Uganda - Posts And Telecommunications Rehabilitation Project : Credit 1367 - Credit Agreement - Conformed

S0U N REDIT NUMBER 1367 UG Development Credit Agreement (Posts and Telecommunications Rehabilitation Project) between REPUBLIC OF UGANDA and INTERNATIONAL DEVELOPMENT ASSOCIATION Dated , 1983 CREDIT NUMBER 1367 UG DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated g, 1983, between REPUBLIC OF UGANDA (hereinaft r called the Borrower) and INTERNATIONAL DEVELOPMENT ASSOCIATION (hereinafter called the Association). ARTICLE I General Conditions; Definitions Section 1.01. The parties to this Agreement accept all the provisions of the General Conditions Applicable to Development Credit Agreements of the Association, dated June 30, 1980, with the same force and effect as if they were fully set forth herein (said General Conditions Applicable to Development Credit Agreements of the Association 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 have the respective meanings therein set forth and the following additional terms have the following meanings: (a) "UPTC" means the Uganda Posts and Telecommunications Corporation established pursuant to Decree No. 15 of 1977 of the Borrower to be responsible on a caretaker basis for the affairs of the East African Posts and Telecommunications Corporation and any successor to UPTC; and (b) "Subsidiary Loan Agreement" means the agreement to be entered into between the Borrower and UPTC pursuant to Section 3.01 (c) of this Agreement, as the same may be amended from time to time and such term includes all schedules to the Subsidiary Loan Agreement. ARTICLE II The Credit Section 2.01. The Association agrees to lend to the Borrower, on the terms and conditions in the Development Credit Agreement set forth or referred to, an amount in various currencies equivalent to twenty million four hundred thousand Special Drawing Rights (SDR 20,400,000). - 2 - Section 2.02. The amount of the Credit may be withdrawn from the Credit Account in accordance with the provisions of Schedule 1 to this Agreement, as such Schedule may be amended from time to time by agreement between the Borrower and the Association, for expenditures made (or, if the Association shall so agree, to be made) in respect of the reasonable cost of goods and services required for the Project and to be financed out of the proceeds of the Credit. Section 2.03. Except as the Association shall otherwise agree, procurement of the goods and civil works required for the Project and to be financed out of the proceeds of the Credit shall be governed by the provisions of Schedule 3 to this Agree- ment. Section 2.04. The Closing Date shall be June 30, 1987, or such later date as the Association shall establish. The Association shall promptly notify the Borrower of such later date. Section 2.05. (a) The Borrower shall pay to the Association a commitment charge at the rate of one-half of one per cent (1/2 of 1%) per annum on the principal amount of the Credit not with- drawn from time to time. The commitment charge shall accrue from a date sixty days after the date of the Development Credit Agree- ment to the respective dates on which amounts shall be withdrawn by the Borrower from the Credit Account or shall be cancelled. (b) The commitment charge shall be paid: (i) at such places as the Association shall reasonably request; (ii) without restrictions of any kind imposed by, or in the territory of, the Borrower; and (iii) in the currency specified in this Agreement for the purposes of Section 4.02 of the General Conditions or in such other eligible currency or currencies as may from time to time be designated or selected pursuant to the provisions of that Section. Section 2.06. The Borrower shall pay to the Association a service charge at the rate of three-fourths of one per cent (3/4 of 1%) per annum on the principal amount of the Credit withdrawn and outstanding from time to time. Section 2.07. Commitment charges and service charges shall be payable semiannually on April 15 and October 15 in each year. -3- Section 2.08. The Borrower shall repay the principal amount of the Credit in semiannual installments payable on each April 15 and October 15 commencing October 15, 1993, and ending April 15, 2033, each installment to and including the installment payable on April 15, 2003, to be one-half of one per cent (1/2 of 1%) of such principal amount, and each installment thereafter to be one and one-half per cent (1-1/2%) of such principal amount. Section 2.09. The currency of the United States of America is hereby specified for the purposes of Section 4.02 of the General Conditions. ARTICLE III Execution ef the Project Section 3.01. (a) The Borrower shall carry out the Project through UPTC with due diligence and efficiency and in conformity with appropriate administrative, financial, engineering, postal and telecommunications 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 this Agreement, the Borrower shall take all necessary action within its powers so that by September 30, 1983, or such later date as shall be agreed between the Borrower and the Association, UPTC shall have been established as a public utility operating, inter alia, on the basis of the principle of full cost recovery from tariffs for its operations and future investments and with clearly defined responsibilities, including the power to borrow funds both in Uganda and abroad for the purpose of its operations. (c) The Borrower shall make available to UPTC, all the proceeds of the Credit under terms and conditions satisfactory to the Association provided, however, that as soon as UPTC is established in the manner described in the preceding paragraph (b), but in any event not later than three months thereafter, the Borrower shall relend the proceeds of the Credit to UPTC under a subsidiary loan agreement to be entered into between the Borrower and UPTC under terms and conditions which shall have been approved by the Association, which shall include repayment of principal in 15 years, including 3 years of grace, interest at a rate of 15% per annum and UPTC bearing the foreign exchange risk, such terms to be made effective as of the Effective Date of this Agreement. -4- (d) The Borrower shall exercise its rights under the Subsidiary Loan Agreement in such manner as to protect the interests of the Borrower and the Association and to accomplish the purposes of the Credit, and, except as the Borrower and the Association shall otherwise a3ree, the Borrower shall not assign, amend, abrogate or waive the Subsidiary Loan Agreement or any provision therof. (e) After UPTC is established in the manner described in paragraph (b) of this Section, and not later than three months after completion of the report of the financial consultants referred to in Section 3.02 (c) of this Agreement, the Borrower shall transfer all postal and telecommunication properties or assets owned by it to UPTC in consideration for UPTC's obligatory annual transfer of dividends to the Borrower, which shall not be less than the Borrower's service payments on debts related to the aforementioned postal and telecommunications properties or assets. Section 3.02. (a) In order to assist the Borrower and UPTC in the implementation of the Project and the carrying out of Part E.2 of the Project, the Borrower shall cause UPTC to employ project implementation, postal, transport and stores experts. (b) In order to assist UPTC in the carrying out of Part D.3 of the Project, the Borrower shall cause UPTC to employ tele- communication training experts. (c) In order to assist UPTC in carrying out Part E.1 of the Project, the Borrower shall cause UPTC to employ financial consultants. (d) In order to assist the Finance and Accounting Depart- ment of UPTC, the Borrower shall cause UPTC to employ three financial experts, who shall take up their posts by not later than September 30, 1984. (e) In order to assist UPTC in carrying out Part E.3 of the Project, the Borrower shall cause UPTC to employ digital network planning and digital switching experts. (f) In order to assist UPTC in carrying out Part E.4 of the Project, the Borrower shall cause UPTC to employ urban telephone network planning and design experts. - 5 - (g) The qualifications, experience and terms and conditions of employment of the consultants and experts referred to in the preceding paragraphs of this Section shall be satisfactory to the Association, and such consultants and experts shall be selected in accordance with principles and procedures satisfactory to the Association on the basis of the "Guidelines for the Use of Con- sultants by World Bank Borrowers and by the World Bank as Executing Agency" published by the Bank in August 1981. Section 3.03. The Borrower shall take all necessary action required for the prompt issuance to UPTC of such import licenses, custom clearances and all other approvals required under the laws of the Borrower to ensure the timely acquisition and importation of the equipment and materials required for the execution of the Project. Section 3.04. (a) The Borrower undertakes, or shall cause UPTC to undertake, to insure, or make adequate provision for the insurance of, the imported goods to be financed out of the proceeds of the Credit against hazards incident to the acquisition, transportation 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) The Borrower shall cause all goods and services financed out of the proceeds of the Credit to be used exclusively for the purposes of the Project. Section 3.05. (a) The Borrower shall furnish or cause UPTC to 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 modi- fications thereof or additions thereto, in such detail as the Association shall reasonably request. (b) The Borrower: (i) shall maintain or cause UPTC to 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) shall enable the Association's represen- tatives 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; -6- and (iii) shall furnish or cause UPTC to furnish to the Associa- tion at regular intervals all such information as the Association shall reasonably request concerning the Project, its cost and, where appropriate, the benefits to De derived from it, the expenditure of the proceeds of the Credit and the goods and services financed out of such proceeds. (c) Upon the award by the Borrower or UPTC 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 Borrower and the Association, the Borrower 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 Bor- rower and the Association of their respective obligations under the Development Credit Agreement and the accomplishment of the purposes of the Credit. Section 3.06. Notwithstanding the generality of the pro- visions of Section 3.05 (b) (iii) of this Agreement, the Borrower shall cause UPTC to furnish semiannually beginning September 30, 1983, and thereafter on March 31, and September 30 of each year until the Closing Date, a statement comparing actual performance for such year and projected achievement for subsequent years against the performance indicators set forth in Schedule 4 to this Agreement. Section 3.07. The Borrower shall cause UPTC by not later than December 31, 1984, to prepare and furnish to the Associa- tion, on terms of reference satisfactory to the Association, a ten-year program for the development of rural telecommunications and postal services within Uganda. In the preparation of such program, the Borrower shall cause UPTC to use personnel whose qualifications and experience shall be satisfactory to the Association. Section 3.08. Not later than June 30, 1985, the Borrower shall, in consultation with the Association: (i) review the -7- tariffs charged by UPTC and UPTC's contribution to the Borrower's resources; (ii) identify tariff adjustments which may be made without further analysis; and (iii) establish terms of reference for a detailed tariff study. ARTICLE IV Other Covenants Section 4.01. (a) The Borrower shall cause UPTC to maintain records adequate to reflect in accordance with consistently main- tained appropriate accounting practices its operations and finan- cial condition, including without limitation to the foregoing, separate accounts reflecting the operations, resources and expenditures, in respect of the Project. (b) The Borrower shall cause UPTC to: (i) have its accounts and financial statements (balance sheets, statements of income and expenses and related statements) for each financial 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 avail- able, 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 Associa- tion shall have reasonably requested, including, without limita- tion to the foregoing, a separate opinion by said auditors on the separate accounts referred to in paragraph (a) of this Section; and (iii) furnish to the Association such other information con- cerning the accounts and financial statements of UPTC and the audit thereof as the Association shall from time to time reason- ably request. (c) Notwithstanding paragraph (b) of this Section, the Borrower shall cause UPTC to furnish the financial statements and reports and other information referred to in sub-paragraphs (ii) and (iii) of that Section, by not later than twelve months after the end of the 1983 financial year, ten months after the end of the 1984 financial year and nine months after the end of the 1985 financial year. Section 4.02. The Borrower shall cause UPTC: (a) to take out and maintain with responsible insurers, or to make other provision satisfactory to the Association for, - 8 - insurance against such risks and in such amounts as shall be con- sistent with appropriate practice; (b) to carry on its operations and conduct its affairs in accordance with sound administrative, financial, engineering, postal and telecommunications practices under the supervision of qualified and experienced management; (c) at all times to operate and to maintain its plants, machinery, equipment and other property, and from time to time, promptly as needed, to make all necessary repairs and renewals thereof, all in accordance with sound engineering, financial, postal and telecommunications practices; and (d) as from June 30, 1984, or such earlier date as the consultants referred to in Section 3.02 (c) of this Agreement shall have completed the preparation of the statements of affairs of UPTC as at December 31, 1982, to use such statement of affairs as the basis for the maintenance of UPTC's accounting records and the preparation of the accounts and financial statements required pursuant to the provisions of this Article. Section 4.03. Until the Closing Date, the Borrower shall not undertake, and shall take all necessary action not to permit UPTC to undertake, any investments in the postal and telecommunica- tions sector over and above those included in the Borrower's investment program for UPTC estimated to cost in the aggregate five million dollars ($5,000,000) equivalent without prior agree- ment with the Association on the financing and implementation plan in respect of such investment or investments, as the case may be. For the purposes of this Section, the "Borrower's invest- ment program for UPTC" means the investment program agreed to between the Borrower and the Association for the 1982-87 fiscal years, which includes an aggregate proposed expenditure of $114,600,000 equivalent (inclusive of price contingencies and 5% physical contingencies for non-Project items). Section 4.04. Except as the Borrower and the Association shall otherwise agree, the Borrower shall cause UPTC: (i) by no later than September 30, 1984 to prepare and furnish to the Borrower and the Association for their approval a method for the revaluation of its fixed postal and telecommunication assets in operation (as such term is defined in Section 4.05 of this Agreement) operated by UPTC; - 9 - (ii) upon approval of such method by the Borrower and the Association, to revalue the fixed postal and telecommunication assets in operation as of June 30, 1984, in accordance with such method of revaluation; (iii) thereafter to revalue annually, on the basis of such methods, the fixed postal and telecommunica- tions assets in operation as at the end of each subsequent financial year; (iv) to utilize only the revalued fixed telecommunica- tions assets referred to in the preceding para- graphs in the calculation of the annual rate of return, as such term is defined in Section 4.05 of this Agreement. Section 4.05. (a) Except as the Borrower and the Association shall otherwise agree, the Borrower shall take all necessary steps as shall be necessary, including the establishment and maintenance of tariffs for telecommunications services, to enable UPTC to produce an annual rate of return of not less than 12% on the revalued net fixed telecommunication assets in operation. (b) For the purposes of this Section: (i) the annual rate of return shall be calculated by relating the net telecommunications operating income for the year in question to the average of revalued net fixed telecommunications assets in operation at the beginning and at the end of that year; (ii) the term "net telecommunications operating income" shall mean the difference between: (A) gross operating revenue accruing from UPTC's telecommunications services; and (B) the operating, maintenance and administration expenses, taxes (if any) and adequate pro- vision for depreciation on revalued fixed assets in operation, but excluding interest and other charges on debt, all related to telecommunications services; and - 10 - (iii) the term "revalued net fixed telecommunications assets in operation" shall mean the gross book value of fixed assets used by UPTC for telecom- munications services, less the amount of accumu- lated depreciation, as valued and revalued from time to time in accordance with sound and consis- tently maintained methods of valuation acceptable to the Association. Section 4.06. Except as the Borrower and the Association shall otherwise agree: .) the Borrower shall, from time to time take, or cause to be taken, all such measures (including, without limitation, adjustment of the structure or levels of its postal and telecom- munications tariffs) as shall be required for UPTC to produce, for each financial year beginning from the 1983 fiscal year, funds from internal sources equivalent to not less than 30% of the annual capital expenditures incurred in the posts and telecommunications sector; (b) two months before the end of each UPTC's financial year, the Borrower or UPTC shall, on the basis of forecasts prepared by the Borrower or UPTC and satisfactory to the Association, review the adequacy of its tariffs to meet the requirement set forth in the preceding paragraph (a) in respect of such year and shall furnish to the Association a copy of such review upon its completion; (c) for the purposes of this Section: (i) the term "funds from internal sources" means the difference between: (1) the sum of gross revenues from all sources related to postal and telecommunications operations, consumer deposits and cash consu- mer contributions in aid of construction, net non-operating income and any reduction in non-cash working capital, and (2) the sum of all expenses of postal and telecommunications operations, including maintenance and administration (excluding depreciation and other non-cash operating - 11 - charges), interest and other charges on debt (excluding interest financed under a loan contract), repayment of loans (including sinking fund payments, if any), all taxes or payments in lieu of taxes, all cash dividends and other cash distributions of surplus, increase in net working capital other than cash, and any other cash outflows other than cash expenditures related to postal and tele- communications operations, and (ii) the term "capital expenditures" means all expendi- tures incurred on account of fixed or capital assets, including interest charged to construc- tion, related to postal and telecommunications operations. ARTICLE V Remedies of the Association Section 5.01. For the purposes of Section 6.02 of the Gen- eral Conditions, the following additional event is specified pur- suant to paragraph (h) thereof: (a) the Borrower shall have taken any action for the disso- lution or disestablishment of UPTC, as established in the manner set forth in Section 3.01 (b) of this Agreement; and (b) the Borrower shall have taken any action in connection with the assets or liabilities of the East African Posts and Telecommunications Corporation or the External Telecommunication Company Limited which, in the Association's reasonable opinion, is inconsistent with the Letter Agreement dated January 25, 1978, among the Borrower, the Republic of Kenya, the United Republic of Tanzania and the Bank. Section 5.02. For the purposes of Section 7.01 of the Gen- eral Conditions, the following additional event is specified pursuant to paragraph (d) thereof, namely, that any event speci- fied in Section 5.01 (b) of this Agreement shall occur and shall continue for a period of 60 days after notice thereof shall have been given by the Association to the Borrower. - 12 - ARTICLE VI Effective Date; Termination Section 6.01. The following events are specified as addi- tional conditions to the effectiveness of the Development Credit Agreement within the meaning of Section 12.01 (b) of the General Conditions: (a) the contracts between UPTC and the consultants selected pursuant to the provisions of Section 3.02 (c) of this Agreement shall have been executed; (b) the Borrower or UPTC shall have entered into agrecments with the International Telecommunications Union and the Universal Postal Union for the employment of the experts referred to in Section 3.02 (a), (b), (e) and (f) of this Agreement; and (c) the Borrower shall have promulgated revised interna- tional tari.fs satisfactory to the Association. Section 6.02. The date, Octo-Ow-i 13( 1993 , is hereby specified for the purposes of Section 12.04 of the General Condi- tions. Section 6.03. The obligations of the Borrower under Sections 4.04, 4.05 and 4.06 of this Agreement and the provisions of Section 5.02 of this Agreement shall cease and determine on the date on which the Development Credit Agreement shall terminate or on a date 15 years after the date of this Agreement, whichever shall be the earlier. ARTICLE VII Representatives of the Borrower; Addresses Section 7.01. The Minister of the Borrower at the time responsible for Finance is designated as representative of the Borrower for the purposes of Section 11.03 of the General Conditions. Section 7.02. The following addresses are specified for the purposes of Section 11.01 of the General Conditions: - 13 - For the Borrower: Secretary to the Treasury Ministry of Finance P.O. Box 8147 Kampala, Uganda Cable address: Telex: FINSEC 61170 Kampala For the Association: International Development Association 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: Telex: INDEVAS 440098 (ITT) Washington, D.C. 248423 (RCA) or 64145 (WUI) IN WITNESS WHEREOF, the parties hereto, acting through their 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. REPUBLIC OF UGANDA By 7Att. Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION By 6A9& 57 &r Regional VCce President Eastern Africa - 14 - SCHEDULE 1 Withdrawal of the Proceeds of the Credit 1. The table below sets forth the Categories of items to be financed out of the proceeds of the Credit, the allocation of the amounts of the Credit to each Category and the percentage of expenditures for items so to be financed in each Category: Amount of the Credit Allocated % of (Expressed in Expenditures Category SDR Equivalent) to be Financed (1) Telecommunications 10,390,000 100% of foreign equipment, materials expenditures, and spare parts 100% of local ex- under Parts A, penditures (ex- D and F of the factory cost) Project and 75% of local expenditures for other items procured locally (2) Vehicles, equip- 3,620,000 100% of foreign ment, machinery, expenditures, tools, spare parts, 100% of local ex- postal materials penditures (ex- and other mate- factory cost) and rials under Parts 75% of local B, C, D and F expenditures for of the Project other items pro- cured locally (3) Consultants' 3,620,000 100% of foreign services, expenditures technical assistance and training (4) Unallocated 2,770,000 TOTAL 20,400,000 - 15 - 2. For the purposes of this Schedule: (a) the term "foreign expenditures" means expenditures in the currency of any country other than that of the Borrower for goods or services supplied from the territory of any country other than that of the Borrower; and (b) the term "local expenditures" means expenditures in the currency of the Borrower or for goods or services supplied from the territory of the Borrower. 3. The disbursement percentages have been calculated in com- pliance with the policy of the Association that the proceeds of the Credit shall not 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; on this basis, if the amount of any such taxes levied on or in respect of items in any Category decreases or increases, the Association may, by notice to the Borrower, increase or decrease the disbursement percentage then applicable to such Category as required to be consistent with the aforemen- tioned policy of the Association. 4. Notwithstanding the provisions of paragraph 1 above, no withdrawals shall be made in respect of expenditures made prior to the date of this Agreement. 5. Notwithstanding the allocation of an amount of the Credit or the disbursement percentages set forth in the table in para- graph 1 above, if the Association has reasonably estimated that the amount oi the Credit then allocated to any Category will be insufficient to finance the agreed percentage of all expenditures in that Category, the Association may, by notice to the Borrower: (i) reallocate to such Category, to the extent required to meet the estimated shortfall, proceeds of the Credit which are then allocated to another Category and which, in the opinion of the Association, 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 expen- ditures in order that further withdrawals under such Category may continue until all expenditures thereunder shall have been made. 6. If the Association shall have reasonably determined that the procurement of any item in any Category is inconsistent with the - 16 - procedures set forth or referred to in this Agreement, no expenditure for such item shall be financed out of the proceeds of the Credit, and the Association may, without in any way restricting or limiting any other right, power or remedy of the Association under the Development Credit Agreement, by notice to the Borrower, cancel such amount of the Credit as, in the Asso- ciation's reasonable opinion, represents the amount of such expenditures which would otherwise have been eligible for financing out of the proceeds of the Credit. - 17 - SCHEDULE 2 Description of the Project The Project is designed to rehabilitate the telecommunica- tions and postal services in Uganda and is part of the Borrower's investment program for UPTC for the years 1982-87. It includes the following parts: Part A: Telecommunications Services 1. Installation of 2 new 1,000 line container telephone ex- changes, including ancillary equipment, such as manual switch- board, air conditioning and a power plant. 2. Rehabilitation and extension of the existing crossbar exchanges in Jinja, Entebbe, Mengo, Fort Portal, Kakira and Lugazi, including the provision of common equipment and trunk terminations and extension of the Entebbe exchange by 1,000 lines, Kakira by 200 lines and Lugazi by 200 lines. 3. Rehabilitation of the existing Pentaconta telex exchange, including the provision of additional printed circuit cards for the existing Nedix telex exchange and national and international VFT systems. 4. Rehabilitation of the subscriber distribution network, in- cluding the provision of related supplies and the connection of about 100 rural public call office telephones. 5. Rehabilitation and construction of open wire overhead routes for a two-year period. 6. Provision of telephone instruments, teleprinters and related material for replacements and new subscribers' installations over a two year period. 7. Provision of rural radio equipment, including about 100 radio call units, manual switchboards and point-to-point communi- cation units. 8. Completion of a pole impregnation plant, including the supply of miscellaneous tools and equipment. 9. Replacement of air conditioning equipment for the exchanges at Kampala Telephone House, installation of air conditioning - 18 - equipment at Mengo ad rehabilitation of air conditioning equip- ment in Jinja, Entebbe, Kakira and Lugazi. Part B: Postal Services Acquisition of post office keys and locks, mail bags, safes and armored steel, scales of various types, office machines and post offices and letter posting boxes. Part C: Vehicles and Equipment 1. Acquisition of about 3 heavy lorries, 40 vans, 15 four- wheel drive vehicles, 15 five-seater small cars, three 22- seater minibuses, and one 60-seater bus, 30 motorcycles and 300 cycles. 2. Acquisition of machinery and tools for the rehabilitation and modernization of UPTC's mechanical workshop, including hydraulic jacks, arc welding machine, air compressors, tire inflation rotary gauges, vulcanizer, wheel balancers and battery chargers. 3. Acquisition of a single color small offset printer and related material for UPTC's printing shop and an ammonia printing machine and associated material for UPTC's drawing office. Part D: Training 1. Completion of the construction of the Nakawa training school. 2. Equipping of the workshop and laboratories of the Nakawa training school. 3. Formulation and introduction of comprehensive training in the telecommunications and postal fields and upgrading or devel- opment of programs fitting UPTC's job requirement and moderniza- tion of teaching methods and introduction of instruction in new telecommunications technology. Part E: Technical Assistance 1. Preparation of a statement of affairs for UPTC, evaluation of the fixed assets, stores and accounts receivable of the posts and telecommunications sector, establishment of a computerized accounting and stores system, a management information system, - 19 - procedures for budget preparation and cost analysis, a method- ology for tariff setting and determination and carrying out of a training program for UPTC's financial staff. 2. Organization and management of supplies, stores, transport and of UPTC's mechanical workshop. 3. Planning of an integrated digital telecommunications system for Uganda and preparation of related projects. 4. Preparation of a project to develop the urban cable network. Part F: Recurrent Imports (two-year consumption) 1. Acquisition of spare parts for step-by-step and crossbar telephone exchanges and for the international telephone exchange. 2. Acquisition of spare parts for radio, multiplex carrier and line equipment. 3. Acquisition of spare parts for telephone sets and tele- printers. 4. Acquisition of creosote oil for the pole plant. 5. Acquisition of tools for maintenance, installations and con- struction and for the telecommunications repair center. 6. Acquisition of money orders, aerogrammes and various registered envelopes, date stamps, stamp albums, stationery and sundry materials. 7. Acquisition of tools for UPTC's building branch. 8. Acquisition of spare parts for about 150 existing vehicles, and spare parts for the new vehicles to be provided under the Project. 9. Acquisition of about 1,000 assorted tires with tubes and about 200 assorted batteries. 10. Acquisition of miscellaneous purchases for UPTC's printing shop and drawing office. The Project is expected to be completed by June 30, 1986. - 20 - SCHEDULE 3 Procurement A. International Competitive Bidding 1. Except as provided in Part C hereof, goods 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 to be procured on the basis of international competitive bidding, in addition to the requirements of paragraph 1.2 of the Guidelines, the Borrower 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 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 in question. The Borrower 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. 3. Goods shall be bulked together in bidding packages to the maximum extent practicable for the purposes of bidding and procurement. 4. For the purpose of evaluation and comparison of bids for the supply of goods to be procured on the basis of international com- petitive 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) customs duties and other import taxes levied in connection with the importation, or the sales and simi- lar taxes levied in connection with the sale or delivery, pur- suant 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. - 21 - B. Preference for Domestic Manufacturers In the procurement of goods in accordance with the pro- cedures described in Part A of this Schedule, goods manufactured in Uganda may be granted a margin of preference in accordance with, and subject to, the following provisions: 1. All bidding documents for the procurement of goods shall clearly indicate any preference which will be granted, the information required to establish the eligibility of a bid for such preference and the following methods and stages that will be followed in the evaluation and comparison of bids. 2. After evaluation, responsive bids will be classified in one of the following three groups: (1) Group A: bids offering goods manufactured in Uganda if the bidder shall have established to the satisfaction of the Borrower and the Association that the manufacturing cost of such goods includes a value added in Uganda equal to at least 20% of the ex-factory bid price of such goods. (2) Group B: all other domestic bids. (3) Group C: bids offering any other goods. 3. In order to determine the lowest evaluated bid of each group, all evaluated bids in each group shall first be compared among themselves, without taking into account customs duties and other import taxes levied in connection with the importation, and sales and similar taxes levied in connection with the sale or delivery, pursuant to the bids, of the goods. Such lowest evalu- ated bids shall then be compared with each other, and if, as a result of this comparison, a bid from group A or group B is the lowest, it shall be selected for the award. 4. If, as a result of the comparison under paragraph 3 above, the lowest bid is a bid from group C, all group C bids shall be further compared with the lowest evaluated bid from group A after adding to the evaluated bid price of the imported goods offered in each group C bid, for the purpose of this further comparison only, an amount equal to: (i) the amount of customs duties and other import taxes which a non-exempt importer would have to pay for the importation of the goods offered in - 22 - such group C bid; or (ii) 15% of the c.i.f. bid price of such goods if said customs duties and taxes exceed 15% of such price. If the group A bid in such further comparison is the lowest, it shall be selected for the award; if not, the bid from group C which, as a result of the comparison under paragraph 3 is the lowest evaluated bid, shall be selected. C. Other Procurement Procedures 1. Contracts for goods which cannot be grouped in bidding pack- ages estimated to cost $50,000 equivalent or more shall be pro- cured through limited international tendering after obtaining quotations from a group of potential suppliers broad enough, under the circumstances, to assure competitive prices provided, however, that the aggregate amount of such contracts shall not exceed $3,000,000 equivalent. 2. Contracts for the supply and installation of proprietary goods shall be procured on a negotiated basis from the original manufacturers or authorized representatives, on terms satis- factory to the Association provided, however, that the aggregate amount of such contracts shall not exceed $2,600,000 equivalent. 3. Vehicles shall be procured on the basis of competitive bidding locally advertised in accordance with procedures satisfactory to the Association. D. 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 estimated to cost the equivalent of $50,000 or more: (a) Before bids are invited, the Borrower 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. - 23 - (b) After bids have been received and evaluated, the Bor- rower 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 evaluation and comparison of the bids received, 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 Borrower 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 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 with- drawal of funds from the Credit Account in respect of such con- tract. 3. With respect to each contract not governed by the preceding paragraph the Borrower 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 infor- mation as the Association shall reasonably request. The Associa- tion shall, if it determines that the award of the contract was not consistent with the Guidelines or this Schedule, promptly inform the Borrower and state the reasons for such determination. 4. 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 Borrower 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 pro- visions of this Agreement, shall promptly inform the Borrower and state the reasons for its determination. - 24 - SCHEDULE 4 Performance Indicators 1983 1984 1985 1986 1987 Telephone lines 2,145 2,485 5,290 5,350 7,350 added Telex lines - 140 140 300 500 added % of lines out 18% 10% 7% 6% 5% of order (year end) % repaired in 10% 30% 60% 80% 80% one week Long distance 50% 58% 65% 75% 75% effective calls Telecommunications 120 110 95 80 67 staff per 1000 telephone lines Months of billing delay at year end: Telephone 2 2 1 1 1 Telex 2 2 1 1 1 Rate of return on 13 13 14 15 16 net revalued assets Total annual cost 67 71 74 77 84 before depreciation per working tele- phone line (including infla- tion) (thousand U SH) - 25 - Performance Indicators 1983 1984 1985 1986 1987 Receivables out- standing as % of annual revenues Government 40 35 25 17 17 Private 20 17 17 17 17 Self generated cash 36 32 57 44 45 as % of annual investment program 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 1983R. FOR SECRETARY