Upper Volta - Telecommunications Project : Credit 0141 - Project Agreement - Conformed

CREDIT NUMBER 141 UV Project Agreement (Telecommunications Project) BETWEEN INTERNATIONAL DEVELOPMENT ASSOCIATION AND OFFICE DES POSTES ET TELECOMMUNICATIONS DE HAUTE-VOLTA DATED FEBRUARY 18, 1969 CREDIT NUMBER 141 UV Project Agreement (Telecommunications Project) BETWEEN INTERNATIONAL DEVELOPMENT ASSOCIATION AND OFFICE DES POSTES ET TELECOMMUNICATIONS DE HAUTE-VOLTA DATED FEBRUARY 18, 1969 AGREEMENT, dated February 18, 1969, between INTER- NATIONAL DEVELOPMENT ASSOCIATION (hereinafter called the Association) and the OFFICE DES POSTES ET TELECOMMUNICA- TIONS DE HAUTE-VOLTA (hereinafter called the Office) : WHEREAS by a development credit agreement of even date herewith between the Republic of Upper Volta (hereinafter called the Borrower), and the Association, (hereinafter called the Development Credit Agreement), the Asso- ciation has agreed to make available to the Borrower an amount in various currencies equivalent to eight hundred thousand dollars ($800,000), on the terms and conditions set forth in the Development Credit Agreement, to be relent to the Office, but only on condition that the Office agree to undertake certain obligations toward the Association as hereinafter provided; 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 herein- after 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 de- fined in the Development Credit Agreement and in Devel- opment Credit Regulations No. 1 of the Association dated June 1, 1961 as amended February 9, 1967 shall have the respective meanings therein set forth. 4 ARTICLE II Particular Covenants of the Office SECTION 2.01. (a) The Office shall carry out the Project described in Schedule 2 to the Development Credit Agree- ment with due diligence and efficiency and in conformity with sound engineering, financial and public utility stand- ards and practices, and shall provide, promptly as needed, the funds, facilities, services and other resources required for the purpose. (b) In carrying out Parts 3 and 4 of the Project, the Office shall employ competent and experienced consultants acceptable to the Association to an extent and upon such terms and conditions as shall have been approved by the Association. (c) The training of local telecommunications personnel under Part 4 of the Project shall be carried out with the assistance of competent and qualified instructors acceptable to the Association. SECTION 2.02. The Office shall apply the proceeds of the Credit relent to it by the Borrower under the Subsidiary Loan Agreement exclusively to financing the cost of goods required to carry out the Project and, except as the Asso- ciation shall otherwise agree, shall cause all goods fmanced out of such proceeds to be used exclusively in the carrying out of the Project until the completion thereof. SECTION 2.03. Except as the Association shall otherwise agree: (i) the goods, other than services of consultants, to be financed out of the proceeds of the Credit shall be procured on the basis of international competitive bidding in accord- ance with the Guidelines for Procurement under World Bank Loans and IDA Credits, published by the Bank in 5 February 1968, and in accordance with such other proce- dures supplementary thereto as are set forth in Schedule 1 to the Project Agreement; and (ii) contracts for the procurement of all goods to be financed out of the proceeds of the Credit, except in respect of goods to which paragraph 3 of Schedule 1 to the Project Agreement is applicable, shall be subject to the approval of the Association. SECTIoN 2.04. (a) The Office shall promptly furnish to the Association, upon request by the Association from time to time, the plans, specifications and work schedules for the Project, and any material modifications subsequently made therein, in such detail as the Association shall request. (b) The Office shall: (i) maintain records adequate to identify the goods financed out of the proceeds of the Credit, to disclose the use thereof in the Project, to record the progress of the Project (including the cost thereof) and to reflect in accordance with consistently maintained sound accounting practices the operations and financial condition of the Office; and (ii) shall enable the Associa- tion's representatives to inspect the Project, the goods, all other plants, sites, works, property and equipment of the Office and any relevant records and documents. (c) The Office shall furnish to the Association all such information as the Association shall reasonably request concerning the expenditure of the proceeds of the Credit, the goods, the Project and the administration, operations and financial condition of the Office. (d) The Office shall establish as of January 1, 1969, and shall maintain at all times thereafter, an effective system of accounting and of financial management based on sound commercial and accounting principles. Such system shall be fully operative not later than December 31, 1970, and shall provide for separate accounts for the Office 's postal 6 operations, and for its telecommunications operations, and it shall show separately the internal flow of funds for each of these operations. (e) The Office shall have its accounts relating to its tele- communications operations audited annually by independ- ent accountants acceptable to the Association, and shall promptly after audited statements (balance sheet and re- lated statement of earnings and expenses) are available, and not later than six months after the close of the Office's fiscal year to which they apply, transmit to the Association certified copies of such statements and a signed copy of the accountants' report. SECTION 2.05. (a) The Association and the Office shall cooperate fully to assure that the purposes of the Credit will be accomplished. To that end, the Association and the Office shall from time to time, at the request of either party, exchange views through their representatives with regard to the performance by the Office of its obligations under the Project Agreement or the Subsidiary Loan Agreement, to the administration, operations and financial condition of the Office and to any other matters relating to the pur- poses of the Credit. (b) The Office shall promptly inform the Association and the Borrower of any condition which interferes with, or threatens to interfere with, the accomplishment of the purposes of the Credit, or the performance by the Office of its obligations under the Project Agreement or the Subsid- iary Loan Agreement. SECTIo 2.06. Until all the works under the Project shall have been completed, the Office shall not effect any changes in its telecommunications tariffs without prior consultation with the Association. SECTON 2.07. (a) The Office shall carry out or cause to be carried out a full review of its telecommunications tar- 7 iffs before December 31, 1971; on the basis of such review the Office shall establish, and thereafter maintain, a tele- communications rate structure and tariffs which shall pro- vide to the Office revenue sufficient: (i) to cover the oper- ating expenses of its telecommunications operations, and (ii) to produce an annual return on the current value of the net fixed telecommunications assets operated by the Office at a rate established by the Office after consultation with the Borrower and the Association, having due regard to future development requirements. (b) For the purposes of this Section: (i) The annual rate of return shall be calculated by using as the denominator the average of the current value 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. (ii) The term "current value of net fixed telecom- munications assets" means the gross value of fixed telecommunications assets as revalued from time to time, less accumulated deprecia- tion, based on appropriate valuation and de- preciation methods approved by the Associa- tion. (iii) The term "operating income" means the dif- ference between operating revenues and oper- ating expenses. (iv) The term "operating revenues" means all revenues from telecommunications operations and other revenues incidental thereto. (v) The term "operating expenses" means all direct costs of operation by the Office of its telecommunications facilities, including a rea- 8 sonable portion of overhead costs, adequate maintenance expenses, and an adequate provi- sion for depreciation, but excluding interest and other charges on debt. SECTIOLR 2.08. (a) Except as the Association shall other- wise agree and subject to Section 2.08(c) hereof, the Office shall not incur any debt other than pursuant to the Sub- sidiary Loan Agreement, unless its net revenues from tele- communications operations for the preceding fiscal year or for any later twelve-month period, whichever is the greater, shall be not less than 1.5 times the maximum debt service requirement for any succeeding fiscal year on all debt including the debt to be incurred. (b) The Office shall incur no debt during the period of execution of the Project and during the period of five years following the completion of the Project without prior con- sultation with the Association. (c) For the purposes of this Section: (i) The term "debt" means all indebtedness of the Office, an.- all indebtedness incurred by the Bor- rower on behalf of the Office, relating to its tele- communications operations, except: (A) indebted- ness representing money borrowed in the ordinary course of business and maturing by its terms on demand or not more than one year after incurrence, to the extent that the amount of such indebtedness at any time outstanding does not exceed 170/% of the Office's total telecommunications operating ex- penses excluding depreciation for the preceding fiscal year or for any later twelve-month period, whichever is greater; and (B) indebtedness which is incurred in the ordinary course of business other than for money borrowed and which is payable not more than one year after its incurrence. (ii) The term "incur" with reference to any debt in- eludes any modification of the terms of payment of 0 9 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) The term "net revenues" means gross revenues from telecommunications operations and other rev- enues incidental thereto, adjusted to take account of the Office's telecommunications tariffs in effect at the time of the incurrence of debt even though they were not in effect during the fiscal year or twelve-month period to which such revenues relate, less all operating, maintenance and administrative expenses and provision for taxes, if any, but before provision covering depreciation and debt service requirements. (iv) The term "debt service requirement" means the aggregate amount of amortization (including sink- ing fund payments, if any), interest and other charges on debt. (v) Whenever for the purposes of this Section it shall be necessary to value, in terms of the currency of the Borrower, debt payable in another currency, such valuation shall be made on the basis of the prevailing lawful rate of exchange at which such other currency is, at the time of such valuation, obtainable for the purposes of servicing such debt or, if such o1her currency is not so obtainable, at the rate of exchange that will be reasonably deter- mined by the Association. SECTION 2.09. Except as the Association shall otherwise agree, the Office shall not create nor permit to be created any mortgage, pledge, charge or other lien on any of its property or assets necessary to its telecommunications operations; provided, however, that the foregoing provi- sion of this Section shall not apply (i) to any lien created on property, at the time of purchase thereof, solely as 10 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. SECTION 2.10. (a) Except as the Association shall other- wise agrec, the Office shall at all times maintain its exist- ence and right to carry on its telecommunications opera- tions and shall take all steps necessary to acquire, maintain and renew all rights, powers, privileges and franchises which are necessary or useful in the conduct of its business. (b) The Office shall at all times operate and maintain its plants, equipment and other property, and shall promptly make all necessary repairs and renewals thereof, in accord- ance with sound engineering and public utility practices. (c) The Office shall not, without the prior approval of the Association, sell, lease, transfer or otherwise dispose of any of its property or assets which shall be required for efficient telecommunications operations. SECTION 2.11. (a) The Office shall at all times manage its affairs, maintain its financial position and carry on its telecommunications operations, in accordance with sound business, financial and public utility practices, and under the supervision of competent and experienced management. (b) The Office shall appoint no Director, Chief Financial Officer or Chief Engineer for its telecommunications oper- ations, without prior consultation with the Association and without giving due consideration to the views expressed by the Association with respect to the qualifications and experience of the persons proposed for such appointments. (c) The Office shall take all measures required to insti- tute and maintain adequate telecommunications personnel recruitment and training policies and, in particular, shall provide all funds and facilities necessary for the training of its vocational and higher level personnel, with due re- 11 gard to the development needs of the Office, and in accord- ance with sound management and financial practices. SECTION 2.12. (a) The Office shall take out and maintain with responsible insurers, or make other provisions satis- factory to the Association for, insurance against such risks and in such amounts as shall be consistent with sound public utility practices. (b) Without limiting the generality of the foregoing, the Office undertakes to insure the imported goods financed out of the proceeds of the Credit against marine, transit and other 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 Office to replace or repair such goods. SECTION 2.13. The Office shall duly perform all its obli- gations under the Subsidiary Loan Agreement. Except as the Association and the Office shall otherwise agree, the Office shall not take or concur in any action which would have the effect of amending, abrogating, assigning or waiv- ing any provision of the Subsidiary Loan Agreement. ARTICLE III Effective Date; Termination; Cancellation and Suspension SECTION 3.01. The Project Agreement shall come into force and effect on the Effective Date. If the Development Credit Agreement terminates pursuant to Section 6.03 thereof, the Association shall promptly notify the Office of this event and, upon the giving of such notice, the Project Agreement and all obligations of the parties here- under shall forthwith terminate. SECTION 3.02. The Project Agreement and all obliga- tions of the Office and of the Association hereunder shall terminate on the later of: 0 12 (i) the date when the Subsidiary Loan Agreement shall terminate in accordance with its terms, or (ii) December 31, 1988. SECTION 3.03. Notwithstanding any cancellation or sus- pension under the Development Credit Agreement, all the provisions of the Project Agreement and all the applicable provisions of the Credit Regulations shall continue in full force and effect, except as specifically provided in Article V of the Credit Regulations. ARTICLE IV Miscellaneous Provisions SECTION 4.01. Any notice or request required or per- mitted to be given or made under the Project Agreement and any agreement between the parties contemplated by the Project 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, tele- gram, cable or radiogram to the party to which it is re- quired or permitted to be given or made at such party's address hereinafter specified, or at such other address as such party shall have designated by notice to the party giving such notice or making such request. The addresses so specified are: For the Association: International Development Association 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: Indevas Washington, D.C. 13 For the Office: Office des Postes et Telcommunications de Haute-Volta Ouagadougou, Upper Volta Cable address: Ofipostel Ouagadougou SECTION 1.02. No delay in exercising, or omission to ex- ercise, any right, power or remedy accruing to either party under the Project Agreement upon any default shall impair any such right, power or remedy or be construed to be a waiver thereof or an acquiescence in such default; nor shall the action of such party in respect of any default, or any acquiescence in any default, affect or impair any right, power or remedy of such party in respect of any other or subsequent default. SECTION 4.03. The Office shall furnish to the Association sufficient evidence of the authority of the person or persons who will, on behalf of the Office, take any action or execute any documents required or permitted to be taken or exe- cuted by the Office pursuant to any of the provisions of the Project Agreement and the authenticated specimen signa.- ture of each such person. SECTION 4.04. Any action required or permitted to be taken, and any documents required or permitted to be exe- cuted, under the Project Agreement or the Subsidiary Loan Agreement on behalf of the Office may be taken or executed by the Director of the Office or such other person or persons as the Office shall designate in writing. LN WITNESS WHEREOF the parties hereto, acting through their representatives thereunto duly authorized, have L 14 caused the Project Agreement to be signed in their respec- tive names and delivered in the District of Columbia, United States of America, as of the day and year first above written. INTERNATIONAL DEVELOPMENT ASSOCIATION By /s/ MOHAMED SHOAIB Vice President OFFICE DES POSTES ET TELECOMMUNICATIONS DE HAUTE-VOLTA By /s/ HAMA ARBA DIALLO Authorized Representative 15 SCHEDULE 1 Procurement of Goods 1. With respect to goods in Categories A, B, and D as set out in Schedule 1 to the Development Credit Agreement, identical or similar items of equipment and accessories thereto will be grouped together wherever practicable for purposes of bidding and procurement, and such grouping of items shall be subject to the approval of the Association. Such procurement shall be on the basis of the Guidelines for Procurement under World Bank Loans and IDA Credits published by the Bank in February 1968 (hereinafter re- ferred to as the Guidelines). 2. Prior to inviting bids with respect to items or groups of items in such Categories A, B, or D of said Schedule 1, expected to cost the equivalent of $25,000 or more, the Office shall submit to the Association for approval, a de- scription of the advertising procedures to be used, and copies of specifications, invitations to bid, and draft con- tract documents. Before awarding any such contract, the Office shall submit to the Association for approval evidence of advertising, the analyses and evaluation by the Office of bids received, the consultants' recommendations, and the Office's proposals for awards. If a proposed final con- tract differs substantially from the terms and conditions contained in the documents previously approved by the Association, the text of the proposed changes will be sub- mitted to the Association for review and approval prior to the execution of the contract. One conformed copy of each contract for any such items or groups of items to be financed out of the proceeds of the Credit shall be sent to the Association promptly after execution. 3. In respect of contracts for the procurement of items or groups of items in such Categories A, B or D of such Schedule 1 expected to cost less than the equivalent of $25,000, a description of the advertising and bidding proce- (nres used, the speciflcations and the bid evaluation report, 16 as well as one conformed copy of each such contract, shall be sent to the Association promptly after the execution of any such contract and prior to the submission to the Asso- ciation of the first application for withdrawal of funds from the Credit Account in respect of any such contract. 4. With respect to the civil and construction works in Category C of Schedule 1 to the Development Credit Agree- ment, the Office shall give the invitations to bid regional advertising coverage acceptable to the Association. Con- tracts with respect to such civil and construction works shall be awarded after approval by the Association of an abstract of all bids received, of the Office's evaluation thereof and of the Office's proposals concerning such con- tracts and the awards. Such contracts shall be awarded to the bidder or bidders offering the loest evaluated bid determined to be the most favorable in regard to technical and financial considerations and practices, and one con- formed copy of each signed contract with respect to such civil and construction works shall be sent to the Association promptly after execution. 5. Whenever a contract under the Project is awarded to a supplier or to a contractor not registered in Upper Volta, the Office shall facilitate the accomplishment by such sup- plier or contractor of all regulatory formalities which may be required to enable it to carry out such contract.