Upper Volta - Third Telecommunications Project : Credit 1235 - Project Agreement - Conformed

CREDIT NUMBER UW V DOCUM=1TS Project Agreement (Third Telecommunications Project) between INTERNATIONAL DEVELOPMENT ASSOCIATION and OFFICE DES POSTES ET TELECOMMUNICATIONS DE HAUTE VOLTA Dated 6 , 1982 CREDIT NUMBER 8 UV PROJECT AGREEMENT AGREEMENT, dated -1 - , 1982, between INTERNATIONAL DEVELOPMENT AS OCIATION (hereinafter called the Association) and OFFICE DES POSTES ET TELECOMNUNICATIONS 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 fourteen million nine hundred thousand Special Drawing Rights (SDR 14,900,000), 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 are hereinafter set forth; WHEREAS by a Subsidiary Loan Agreement to be entered into 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; 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 set forth. 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, -2- with due diligence and efficiency and in conformity with appro- priate administrative, financial, and engineering and public utility practices. Section 2.02. In order to assist the Office in the evaluation of bids, the supervision of construction, installation and erec- tion and in carrying out Parts F and G of the Project, the Ofrice shall employ engineering and management consultants or experts whose selection, qualifications, experience and terms and condi- tions of employment shall be satisfactory to the Association in accordance with the principles and procedures described in the "Guidelines for the Use of Consultants by World Bank Borrowers and by the World Bank as Executing Agency" published by the Bank in August 1981. Section 2.03. Except as the Association shall 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) 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, 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 the Office to replace or repair such goods. (b) Except as the Association may otherwise agree, the Office 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) The Office shall furnish to the Associa- tion, 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 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 -3- of the Credit, and to disclose their use in the Project; (ii) shall enable the Association's 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) shall furnish to the Association at regular intervals all such information as 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) Upon the award by the Office of any contract for goods, works or services to be financed out of the proceeds of the Credit, the Association may publish a description thereof, the name and nationality of the party to whom the contract was awarded and the contract price. (d) 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 Office and the Association, the Office 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 the Office and the Association of their respective obligations under the Project Agreement and the accomplishment of the purposes of the Credit. (e) The Office shall enable the Association's representa- tives to examine all plants, installations, sites, works, build- ings, property and equipment of the Office and any relevant records and documents. Section 2.06. The Office shall duly perform all its obliga- tions under the Subsidiary Loan Agreement. Except as the Associa- tion 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 provi- sion thereof. Section 2.07. (a) The Office shall at the request of the Association, exchange views with the Association with regard to the progress of the Project, the performance of its obligations -4- under this Agreement or under the Subsidiary Loan Agreement and other matters relating to the purposes of the Credit. (b) The Office 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 the Office of its obligations under this Agreement or under the Subsidiary Loan Agreement. Section 2.08. The Office shall carry out the Management Improvement Program included in Part G of the Project under terms of reference and pursuant to a time schedule agreed with the Association and shall complete the review of its tariff structure included in such Part G by December 31, 1982. ARTICLE III Management and Operations of the Office Section 3.01. 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. Section 3.02. (a) The Office shall at all times manage its affairs, maintain its financial position and carry on its tele- communications operations, in accordance with sound business, financial and public utility practices and under the supervision of qualified and experienced management. (b) December 31, 1982, the Office shall make such organiza- tion changes as shall be satisfactory to the Association, includ- ing providing for separate Deputy Directors General for telecom- munication operations and for postal and financial operations and shall fill such positions with qualified and experienced person- nel. (c) Before appointing a Director General, Deputy Director General, Chief Financial Officer or Chief Engineer for its tele- communications 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 appointment. - 5 - Section 3.03. Prior to the completion of the Project, the Office shall not increase the number of its permanent staff above the level existing at tha end of 1980 nor increase in real terms its budget for temporary staff above that for 1981. 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 shall: (i) have its accounts and financial statements (balance sheets, statements of income and expenses and related statements) for each fiscal year audited, in accordance with appropriate 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 Associa- tion 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 4.03. The Office shall repay to the Postal Checking Account System in equal annual instalments over the period from 1983 to 1992 the amount of CFAF 2,427,000,000 used by the telecom- munications branch since 1975 and no funds from such system shall be used by the office prior to the completion of the Project. Section 4.04. The Office shall not, without the prior approval of the Association, undertake in any one year any capital investment outside its 1982-1986 investment program exceeding the equivalent of $1,000,000. Section 4.05. Except as the Assocation shall otherwise agree, the Office shall take such steps as shall be necessary, including the maintenance of a telecommunications rate and tariffs struc- ture to provide to the Office revenue sufficient to produce an annual rate of return of not less than 13% as from January 1, 1983 and 15% as from January 1, 1984. For the purposes of this Section: - 6 - (a) The annual rate of return shall be calculated in respect of each fiscal year by using as the denominator the average of the current values of net fixed telecommunications assets operated 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. (b) The term "current value of net fixed telecommunications assets" means the gross value of fixed telecommunications assetr as revalued from time to time, less accumulated depreciation, based on appropriate valuation and depreciation methods satis- factory to the Associatioh. (c) The term "operating income" means the difference between operating revenue and operating expenses. (d) The term "operating revenue" means all revenue from telecommunications operations and other rvevie incidental thereto. (e) The term "operating expenses" means all direct costs of operation by the Office of its telecommunications facilities, including a reasonable portion of overhead costs, adequate main- tenance expenses, and an adequate provision for depreciation and taxes, but excluding interest and other charges on debt. 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 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 and includes the amount repayable to the Postal Checking Account System under Section 4.03. above. - 7 - Section 4.07. (a) Except as the Association shall otherwise agree the Office shall not incur any debt for its telecommunica- tions operations, other than pursuant to the SubsLdiary Loan Agreement, unless its net revenue 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 and of the debt to be incurred. (b) 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 in- cludes 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. (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 Borrower, if any, but before provision for depre- ciation 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 8 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) "Operating expenses" means all operating and administrative expenses, including provision for taxes, if any, but before provision for deprecia- tion and interest and other charges on debt. (c) The provisions of this Section supersede any prior agreement between the Association and the Office on the limitation of the debt of the Office. 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 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 twenty-one 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. Section 5.03. All the provisions of this Agreement shall con- tinue in full force and effect notwithstanding any cancellation or suspension under the General Conditions. - 9 - 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, talex 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 des- ignated 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) 64145 (WUI) or 197688 (TRT) For the Office: Office des Postes et Telecommunications Ouagadougou Upper Volta Cable address: Telex: DIRPOSTEL 5200 UV Quagadougou 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 the Office or by the Office on behalf - 10 - of the Borrower under the Development Credit Agreement may be taken or executed by its Director General or such other person or persons as he shall designate in writing, and the Office shall furnish to the Association sufficient evidence of the authority and the authenticated specimen signature of each such person. Section 6.03. 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 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 Western Africa OFFICE DES POSTES ET TELECOMMUNICATIONS DE HAUTE VOLTA By Authorized Representative - 11 - SCHEDULE Procuremnt A. International Competitive Bidding 1. Except as provided in Part C of this Schedule goods and civil works shall be procured under contracts awarded in accordance with procedures consistent with those set forth in the current edition of 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, the Office 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 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 Office 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 goo.ds 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; (ii) cLstoms 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; and (iii) the cost of inland freight and other expenditures incidental to the delivery of the goods to the place of their use or installation shall be included. - 12 - B. Preference for Domestic Contractors With respect to the evaluation of bids for any contract for civil works included under Category (1) of the table set forth in Schedule 1 to the Development Credit Agreement and to be procured in accordance with the procedures described in Part A of this Schedule, the Office may grant a margin of preference of 7-1/2% to domestic contractors, in accordance with, and subject to, the following provisions: 1. Contractors applying for such preference shall be asked to provide, as part of the data for qualification, such informa- tion, including details of ownership, as shall be required to determine whether, according to the classification established by the Borrower and accepted by the Association, a particular firm or group of firms qualifies for a domestic preference. The bidding documents shall clearly indicate the preference and the method that will be followed in the evaluation and comparison of bids to give effect to such preference. 2. After bids have been received and reviewed by the Office, responsive bids will be classified into the following groups: (i) bids offered by domestic contractors eligible for preference; and (ii) bids offered by other contractors. For the purpose of evaluation and comparison of bids an amount equal to 7-1/2% of the bid amount shall be added to bids received under group (ii) above. C. Other Procurement Procedures Vehicles and tools which, after grouping for the purpose of inviting bids, form lots of a value estimated to be less than $40,000 equivalent, may be procured following the competitive bidding procedures of the Borrower. D. Review of Procurement Decisions by the Association Review of invitations to bid and of proposed awards and final contracts: - 13 - 1. With respect to all contracts estimated to cost the equiva- lent of $100,000 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 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, the Office 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, by the consul- tants 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 such other information as the Association shall reasonably request. The Association shall, if it determines that the intended award would be inconsistent with the Guidelines or this Schedule, promptly inform the Office and state the reasons for such determination. (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 submission to the Association of the first application for with- drawal of funds from the Credit Account in respect of such con- tract. 2. With respect to each contract not governed by the preceding paragraph 1, the Office 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 - 14 - the Guidelines or this Schedule, promptly inform the Office and state the reasons for such determination. 3. Before agreeing to any material modification or waiver of the terms and conditions of a contract, or granting an extension of the stipulated time for performance of such contract, or issuing any change order under such contract (except in cases of extreme urgency) which would increase the cost of the contract by more than 15% of the original price, the Office shall inform the Association of the proposed modification, waiver, extension or change order and the reasons therefor. The Association, if it determines that the proposal would be inconsistent with the provisions of this Agreement, shall promptly inform the Office and state the reasons for its 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 day of dV , 198 2 FOR SECRETARY