Burundi - Telecommunications Project : Credit 1058 - Project Agreement - Conformed

CREDIT NUMBER 1058 BU Project Agreement (Telecommunications Project) between INTERNATIONAL DEVELOPMENT ASSOCIATION and OFFICE NATIONAL DES TELECOMMUNICATIONS Dated , 1980 CREDIT NUMBER 1058 BU PROJECT AGREEMENT AGREEMENT, dated , 1980, between INTERNATIONAL DEVELOPMENT A OCIATION (hereinafter called the Association) and OFFICE NATIONAL DES TELECOMMUNICATIONS (herein- after called ONATEL). WHEREAS by the Development Credit Agreement of even date herewith between the Republic of Burundi (hereinafter called the Borrower) and the Association, the Association has agreed to make available to the Borrower an amount in various currencies equivalent to seven million, seven hundred thousand dollars ($7,700,000), on the terms and conditions set forth in the Devel- opment Credit Agreement, but only on condition that ONATEL agree to undertake such obligations toward the Association as are hereinafter set forth; WHEREAS by a subsidiary loan agreement to be entered into between the Borrower and ONATEL, the proceeds of the Credit provided for under the Development Credit Agreement, will be made available to ONATEL on the terms and conditionsp therein set forth; and WHEREAS ONATEL, in consideration of the Association's enter- ing into the Development Credit Agreement with the Borrower, hhs 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 set forth. ARTICLE II Execution of the Project Section 2.01. ONATEL 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 prac- tices. -2- Section 2.02. In order to assist ONATEL in carrying out the Project, especially in: (i) the preparation of detailed engineer- ing plans, specifications and bidding documents; (ii) bid eval- uation; (iii) the inspection of equipment and supervision of the installation thereof, for the Project; and (iv) the preparation of accounts on a commercial basis, ONATEL shall employ a manage- ment expert, engineering consultants and a financial advisor, all of whose qualifications, experience and terms and conditions of employment shall be satisfactory to the Association. Section 2.03. Except as the Association may otherwise agree, procurement of the goods and civil works to be financed out of the proceeds of the Credit shall be governed by the provisions of the Schedule to this Agreement. Section 2.04. (a) ONATEL 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, trans- portation and delivery thereof to the place of use or installa- tion, and for such insurance any indemnity shall be payable in a currency freely usable by ONATEL to replace or repair such goods. (b) Except as the Association may otherwise agree, ONATEL 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) ONATEL shall furnish to the Associa- tion, promptly upon their preparation, the plans, specifications, contract documents and work and procurement schedules for the r Project, and any material modifications thereof or additions thereto, in such detail as the Association shall reasonably request. (b) ONATEL shall: (i) maintain records and procedures adequate to record and monitor the progress of the Project (including its cost and the benefits to be derived from it), to identify the goods and services financed out of the proceeds of the Credit, and to disclose their use in the Project; (ii) enable the Association's accredited representatives to visit the facilities and construction sites included in the Project and to examine the goods financed out of the proceeds of the Credit and any relevant records and documents; and (iii) furnish to the Association at regular intervals all such information as -3- the Association shall reasonably request concerning the Project, its cost and, where appropriate, the benefits to be derived from it, the expenditures of such proceeds 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 ONATEL and the Association, ONATEL shall prepare and furnish to the Association a report, of such scope and in such detail as the Association shall reasonably request, on the execution and initial operation of the Project, its cost and the benefits derived and to be derived from it, the performance by ONATEL and the Association of their respective obligations under the Project Agreement and the accomplishment of the purposes of the Credit. (d) ONATEL shall enable the Association's representatives to examine all plants, installations, sites, works, buildings, property and equipment of ONATEL and any relevant records and documents. Section 2.06. ONATEL shall duly perform all its obligations under the Subsidiary Loan Agreement. Except as the Association may otherwise agree, ONATEL 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) ONATEL shall, at the request of the Asso- ciation, exchange views with the Association with regard to the progress of the Project, the performance of its obligations under this Agreement and under the Subsidiary Loan Agreement, and other matters relating to the purposes of the Credit. (b) ONATEL shall promptly inform the Association of any condition which interferes or threatens to interfere with the progress of the Project, the accomplishment of the purposes of the Credit, or the performance by ONATEL of its obligations under this Agreement and under the Subsidiary Loan Agreement. ARTICLE III Management and Operations of ONATEL Section 3.01. ONATEL shall at all times manage its affairs, maintain its financial position, plan its future expansion and -4- conduct its business and undertaking, all in accordance with sound business, financial and public utility practices, and under the supervision of experienced and competent management assisted by adequate and competent staff. Section 3.02. ONATEL shall: (a) at all times take all necessary steps to maintain its existence and its right to carry on operations, and to acquire and retain all rights, powers, privileges and franchises which are necessary or useful for the purpose of complying with its obliga- tions under this Agreement or for the efficient conduct of its business and undertaking; (b) at all times operate and maintain the plants, machinery, equipment and other property owned or operated by it and promptly make all necessary repairs and renewals thereof, all in accordance with sound engineering and public utility practices; and (c) not sell, lease, transfer or otherwise dispose of any of the property or assets owned or operated by it which are necessary or useful for the efficient conduct of its business and under- taking. Section 3.03. ONATEL 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. ONATEL shall maintain records adequate to reflect in accordance with consistently maintained appropriate accounting practices its operations and financial condition and shall furnish to the Association within four months after the end of each fiscal year copies of its financial statements for such year (balance sheet, statement of income and expenses and related statements). Section 4.02. ONATEL shall: (i) have its accounts and finan- cial statements (balance sheet, statement of income and expenses and related statements) for each fiscal year audited, in accor- dance with appropriate auditing principles consistently applied, -5- 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 ONATEL and the audit thereof as the Association shall from time to time reasonably request. Section 4.03 (a) ONATEL shall: (i) in accordance with terms of reference satisfactory to the Association, undertake a study of its telecommunications rate structure and tariffs, to be completed by July 1, 1981 or such later date as may be acceptable to the Association; and (ii) discuss with the Association, not later than December 31, 1981, the economic and financial implica- tions of the execution of the recommendations made in such study. (b) ONATEL shall not change its telecommunications tariffs without a prior exchange of views with the Association. (c) Except as the Association may otherwise agree, ONATEL shall take all measures within its power (including but not limited to adjustments of its telecommunications rate structure and tariffs), as shall be necessary or appropriate to enable it to earn an annual rate of return of not less than ten per cent (10%). (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 deno- minator the average of the current values of net fixed telecommunications assets operated by ONATEL at the beginning and at the end of the year in question and, as the numerator, the operating income of ONATEL from its telecommunications operations for that year. (ii) The term "current value of net fixed telecommuni- cations 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 satisfactory to the Association. -6- (iii) The term "operating income" means the difference between operating revenue and operating expenses. (iv) the term "operating revenue" means all revenue from telecommunications operations and other revenue incidental thereto. (v) The term "operating expenses" means all direct costs of operation by ONATEL of its telecommunica- tions 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. Section 4.04. Prior to the completion of the Project, ONATEL shall not undertake any capital expenditures for telecommunica- tions, other than those provided for in the ONATEL Investment Program, exceeding the equivalent of $500,000 in any one year, unless a financing plan therefor has been agreed between the Association and ONATEL. Section 4.05. (a) ONATEL shall use funds generated by its telecommunications operations for any of its other operations, or make available such funds for any other purpose, only to the extent that such funds exceed ONATEL's financial requirements for its telecommunications operating and administrative expenses (including adequate maintenance and taxes, if any) and after adequate provision has been made for depreciation and investments, including debt service requirements, in respect of its telecommu- nications 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. (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 4.06. (a) Not later than December 31, 1980, ONATEL shall furnish to the Association a plan containing a method for the revaluation of its fixed assets. -7- (b) Upon discussions with and approval by the Association on the method contained in the plan referred to in paragraph (a) hereof, ONATEL shall employ such method for the revaluation of its fixed assets and shall not change the method without prior discus- sions with the Association. Section 4.07. Except as the Association may otherwise agree, ONATEL 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 a ovision 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. 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 ONATEL 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 Agree- ment. (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 ONATEL of this event. Section 5.03. All the provisions of this Agreement shall continue in full force and effect notwithstanding any cancellation or suspension under the General Conditions. -8- ARTICLE VI Miscellaneous Provisions Section 6.01. Any notice or request required or permitted to be given or made under this Agreement and any agreement between the parties contemplated by this Agreement shall be in writing. Such notice or request shall be deemed to have been duly given or made when it shall be delivered by hand or by mail, telegram, cable, telex or radiogram to the party to which it is required or permitted to be given or made at such party's address herein- after 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: Telex: INDEVAS 440098 (ITT) Washington, D.C. 248423 (RCA) or 64145 (WUI) For ONATEL: Office National des Telcommunications B.P. 60 Bujumbura Republique du Burundi Cable address: Telex: ONATEL BDI 82 BUJA Bujumbura Section 6.02. Any action required or permitted to be taken, and any document required or permitted to be executed, under this Agreement on behalf of ONATEL or by ONATEL on behalf of the Borrower pursuant to the Development Credit Agreement may be taken or executed by the Director General of ONATEL or such other person -9- or persons as such Director General shall designate in writing, and ONATEL shall furnish to the Association sufficient evidence of the authority and the authenticated specimen signature of such person. Section 6.03. This Agreement may be executed in several counterparts, each of which shall be an original, and all collec- tively 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 in the District of Columbia, United States of America, as of the day and year first above written. INTERNATIONAL DEVELOPMENT ASSOCIATION By Regional Vice President Eastern Africa OFFICE NATIONAL DES TELECOMMUNICATIONS By Authorized Representative - 10 - SCHEDULE Procurement A. International Competitive Bidding 1. Except as provided in Part B hereof, goods and civil works 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 international competitive bidding as described in Part A of the Guidelines. 2. For goods and works to be procured on the basis of inter- national competitive bidding, in addition to the requirements of paragraph 1.2 of the Guidelines, ONATEL shall prepare and forward to the Association 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 procurement notice, in such form and detail and containing such information as the Association shall reasonably request; the Association will arrange for the publica- tion of such notice in order to provide timely notification to prospective bidders of the opportunity to bid for the goods and works in question. ONATEL shall provide the necessary information to update such notice annually so long as any goods or works remain to be procured on the basis of international competitive bidding. 3. For the purpose of evaluation and comparison of bids for the supply of goods to be procured on the basis of international competitive bidding: (i) bidders shall be required to state in their bid the c.i.f. (port of entry) price for the imported goods, or the ex-factory price or off-the-shelf price of other goods, offered in such bid; and (ii) customs duties and other import taxes levied in connection with the importation, or the sales and similar taxes levied in connection with the sale or delivery, pursuant to the bid, of the goods shall not be taken into account in the evaluation of the bids. B. Other Procurement Procedures 1. Contracts for the supply of vehicles and sundry equipment estimated to cost the equivalent of less than $50,000 may be - 11 - awarded in accordance with the Borrower's applicable procurement procedures, provided, however, that, unless the Association shall otherwise agree, the aggregate amount of the contracts so awarded shall not exceed the equivalent of $500,000. 2. Contracts for the supply of equipment to be installed in the existing Bujumbura local and telex exchanges may be awarded on the basis of price quotations from suppliers capable of providing equipment compatible with existing equipment. The awarding of any such contract shall be subject to prior approval by the Associa- tion. 3. Civil works for the construction of buildings and access roads may be carried out by force account by ONATEL. 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 for equipment estimated to cost the equivalent of $50,000 or more: (a) Before bids are invited, ONATEL 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 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, ONATEL shall, before a final decision on the award is made, inform the Association 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 on the evalu- ation and comparison of the bids received, and such other infor- mation as the Association shall reasonably request. The Associa- tion shall, if it determines that the intended award would be inconsistent with the Guidelines or this Schedule, promptly inform ONATEL and state the reasons for such determination. - 12 - (c) The terms and conditions of the contract shall not, without the Association's concurrence, materially differ from those on which bids were asked or prequalification invited. (d) Two conformed copies of the contract shall be furnished to the Association promptly after its execution and prior to the submission to the Association of the first application for withdrawal of funds from the Credit Account in respect of such contract. 2. With respect to each contract not governed by the preceding paragraph 1, ONATEL shall furnish to the Association, promptly after its execution and prior to the submission to the Association of the first application for withdrawal of funds from the Credit 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 Association shall reasonably request. The Association shall, if it determines that the award of the contract was not consistent with the Guidelines or this Schedule, promptly inform ONATEL and state the reasons for such determination. INTERNATIONAL DEVELOPMENT ASSOCIATION CERTIFICATE I hereby certify that the foregoing is a true copy of the original in the archives of the Interna- tional Development Association. In witness whereof I have signed this Certifi- cate and affixed the Seal of the Association thereunto the Z day of 198 0. FOR SECRETARY