufficient to produce an annual rate of return of not less than 6% as from January 1, 1974 through December 31, 1978 and an annual rate of return of not less than 8% as from January 1, 1979 or such other date as shall be agreed by the Association. (c) For the purposes of this Section: 8 (i) The annual rate of return shall be calculated in respect of each fiscal year by using as the denominator the average of the current value of net fixed telecommunications assets opeiated by the Office at the beginning, and at the end of the year in question and, as the numerator, the operating income of the Office from its telecommunications operations for that year. (ii) The term "current value of net fixed telecommunications assets" means the gross value of fixed telecommunications assets as revalued from time to time, less accumulated depreciation, based on appropriate valuation and depreciation methods approved by 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 incidental thereto. (v) The term "operating expenses" means all direct costs of operation by the Office of its telecommunicati6ns facilities, including a reasonable portion of overhead costs, adequate maintenance expenses, and an adequate provision for depreciation and taxes, but excluding interest and other charges on debt. (e) This section supersedes the provisions of Sections 2.06 and 2.07 of the First Project Agreement. Section 4.06. (a) Until completion of the Project the Office shall not make any Remittances to the Borrower's Treasury and shall not use surplus telecommunications funds for other purposes until adequate provision has been made for sufficient funds to meet the operational, debt service, working capital and expansion requirements of the Office's telecommunications services. (b) For the purpose 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. 9 (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. Prior to the completion of the Project, the Office shall not undertake any other telecommunications capital expenditures greater than $200,000 equivalent in any one year, unless a financing plan therefor has been agreed between the Association and the Borrower. Section 4.08. (a) The Office shall incur no debt for its telecommunication operations during the period of execution of the Project and during the period of five years following the completion of the Project without prior consultation with the Association. (b) Except as the Association and the Office shall otherwise agree and subject to Section 4.08(d) hereof, the Office shall not incur any debt for its telecommunications operations other than pursuant to the Subsidiary Loan Agreement, unless its net revenues from such 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 at least one and one-half times the maximum debt service requirement for any succeeding fiscal year on all debt incurred by the Office for such operations, including the debt to be incurred. (c) Except as the Association and the Office shall otherwise agree, the Borrower shall not incur any short-term debt for its telecommunications operations if such debt, together with all other outstanding short-term debt for such operations, would exceed two-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. (d) For the purposes of this Section: (i) The term "debt" has the same meaning as under Section 4.06(b)(ii) hereof. (ii) The term "incur" with reference to any debt includes any modification of the terms of payment of such debt. Debt shall be deemed to be incurred on the date of execution and delivery of a contract, loan agreement or other instrument providing for such debt. 10 (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 the Office, if any, but before provision for depreciation and interest and other charges on debt. (iv) The term "debt service requirement" has the same meaning as under Section 4.06(b)(i) hereof. (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 the Office 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 public checking account funds, 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 depreciation and interest and other charges on debt. (e) This Section supersedes Section 2.08 of the First Project Agreement. Section 4.09. Except as the Association shall otherwise agree, the Office 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 arising 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. 11 ARTICLE V Consultation, Information and Inspection Section 5.01. The Association and the Office shall cooperate fully to assure that the purposes of the Credit will be accomplished. To that end, the Association and the Office 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, the administration, operations and financial condition of the Office and other matters relating to the purpose of the Credit. Section 5.02. The Association and the Office 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 under this Agreement or the performance by the Borrower and the Office of their respective obligations under the Subsidiary Loan Agreement. Section 5.03. The Office shall enable the Association's representatives to examine all plants, sites, works, properties and equipment of the Office and any relevant records and documents. 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 and of the Office 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 20 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 the Office of this event. 12 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. 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: 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 the Office: Office des Postes et T616communications de Haute Volta Ouagadougou Upper Volta Cable address: DIRPOSTEL Ouagadougou 13 Section 7.02. Any action required or permitted to be taken, and any documents required or permitted to be executed, under this Agreement on behalf of the Office may be taken or executed by the Director of the Office or such other person or persons as the Office shall designate in writing. Section 7.03. The Office 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 the Office, take any action or execute any documents required or permitted to be taken or executed by the Office pursuant to any of the provisions of this Agreement. Section 7.04. This Agreement may be executed in several counterparts, each of which shall be an original, and all collectively but one instrument. 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 / Wilfried Thalwitz Director, Regional Projects Department Western Africa Regional Office OFFICE DES POSTES ET TELECOMMUNICATIONS DE HAUTE VOLTA By /s / T6lesphore Yaguibou Authorized Representative 14 SCHEDULE 1 Procurement A. Contracts Governed by Guidelines for Procurement 1. With respect to any contract for items included in Categories I, 1I, III and IV of the table set out in paragraph I of Schedule 1 to the Development Credit Agreement estimated to cost the equivalent of $20,000 or more: (a) Before bids are invited, the Office 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 Association's concurrence before it is issued to the prospective bidders. (b) After bids have been received and evaluated, the Office 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, by the consultants 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 consultants, and 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 2.05 of this Agreement, promptly inform the Office and the Borrower, state the reasons for such determination and advise the Borrower of any cancellation pursuant to the provisions of paragraph 4(c) of Schedule 1 to the Development Credit Agreement. (c) The terms and conditions of the contract shall not, without 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 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 zontract. 2. With respect to any other contract for items included in Categories 1, 11, III and IV of the table set out in paragraph I of Schedule 1 to the Development Credit Agreement, the Office shall furnish to the Association, promptly after its 15 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 2.05 of this Agreement, promptly inform the Office and the Borrower, state the reasons for such determination and advise the Borrower of any cancellation pursuant to the provisions of paragraph 4(c) of Schedule 1 to the Development Credit Agreement. B. Special Procedures Applicable to Goods under Category II of the table set out in paragraph 1 of Schedule 1 to the Development Credit Agreement Notwithstanding the provisions referred to in Section 2.05 of this Agreement or included in the foregoing paragraphs of this Schedule, the Office may, pursuant to paragraph 1.2 of the Guidelines for Procurement under World Bank Loans and IDA Credits, published by the Bank in April 1972, as revised in October 1972, use procedures other than international competition for goods included in Category II of the table set out in paragraph 1 of Schedule 1 to the Development Credit Agreement provided that the justification for the use of such alternative procedures, and such procedures are satisfactory to the Association. 0