India - Seventh Telecommunications Project : Loan 1592 - Loan Agreement - Conformed

CONFORMED COPY LOAN NUMBER 1592 IN Loan Agreement (Seventh Telecommunications Project) between INDIA and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Dated June 19, 1978 LCAN NUMBER 1592 IN LOAN AGREEMENT AGREEMENT, dated June 19, 1978, between INDIA, acting by its President (hereinafter called the Borrower) and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPM'NT (hereinafter called the Bank). WHEREAS (A) the Borrower has requested the Bank to assist in the financing of the Project described in Schedule 2 to this Agreement by making the Loan as hereinafter provided; (B) Part B of the Project will be carried out by Indian Telephones Industries, Limited (hereinafter called ITI), a public limited company established under the Borrower's Companies Act of 1956, as amended, with the Borrower's assistance and, as part of such assistance, the Borrower will make available to ITI part of the proceeds of the Loan as hereinafter provided; (C) Part C of the Project will be carried out by Hindustan Cables, Limited (hereinafter called HCL), a public limited company established under the Borrower's Companies Act of 1956, as amended, with the Borrower's assistance and, as part of such assistance, the Borrower will make available to HCL part of the proceeds of the Loan as hereinafter provided; (D) Part D of the Project will be carried out by Hindustan Teleprinters, Limited (hereinafter called HTL), a public limited company established under the Borrower's Companies Act of 1956, as amended, with the Borrower's assistance and, as part of such assistance, the Borrower will make available to HTL part of the proceeds of the Loan as hereinafter provided; and WHEREAS the Bank has agreed, on the basis inter alia of the foregoing, to make the Loan available to the Borrower upon the terms and conditions set forth hereinafter and in a project agreement of even date herewith between the Bank, of the one part, and ITI, HCL and HTL, of the other part; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I General Conditions; Definitions Section 1.01. The parties to this Agreement accept all the provisions of the General Conditions Applicable to Loan and - 2 - Guarantee Agreements of the Bank, dated March 15, 1974, with the same force and effect as if they were fully set forth herein (said General Conditions Applicable to Loan and Guarantee Agreements of the Bank being hereinafter called the General Conditions). Section 1.02. Wherever used in this Agreement, unless the context otherwise requires, the several terms defined in the General Conditions and in the Preamble to this Agreement have the respective meanings therein set forth and the following additional terms have the following meanings: (a) "Project Agreement" means the agreement between the Bank, of the one part, and ITI, HCL and HTL, of the other part, of even date herewith, as the same may be amended from time to time, and such term includes all schedules to the Project Agreement and all agreements supplemental to the Project Agreement; (b) "Subsidiary Loan Agreements" mean the agreements to be entered into between the Borrower and each of ITI, HCL and HTL 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 Agreements; (c) "P&T" means the Posts and Telegraphs Department of the Ministry of Communications of the Borrower; and (d) "Branch" means the Telecommunications Branch of P&T. ARTICLE II The Loan Section 2.01. The Bank agrees to lend to the Borrower, on the terms and conditions in the Loan Agreement set forth or referred to, an amount in various currencies equivalent to one hundred twenty million dollars ($120,000,000). Section 2.02. The amount of the Loan may be withdrawn from the Loan 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 Bank, for expendi- tures made (or, if the Bank 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 Loan. -3- Section 2.03. Except as the Bank shall otherwise agree, procurement of the goods to be financed out of the proceeds of the Loan, shall be governed by the provisions of Schedule 4 to this Agreement. Section 2.04. The Closing Date shall be March 31, 1982 or such later date as the Bank shall establish. The Bank shall promptly notify the Borrower of such later date. Section 2.05. The Borrower shall pay to the Bank a commit- ment charge at the rate of three-fourths of one per cent (3/4 of 1%) per annum on the principal amount of the Loan not withdrawn from time to time. Section 2.06. The Borrower shall pay interest at the rate of seven and one-half per cent (7.50%) per annum on the principal amount of the Loan withdrawn and outstanding from time to time. Section 2.07. Interest and other charges shall be payable semiannually on January 15 and July 15 in each year. Section 2.08. The Borrower shall repay the principal amount of the Loan in accordance with the amortization schedule set forth in Schedule 3 to this Agreement. ARTICLE III Execution of the Project Section 3.01. (a) The Borrower shall carry out Part A of the Project through P&T with due diligence and efficiency and-in con- formity with appropriate administrative, financial and engineering practices, and shall provide, promptly as needed, the funds, facilities, services and other resources required for the purpose. (b) Without any limitation or restriction upon any of its other obligations under the Loan Agreement, the Borrower shall cause ITI, HCL and HTL to perform in accordance with the provi- sions of the Project Agreement all the obligations therein set forth, shall take or cause to be taken all action, including the provision of funds, facilities, services and other resources, necessary or appropriate to enable ITI, HCL and HTL to perform such obligations, and shall not take or permit to be taken any action which would prevent or interfere with such performance. -4- (c) The Borrower shall relend out of the proceeds of the Loan (i) an amount equivalent to ten million three hundred thousand dollars ($10,300,000) to ITI for carrying out Part B of the Project, (ii) an amount equivalent to seven million five hundred thousand dollars ($7,500,000) to HCL for carrying out Part C of the Project, and (iii) an amount equivalent to two million two hundred thousand dollars ($2,200,000) to HTL for carrying out Part D of the Project, under Subsidiary Loan Agreements to be entered into between the Borrower and each of ITI, HCL and HTL, under terms and conditions which shall have been approved by the Bank, including, inter alia, an interest rate of ten and a quarter per cent (10-1/4%) per annum and a repayment period of fifteen years, including a grace period of three years. (d) The Borrower shall exercise its rights under each of the Subsidiary Loan Agreements in such manner as to protect the interests of the Borrower and the Bank and to accomplish the purposes of the Loan, and except as the Bank shall otherwise agree, the Borrower shall not assign, amend, abrogate or waive any of the Subsidiary Loan Agreements or any provision thereof. Section 3.02. (a) The Borrower undertakes to insure, or make adequate provision for the insurance of, the imported goods to be financed out of the proceeds of the Loan under Part A of the Project against hazards incident to the acquisition, transporta- tion 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 the Borrower to replace or repair such goods. (b) Except as the Bank shall otherwise agree, the Borrower shall cause all goods and services financed out of the proceeds of the Loan under Part A of the Project to be used exclusively for said Part of the Project. Section 3.03. (a) The Borrower shall furnish to the Bank, promptly upon their preparation, the plans, specifications, reports, contract documents and work and procurement schedules for Part A of the Project, and any material modifications thereof or additions thereto, in such detail as the Bank shall reasonably request. (b) The Borrower shall: (i) maintain records and procedures adequate to record and monitor the progress of Part A of the Project (including its cost and the benefits to be derived from it), to identify the goods and services financed out of the - 5 - proceeds of the Loan under said Part of the Project, and to disclose their use in said Part of the Project; (ii) enable the Bank's accredited representatives to visit the facilities and construction sites included in said Part of the Project and to examine the goods financed out of the proceeds of the Loan and any relevant records and documents; and (iii) furnish to the Bank at regular intervals all such information as the Bank shall reasonably request concerning Part A of the Project, its cost and, where appropriate, the benefits to be derived from it, the expenditure of the proceeds of the Loan and the goods and services financed out of such proceeds. (c) Promptly after completion of the Project, but in any event not later than six months after the Closing Date or such later date as may be agreed for this purpose between the Borrower and the Bank, the Borrower shall prepare and furnish to the Bank a report, of such scope and in such detail as the Bank shall reason- ably request, on the execution and initial operation of Part A of the Project, its cost and the benefits derived and to be derived from it, the performance by the Borrower and the Bank of their respective obligations under the Loan Agreement and the accom- plishment of the purposes of the Joan. ARTICLE IV Other Covenants Section 4.01. (a) It is the policy of the Bank, in making loans to, or with the guarantee of, its members not to seek, in normal circumstances, special security from the member concerned but to ensure that no other external debt shall have priority over its loans in the allocation, realization or distribution of foreign exchange held under the control or for the' benefit of such member. To that end, if any lien shall be created on any public assets (as hereinafter defined), as security for any external debt, which will or might result in a priority for the benefit of the creditor of such external debt in the allocation, realization or distribution of foreign exchange, such lien shall, unless the Bank shall otherwise agree, ipso facto and at no cost to the Bank, equally and ratably secure the principal of, and interest and other charges on, the Loan, and the Borrower, in creating or permitting the creation of such lien, shall make express provision to that effect; provided, however, that, if for any constitutional or other legal reason such provision cannot be made with respect to any lien created on assets of any of its political or administrative subdivisions, the - 6 - Borrower shall promptly and at no cost to the Bank secure the principal of, and interest and other charges on, the Loan by an equivalent lien on other public assets satisfactory to the Bank. (b) The foregoing undertaking shall not apply to: (i) any lien created on property, at the time of purchase thereof, solely as security for payment of the purchase price of such property; and (ii) any lien arising in the ordinary course of banking transactions and securing a debt maturing not more than one year after its date. (c) As used in this Section, the term "public assets" means assets of the Borrower, of any political or administrative subdivision thereof and of any entity owned or controlled by, or operating for the account or benefit of, the Borrower or any such subdivision, including gold and other foreign exchange assets held by any institution performing the functions of a central bank or exchange stabilization fund, or similar functions, for the Borrower. Section 4.02. (a) The Borrower shall cause P&T to maintain records adequate to reflect in accordance with consistently maintained appropriate accounting practices the operations, resources and expenditures in respect of Part A of the Project. (b) The Borrower shall have the accounts of the Branch for each fiscal year cudited annually by the Comptroller and Auditor General of the -orrower. The Borrower shall transmit to the Bank for each fiscal year, provisional accounts (balance sheet and related statement of earnings and expenses) of the Branch not later than four months after the close of the fiscal year to which they relate, and within a reasonable time thereafter, certified copies of the audited statements (balance sheet and related statement of earnings and expenses) and signed copies of the auditor's reports relating to said accounts. Section 4.03. (a) The Borrower shall cause the Branch to take all measures required (including the introduction, maintenance and periodic adjustments of tariffs for telecommunications services) to realize an annual rate of return of not less than 11% on the average net value of the Branch's fixed assets in operation. (b) For the purpose of this Section: (i) the required annual rate of return shall be calcu- lated by using as the denominator in respect of -7- each fiscal year one-half of the sum of the net' value of the Branch's fixed assets in operation at the beginning and at the end of each such year and as the numerator the Branch's operating income from telecommunications services for that same year; (ii) the term "net value of the Branch's fixed assets in operation" means the gross value of such assets less accumulated depreciation, all determined in accordance with appropriate methods of valuation and depreciation acceptable to the Bank; (iii) the term "operating income" means the difference between: (A) all operating revenues accruing from telecom- munications services, excluding subscriber deposits, interest income and that portion of receipts which relates to service to be rendered in future years; and (B) all operating costs of the telecommunications services, including administrative expenses, adequate maintenance and provision for depreciation on all depreciable assets in operation, computed in accordance with the straight-line method at an average rate of not less than 4-1/2% of the gross value of such depreciable assets in operation, but excluding interest and other charges on debt and on the Borrower's contributions to P&T. Section 4.04. Except as the Borrower and the Bank may other- wise agree, the Borrower shall: (a) not later than March 31, 1980, review or cause to be reviewed, the value of the net fixed assets in operation of the Branch to determine whether, because of changes in current prices, adjustments to such value are required, and shall notify the Bank of the results of such review for its comments; and (b) based on the above, and commencing with fiscal year 1981, cause, if necessary, the value of the net fixed assets in operation of the Branch to be adjusted to the extent agreed upon between the Borrower and the Bank for purposes of calculating the rate of return specified in Section 4.03 (a) of this Agreement. - 8 - Section 4.05. (a) Unless and until the rate of return shall have been calculated as provided in Section 4.04 of this Agree- ment, the Borrower shall cause the Branch to take all measures necessary to produce each year funds from internal sources equiv- alent to not less than 60% of the annual capital expenditures of the Branch, or on the basis of realistic forecasts of such expen- ditures, during each such year. (b) For the purposes of this Section: (i) the terms "funds from internal sources" means the difference between: (A) the sum of gross revenues from all sources related to telecommunications operations; and (B) the sum of all expenses of operation, includ- ing maintenance and administration (excluding depreciation and other non-cash operating charges), interest and other charges on debt, repayment of loans (including sinking fund payments, if any), all taxes or payments in lieu of taxes, all cash distribution of surplus and any other cash outflows other than capital expenditures related to telecommuni- cations operations; and (ii) the term "capital expenditures" means all funds required on account of fixed or capital assets and for working capital purposes. Section 4.06. The Borrower shall at all times cause its telecommunications facilities to be operated and maintained and all necessary renewals and repairs thereof to be made, all in accordance with appropriate engineering practices. ARTICLE V Remedies of the Bank Section 5.01. For the purposes of Section 6.02 of the General Conditions, the following additional events are specified pursuant to paragraph (k) thereof: -9- (a) ITI, HCL or HTL shall have failed to perform any cove- nant, agreement or obligation of ITI, HCL or HTL under the Project Agreement; (b) an extraordinary situation shall have arisen which shall make it improbable that ITI, HCL or HTL will be able to perform its obligations under the Project Agreement; (c) any law pertaining to the establishment and operations of ITI, HCL or HTL, or any provision thereof, shall have been amended, suspended, abrogated, repealed or waived in such a way as to materially and adversely affect the ability of ITI, HCL or HTL to carry out the covenants, agreements and obligations set forth in the Project Agreement; and (d) the Borrower or any other authority having jurisdiction shall have taken any action for the dissolution or disestablish- ment of ITI, HCL or HTL or for the suspension of its operations. Sec Ion 5.02. For the purposes of Section 7.01 of the General Conditions, the following additional events are specified pursuant to paragraph (h) thereof: (a) the event specified in paragraph (a) of Section 5.01 of this Agreement shall occur and shall continue for a -eriod of 60 days after notice thereof shall have been given by the Bank to the Borrower and ITI, HCL or HTL; and (b) any event specified in paragraphs (c) and (d) of Section 5.01 of this Agreement shall occur. ARTICLE VI Effective Date; Termination Section 6.01. The following events are specified as addi- tional conditions to the effectiveness of the Loan Agreement within the meaning of Section 12.01 (c) of the General Conditions: (a) the Project Agreement has been duly executed on behalf of ITI, HCL and HTL; and (b) the Subsidiary Loan Agreements have been duly executed on behalf of the Borrower and each of ITI, HCL and HTL, respec- tively. Section 6.02. The following are specified as additional matters, within the meaning of Section 12.02 (c) of the General - 10 - Conditions, to be included in the opinion or opinions to be furnished to the Bank: (a) that the Project Agreement has been duly authorized or ratified by ITI, HCL and HTL, and is legally binding upon ITI, HCL and HTL in accordance with its terms; and (b) that the Subsidiary Loan Agreements have been duly authorized or ratified by the Borrower and ITI, HCL and HTL and are legally binding upon the Borrower and ITI, HCL and HTL in accordance with their terms. Section 6.03. The date September 18, 1978, is hereby speci- fied for the purposes of Section 12.04 of the General Conditions. ARTICLE VII Representatives of the Borrower; Addresses Section 7.01. Any Secretary, Additional Secretary, Joint Secretary, Director or Deputy Secretary of the Department of Economic Affairs in the Ministry of Finance of the Borrower is designated as representative of the Borrower for the purposes of Section 11.03 of the General Conditions. Section 7.02. The following addresses are specified for the purposes of Section 11.01 of the General Conditions: For the Borrower: The Secretary to the Government of India Ministry of Finance Department of Economic Affairs New Delhi, India Cable address: Telex: ECOFAIRS 953-313546 New Delhi For the Bank: International Bank for Reconstruction and Development 1818 H Street, N.W. Washington, D.C. 20433 United States of America - 11 - Cable address: Telex: INTBAFRAD 440098 (ITT) Washington, D.C. 248423 (RCA) or 64145 (WUI) IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, have caused this Agreement to be signed in their respective names in the District of Columbia, United States of America, as of the day and year first above written. INDIA By /s/ J.S. Baijal Authorized Representative INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By /s/ W. David Hopper Regional Vice President South Asia - 12 - SCHEDULE 1 Withdrawal of the Proceeds of the Loan 1. The table below sets forth the Categories of items to be financed out of the proceeds of the Loan, the allocation of the amounts of the Loan to each Category and the percentage of expenditures for items so to be financed in each Category: Amount of the Loan Allocated % of (Expressed in Expenditures Category Dollar Equivalent) to be Financed (1) For Part A of the Project: (Goods to be imported by P&T) (a) Local, trunk and telex 22,000,000 ) exchange equipment ) (b) Cable line transmis- 2,000,000 ) sion and gas pressur- ) ization equipment ) (c) Microwave radio equip- 7,500,000 ) 100% of foreign ment and accessories ) expenditures and PCM cable carriers ) and UHF and PCM radio ) equipment ) (d) Materials and equip- 3,500,000 ) ment for P&T workshops ) (e) Laboratory and testing 5,000,000 ) equipment for research, ) testing and training ) (2) For Part A of the Project: (Goods to be purchased by P&T from ITI, HCL and HTL) (a) Telephones, switch- 32,400,000 25% ing and transmission equipment manufactured by ITI - 13 - Amount of the Loan Allocated % of (Expressed in Expenditures Category Dollar Equivalent) to be Financed (b) Cable and wire manu- 27,000,000 36% factured by HCL (c) Teleprinters manufac- 600,000 6% tured by HTL (3) For Part B of the Project: (a) Testing and measuring 3,500,000 ) equipment ) (b) Production and tool 4,200,000 ) 100% of foreign room machines ) expenditures (c) Micro-circuit labora- 2,600,000 ) tory and computer ) equipment ) (4) For Part C of the Project: (a) Production machines 6,400,000 ) and equipment ) ) 100% of foreign (b) Testing and measuring 1,100,000 ) expenditures equipment ) (5) For Part D of the Project: (a) Production and 1,850,000 ) tool machines ) ) 100% of foreign (b) Research and devel- 350,000 ) expenditures opment, testing and ) measuring equipment ) TOTAL 120,000,000 - 14- 2. For the purposes of this Schedule the term "foreign expendi- tures" means expenditures in the currency of any country other than the Borrower and for goods or services supplied from the territory of any country other than the Borrower. 3. The disbursement percentages have been calculated in compli- ance with the policy of the Bank that no proceeds of the Loan shall be disbursed on account of payments for taxes levied by, or in the territory of, the Borrower on goods or services, or on the importation, manufacture, procurement or supply thereof; to that end, if the amount of any such taxes levied on or in respect of any item to be financed out of the proceeds of the Loan decreases or increases, the Bank may, by notice to the Borrower, increase or decrease the disbursement percentage then applicable to such item as required to be consistent with the aforementioned policy of the Bank. 4. Notwithstanding the provisions of paragraph 1 above, no withdrawals shall be made in respect of payments made for expendi- tures prior to the date of this Agreement. 5. Notwithstanding the allocation of an amount of the Loan or the disbursement percentages set forth in the table in paragraph 1 above, if the Bank has reasonably estimated that the amount of the Loan then allocated to any Category will be insufficient to finance the agreed percentage of all expenditures in that Category, the Bank may, by notice to the Borrower: (i) reallocate to such Category, to the extent required to meet the estimated shortfall, proceeds of the Loan which are then allocated to another Category and which in the opinion of the Bank are not needed to meet other expenditures, and (ii) if such reallocation cannot fully meet the estimated shortfall, reduce the disbursement percentage then applicable to such expenditures in order that further withdrawals under such Category may continue until all expenditures thereunder shall have been made. 6. If the Bank shall have reasonably determined that the procurement of any item in any Category is inconsistent with the procedures set forth or referred to in this Agreement, no expenditures for such item shall be financed out of the proceeds of the Loan and the Bank may, without in any way restricting or limiting any other right, power or remedy of the Bank under the Loan Agreement, by notice to the Borrower, cancel such amount of the Loan as, in the Bank's reasonable opinion, represents the amount of such expenditures which would otherwise have been eligible for financing out of the proceeds of the Loan. - 15 - SCHEDULE 2 Description of the Project The Project is to assist (a) the Borrower in carrying out P&T's telecommunications development program covering fiscal years 1979 through 1981, and (b) ITI, HCL and HTL in upgrading and expanding their manufacturing facilities. The Project consists of the following Parts: Part A: P&T (1) Provision and installation of about 340,000 lines of local telephone exchange equipment; (2) provision and installation of subscribers' cable and associated equipment which will permit the connection of about 260,000 new DELs; (3) provision and installation of about 7,500 long-distance public call offices in rural areas; (4) provision and installation of about 38,000 lines of trunk exchange equipment; (5) provision and installation of about 2,000 lines of electronic telex switching equipment; (6) provision and installation of coaxial cable line trans- mission equipment, cable pressurization equipment, microwave and UHF/VHF radio equipment and PCt carrier systems to upgrade and extend the trunk and junction network; and (7) provision and utilization of testing and laboratory equipment for P&T's Telecommunications Research Center, Training Center and Technical Development Circle. Part B: ITI (1) provision and installation of production and tool room machines to replace obsolete machines and upgrade production facilities and output at the Bangalore and Naini factories; - 16 - (2) provision and installation of modern testing and measuring equipment at the Bangalore and Naini factories to improve efficiency and quality of output; (3) provision and installation of equipment to update and expand the micro-circuit laboratory at Bangalore; and (4) provision and installation of new computing facilities for improved management and production control at Bangalore. Part C: HCL (1) provision and installation of cable production machines and plant and testing equipment to replace obsolete machines and equipment to increase output of: (a) large size telephone cables from the Rupnarainpur factory by approximately 40%; (b) small size jelly-filled distribution cable from the Hyderabad factory by approximately 100%; and (c) small diameter coaxial cable from the Rupnarainpur factory by approximately 100%; and (2) provision of research and development equipment for work on optical fiber cable technology. Part D: HTL (1) provision and installation of production and tool room machines to replace obsolete machines in the production and tool room units of the Madras factory; and (2) provision and installation of research and development, testing and measuring equipment to strengthen HTL's research and development capability. The Project is expected to be completed by September 30, 1981. - 17 - SCHEDULE 3 Amortization Schedule Payment of Principal Date Payment Due (expressed in dollars)* On each January 15 and July 15 beginning January 15, 1982 through January 15, 1998 3,530,000 On July 15, 1998 3,510,000 * To the extent that any portion of the Loan is repayable in a currency other than dollars (see General Conditions, Section 4.02), the figures in this column represent dollar equivalents determined as for purposes of withdrawal. - 18 - Premiums on Prepayment The following percentages are specified as the premiums payable on repayment in advance of maturity of any portion of the principal amount of the Loan pursuant to Section 3.05 (b) of the General Conditions: Time of Prepayment Premium Not more than three years before maturity 1.15% More than three years but not more than six years before maturity 2.25% More than six years but not more than eleven years before maturity 4.15% More than eleven years but not more than sixteen years before maturity 6.00% More than sixteen years but not more than eighteen years before maturity 6.75% More than eighteen years before maturity 7.50% - 19 - SCHEDULE 4 Procurement A. International Competitive Bidding 1. Except as provided in Part B hereof, goods shall be procured under contracts awarded in accordance with procedures consistent with those set forth in the "Guidelines for Procurement under World Bank Loans and IDA Credits" published by the Bank in March 1977 (hereinafter called the Guidelines), on the basis of interna- tional competitive bidding as described in Part A of the Guide- lines. 2. For goods to be procured on the basis of international competitive bidding, in addition to the requirements of paragraph 1.2 of the Guidelines, the Borrower, ITI, HCL or HTL, as the case may be, shall prepare and forward to the Bank as soon as possible, and in any event not later than 60 days prior to the date of availability to the public of the first tender or prequalification documents relating thereto, as the case may be, a general procure- ment notice, in such form and detail and containing such infor- mation as the Bank shall reasonably request; the Bank will arrange for the publication of such notice in order to provide timely notification to prospective bidders of the opportunity to bid for the goods and works in question. The Borrower, IT1, HCL or HTL, as the case may be, shall provide the necessary information to update such notice annually so long as any goods remain to be procured on the basis of international competitive bidding. B. Other Procurement Procedures Notwithstanding the provisions set forth in Part A.1 above: 1. Contracts for goods to be financed under Category (2) of paragraph A of Schedule 1 to this Agreement may be procured directly from ITI, HCL and HTL under terms and conditions satis- factory to the Bank. 2. With respect to any contract for the purchase of imported goods costing $100,000 equivalent or more for the production of the Category (2) goods, the Borrower shall cause ITI, HCL and HTL to: (a) invite offers from not less than three major suppliers from member countries of the Bank and Switzerland; - 20 - (b) award the contract to the supplier whose offer is the lowest evaluated offer; (c) keep all records and documents with respect to such contract, including, without limitation, the details of the offers sought, the names of the suppliers invited to submit offers, the analysis of offers, recommendations for award and conformed copies of such contract, for review by the Bank at its request; and (d) furnish to the Bank all such information as the Bank shall reasonably request regarding the per unit cost of the goods so procured. C. Review of Procurement Decisions by the Bank 1. Review of invitations to bid and of proposed awards and final contracts: With respect to all contracts for goods to be procured in accordance with Part A.1 above and estimated to cost the equiva- lent of $100,000 or more: (a) Before bids are invited, the Borrower, ITI, HCL or HTL, as the case may be, shall furnish to the Bank, 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 Bank shall reasonably request. Any further modification to the bidding documents shall require the Bank's concurrence before it is issued to the prospective bidders. (b) After bids have been received and evaluated, the Bor- rower, ITI, HCL or HTL, as the case may be, shall, before a final decision on the award is made, inform the Bank of the name of the bidder to which it intends to award the contract and furnish to the Bank, in sufficient time for its review, a detailed report on the evaluation and comparison of the bids received, and such other information as the Bank shall reasonably request. The Bank shall, if it determines that the intended award would be inconsis- tent with the Guidelines or this Schedule, promptly inform the Borrower, ITI, HCL or HTL, as the case may be, and state the reasons for such determination. - 21 - (c) The terms and conditions of the contract shall not, without the Bank's concurrence, materially differ from those on which bids were asked or prequalification invited. (d) Two confoTmed copies of the contract shall be furnished to the Bank promptly after its execution and prior to the submis- sion to the Bank of the first application for withdrawal of funds from the Loan Account in respect of such contract. 2. With respect to each contract not governed by the preceding paragraph, the Borrower, ITI, HCL or HTL, as the case may be, shall furnish to the Bank, promptly after its execution and prior to the submission to the Bank of the first application for with- drawal of funds from the Loan Account in respect of such contract, two conformed copies of such contract, together with the analysis of the respective bids, recommendations for award and such other information as the Bank shall reasonably request. The Bank shall, if it determines that the award of the contract was not consistent with the Guidelines or this Schedule, promptly inform the Bor- rower, ITI, HCL or HTL, as the case may be, and state the reasons for such determination.