Conformed Copy - C2836 - Urban Environmental Sanitation Project - Development Credit Agreement

Page 1 CREDIT NUMBER 2836 GH Development Credit Agreement (Urban Environmental Sanitation Project) between REPUBLIC OF GHANA and INTERNATIONAL DEVELOPMENT ASSOCIATION Dated May 20, 1996 CREDIT NUMBER 2836 GH DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated May 20, 1996, between REPUBLIC OF GHANA (the Borrower) and INTERNATIONAL DEVELOPMENT ASSOCIATION (the Association). WHEREAS: (A) the Association has received a letter dated January 18, 1996 describing a program of policies, goals and actions designed to improve the Borrower's urban sanitation and infrastructure services (the Program) and declaring the Borrower's commitment to the execution of the Program; (B) the Borrower, having satisfied itself as to the feasibility and priority of the Project described in Schedule 2 to this Agreement, has requested the Association to assist in the financing of the Project; (C) the Borrower intends to seek additional funds from the Nordic Development Fund, the Kingdom of the Netherlands and other donors to assist in the financing of the Project; and (D) the Association has agreed, on the basis, inter alia, of the foregoing, to extend the Credit to the Borrower upon the terms and conditions set forth in this Agreement; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I General Conditions; Definitions Section 1.01. The "General Conditions Applicable to Development Credit Agreements" of the Association, dated January 1, 1985, with the modifications thereto set forth below (the General Conditions), constitute an integral part of this Agreement: Page 2 (a) The last sentence of Section 3.02 is deleted. (b) The second sentence of Section 5.01 is modified to read: "Except as the Association and the Borrower shall otherwise agree, no withdrawals shall be made: (a) on account of expenditures in the territories of any country which is not a member of the Bank or for goods produced in, or services supplied from, such territories; or (b) for the purpose of any payment to persons or entities, or for any import of goods, if such payment or import, to the knowledge of the Association, is prohibited by a decision of the United Nations Security Council taken under Chapter VII of the Charter of the United Nations." Section 1.02. 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) "Assembly" or "MA" means each Municipal or Metropolitan Assembly for Accra, Kumasi, Shama-Ahanta East, Tema and Tamale, established under the Borrower's Local Government Act (No. 462) of 1993; (b) "Cedi" means the currency of the Borrower; (c) "MLGRD" means the Ministry of Local Government and Rural Development of the Borrower; (d) "MWH" means the Ministry of Works and Housing of the Borrower; (e) "TSC" means the Technical Services Center established in MWH; (f) "Project Implementation Manual" means the manual referred to in Section 6.01 (e) of this Agreement; (g) "Project Preparation Advance" means the project preparation advance granted by the Association to the Borrower pursuant to an exchange of letters dated August 30, 1994 and September 26, 1994 between the Borrower and the Association; (h) "Special Account" means the account referred to in Section 2.02 (b) of this Agreement; (i) "Advance Account" means a subaccount of the Special Account referred to in Section 2.02 (c) of this Agreement; (j) "Grant Agreement" means each of the agreements to be entered into between the Borrower and each of the MAs pursuant to Section 3.01 (b) of this Agreement, as the same may be amended from time to time, and such term includes any schedules to the Grant Agreements; (k) "Project Account" means the account referred to in Section 3.01 (d) of this Agreement; (l) "Project Cities" means the cities referred to in paragraph (a) above; and (m) "Project Subaccounts" means the accounts referred to in Section 3.01 (e) of this Agreement. ARTICLE II The Credit Section 2.01. The Association agrees to lend to the Borrower, on the terms and conditions set forth or referred to in the Development Credit Agreement, an amount in various currencies equivalent to forty-seven million, eight hundred thousand Special Drawing Rights (SDR 47,800,000). Section 2.02. (a) The amount of the Credit may be withdrawn from Page 3 the Credit Account in accordance with the provisions of Schedule 1 to this Agreement for expenditures made (or, if the Association shall so agree, to be made) in respect of the reasonable cost of works, goods and services required for the Project described in Schedule 2 to this Agreement and to be financed out of the proceeds of the Credit. (b) The Borrower may, for the purposes of the Project, open and maintain in US dollars a special deposit account in a commercial bank on terms and conditions satisfactory to the Association, including appropriate protection against set-off, seizure or attachment. Deposits into, and payments out of, the Special Account shall be made in accordance with the provisions of Schedule 5 to this Agreement. (c) The Borrower shall: (i) open and maintain in dollars for each Assembly an Advance Account of the Special Account, in one or more commercial banks acceptable to the Association, on terms and conditions satisfactory to the Association (including appropriate protection against set-off, seizure or attachment), to be used by such Assembly exclusively for the purposes of financing works, goods and services under the Project to be carried out by such Assembly, as specified in paragraph 7 of Schedule 4 to this Agreement; and (ii) withdraw from the Special Account and deposit into each Advance Account an amount not exceeding $200,000 each for Accra, Kumasi and Shama-Ahanta East and $100,000 each for Tema and Tamale, and thereafter replenish said Advance Accounts in accordance with paragraph 7 of Schedule 5 to this Agreement. (d) Promptly after the Effective Date, the Association shall, on behalf of the Borrower, withdraw from the Credit Account and pay to itself the amount required to repay the principal amount of the Project Preparation Advance withdrawn and outstanding as of such date and to pay all unpaid charges thereon. The unwithdrawn balance of the authorized amount of the Project Preparation Advance shall thereupon be cancelled. Section 2.03. The Closing Date shall be December 31, 2002, or such later date as the Association shall establish. The Association shall promptly notify the Borrower of such later date. Section 2.04. (a) The Borrower shall pay to the Association a commitment charge on the principal amount of the Credit not withdrawn from time to time at a rate to be set by the Association as of June 30 of each year, but not to exceed the rate of one-half of one percent (1/2 of 1%) per annum. (b) The commitment charge shall accrue: (i) from the date sixty days after the date of this Agreement (the accrual date) to the respective dates on which amounts shall be withdrawn by the Borrower from the Credit Account or cancelled; and (ii) at the rate set as of the June 30 immediately preceding the accrual date or at such other rates as may be set from time to time thereafter pursuant to paragraph (a) above. The rate set as of June 30 in each year shall be applied from the next payment date in that year specified in Section 2.06 of this Agreement. (c) 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 2.05. 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. Page 4 Section 2.06. Commitment charges and service charges shall be payable semiannually on January 1 and July 1 in each year. Section 2.07. (a) Subject to paragraphs (b) and (c) below, the Borrower shall repay the principal amount of the Credit in semiannual installments payable on each January 1 and July 1, commencing July 1, 2006 and ending January 1, 2036. Each installment to and including the installment payable on January 1, 2016 shall be one percent (1%) of such principal amount, and each installment thereafter shall be two percent (2%) of such principal amount. (b) Whenever: (i) the Borrower's gross national product per capita, as determined by the Association, shall have exceeded $790 in constant 1985 dollars for five consecutive years, and (ii) the Bank shall consider the Borrower creditworthy for Bank lending, the Association may, subsequent to the review and approval thereof by the Executive Directors of the Association and after due consideration by them of the development of the Borrower's economy, modify the terms of repayment of installments under paragraph (a) above by requiring the Borrower to repay twice the amount of each such installment not yet due until the principal amount of the Credit shall have been repaid. If so requested by the Borrower, the Association may revise such modification to include, in lieu of some or all of the increase in the amounts of such installments, the payment of interest at an annual rate agreed with the Association on the principal amount of the Credit withdrawn and outstanding from time to time, provided that, in the judgment of the Association, such revision shall not change the grant element obtained under the above-mentioned repayment modification. (c) If, at any time after a modification of terms pursuant to paragraph (b) above, the Association determines that the Borrower's economic condition has deteriorated significantly, the Association may, if so requested by the Borrower, further modify the terms of repayment to conform to the schedule of installments as provided in paragraph (a) above. Section 2.08. 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 of the Project Section 3.01. (a) The Borrower declares its commitment to the objectives of the Project as set forth in Schedule 2 to this Agreement and, to this end, shall: (i) carry out Parts A, B.4, B.5, C.2, C.3 and E.1 (a) of the Project through MLGRD, with due diligence and efficiency and in conformity with appropriate administrative, financial, engineering and environmental practices, and shall provide, promptly as needed, the funds, facilities, services and other resources required for such Parts of the Project; and (ii) cause the MAs to carry out Parts B.1, B.2, B.3, B.6, C.1, D and E.1 (b) of the Project with due diligence and efficiency, in conformity with appropriate administrative, financial, engineering and environmental practices, and provide, promptly as needed, the funds, facilities, services and other resources required for such Parts of the Project. (b) The Borrower shall make part of the proceeds of the Credit, allocated from time to time to Categories (1) (a), (2) (a), (3) (a) and (4) of the table set forth in paragraph 1 of Schedule 1 to this Agreement, available to the MAs as grants, under Grant Agreements to be entered into between the Borrower and each MA, respectively, under conditions which shall have been approved by the Association, which shall include those set forth in paragraphs 6 and 7 of Schedule 4 to this Agreement. (c) The Borrower shall exercise its rights under each Grant Page 5 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 Association shall otherwise agree, the Borrower shall not assign, amend, abrogate or waive the Grant Agreements or any provision thereof. (d) Without limitation upon its obligations under paragraphs (a) and (e) of this Section, the Borrower shall: (i) provide in its annual budget, in each year during the carrying out of the Project, amounts sufficient to cover its counterpart contributions to the cost of the Project; (ii) open and maintain in cedis in a commercial bank, a Project Account, on terms and conditions satisfactory to the Association, in the name of MLGRD, to be used by MLGRD exclusively for the purposes of the Project; (iii) deposit into said Project Account (A) an initial amount of $25,000 equivalent, and (B) the remaining part of its contributions, quarterly in advance, in the amounts to be determined by the Borrower and the Association. (e) The Borrower shall: (i) open and maintain in cedis, in one or more commercial banks, five Project Subaccounts, on terms and conditions satisfactory to the Association, in the name of each Assembly to be used by such Assembly as the Assembly's counterpart contribution to the costs of the Project; and (ii) deposit into each Project Subaccount: (A) an initial amount equivalent to $5,000 for each Project City; and (B) the remaining part of its contributions, quarterly in advance, in the amounts determined by the Borrower and the Association. (f) Without limitation upon the provisions of paragraph (a) of this Section and except as the Borrower and the Association shall otherwise agree, the Borrower shall carry out the Project in accordance with the Implementation Program set forth in Schedule 4 to this Agreement. Section 3.02. Except as the Association shall otherwise agree, procurement of the goods, works and consultants' services 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 Agreement. Section 3.03. For the purpose of Section 9.07 of the General Conditions, and without limitation thereto, the Borrower shall: (a) prepare, on the basis of guidelines acceptable to the Association, and furnish to the Association not later than six (6) months after the Closing Date or such later date as may be agreed for this purpose between the Borrower and the Association, a plan for the future operation of the Project; and (b) afford the Association a reasonable opportunity to exchange views with the Borrower on said plan. Section 3.04. (a) The Borrower shall carry out, jointly with the Association and the Assemblies, not earlier than 36 months and not later than 40 months following the Effective Date, a midterm review of the progress made in carrying out the Project. This review shall cover, among other things: (i) the performance of the Borrower and the Assemblies in carrying out the Project; (ii) the extent to which the institutional objectives of the Project have been achieved; (iii) the performance of the private contractors employed by the Assemblies under the Project; (iv) compliance with the financial, audit and other obligations of the Borrower included in this Agreement; (v) the structure and level of cost recovery measures; (vi) procurement under the Project; (vii) the provision of counterpart funds for the Project by the Borrower; and (viii) plans for the further implementation of the Program. (b) The Borrower shall transmit to the Association, at least 30 days prior to such review, a report, in scope and detail satisfactory to the Association, prepared by MLGRD, TSC and each Assembly, describing the status of progress regarding the items listed in paragraph (a) above and of Project implementation generally. (c) Based on such review, the Borrower shall, jointly with MLGRD, TSC and the Assemblies, promptly prepare an action plan, acceptable to the Association, for the further implementation of the Project and shall Page 6 thereafter implement such action plan. ARTICLE IV Financial Covenants Section 4.01. (a) The Borrower shall maintain or cause to be maintained records and accounts adequate to reflect, in accordance with sound accounting practices, the operations, resources and expenditures in respect of the Project of the departments or agencies of the Borrower responsible for carrying out the Project or any part thereof. (b) The Borrower shall: (i) have the records and accounts referred to in paragraph (a) of this Section, including those for the Special Account and each Advance Account, 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 copy of 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 said records, accounts and the audit thereof as the Association shall from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Credit Account were made on the basis of statements of expenditure, the Borrower shall: (i) maintain or cause to be maintained, in accordance with paragraph (a) of this Section, records and accounts reflecting such expenditures; (ii) retain, until at least one year after the Association has received the audit report for the fiscal year in which the last withdrawal from the Credit Account or payment out of the Special Account or Advance Accounts were made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (iii) enable the Association's representatives to examine such records; and (iv) ensure that such records and accounts are included in the annual audit referred to in paragraph (b) of this Section and that the report of such audit contains a separate opinion by said auditors as to whether the statements of expenditure submitted during such fiscal year, together with the procedures and internal controls involved in their preparation, can be relied upon to support the related withdrawals. ARTICLE V Remedies of the Association Section 5.01. Pursuant to Section 6.02 (h) of the General Conditions, the following additional events are specified: (a) A situation has arisen which shall make it improbable that the Program, or a significant part thereof, will be carried out. (b) The MAs shall have failed to perform any of their respective Page 7 material obligations under their respective Grant Agreements. (c) The Local Government Act (No. 462) of 1993 shall have been amended, suspended, abrogated, repealed or waived, so as to affect materially and adversely the ability of MAs to perform any of their respective obligations under their respective Grant Agreements. (d) The Borrower or any other authority having jurisdiction shall have taken any action for the dissolution or disestablishment of any of the MAs or for the suspension of their respective operations. Section 5.02. Pursuant to Section 7.01 (d) of the General Conditions, the following additional events are specified: (a) any event specified in paragraph (b) of Section 5.01 of this Agreement shall occur and shall continue for a period of sixty days after notice thereof shall have been given by the Association to the Borrower; and (b) any event specified in paragraphs (c) and (d) of Section 5.01 of this Agreement shall occur. ARTICLE VI Effective Date; Termination Section 6.01. The following events are specified as additional conditions to the effectiveness of the Development Credit Agreement within the meaning of Section 12.01 (b) of the General Conditions: (a) the Grant Agreements have been executed on behalf of the Borrower and each MA; (b) the Borrower has deposited the initial deposits into the Project Account and each of the Project Subaccounts referred to in Section 3.01 (d) and (e) of this Agreement, respectively; (c) the Borrower has issued a directive, satisfactory to the Association, requiring the Assemblies to establish separate budget lines for financing waste management operations, including solid waste collection and disposal, liquid waste management and for the maintenance of storm drains; (d) the Assemblies have each employed a Project coordinator, sanitary engineer and accountant in accordance with Section II of Schedule 3 to this Agreement; and (e) the Borrower has adopted a Project Implementation Manual, satisfactory to the Association, specifying, inter alia, performance indicators, procedures and other arrangements for the purpose of implementation of the Project. Section 6.02. The following is specified as an additional matter within the meaning of Section 12.02 (b) of the General Conditions, to be included in the opinion or opinions to be furnished to the Association, namely that the Grant Agreements have been duly authorized or ratified by the Borrower and the MAs, respectively, and are legally binding upon the Borrower and each of the MAs in accordance with their terms. Section 6.03. The date ninety (90) days after the date of this Agreement is hereby specified for the purposes of Section 12.04 of the General Conditions. ARTICLE VII Representatives of the Borrower; Addresses Section 7.01. The Minister responsible for Finance of the Borrower is designated as representative of the Borrower for the purposes of Section 11.03 of the General Conditions. Section 7.02. The following addresses are specified for the Page 8 purposes of Section 11.01 of the General Conditions: For the Borrower: Ministry of Finance P.O. Box M40 Accra, Ghana Cable address: Telex: ECONOMICON 2205 MIFAEP GH Accra For the Association: International Development Association 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: Telex: INDEVAS 248423 (RCA) Washington, D.C. 82987 (FTCC) 64145 (WUI) or 197688 (TRT) IN WITNESS WHEREOF, the parties hereto, acting through their duly authorized representatives, 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 GHANA By /s/ Ekwow Spio-Garbrah Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION By /s/ Olivier Lafourcade Acting Regional Vice President Africa 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 % of Allocated Expenditures (Expressed in to be Category SDR Equivalent) Financed (1) Civil works: 100% of foreign expenditures and 75% of local expenditures (a) For Project Cities 10,410,000 Page 9 (b) For MLGRD 23,160,000 (2) Vehicles, equipment and 100% of foreign spare parts expenditures and 90% of local expenditures (a) For Project Cities 110,000 (b) For MLGRD 1,960,000 (3) Consultants' 100% services, studies and training: (a) For Project Cities 3,310,000 (b) For MLGRD 2,920,000 (4) Operating 75% up to June 30, costs for: 1999; 50% up to June 30, 2001; and 25% thereafter. (a) refuse collection 1,290,000 (b) Others 280,000 90% (5) Refunding of 1,010,000 Amounts due Project pursuant to Preparation Section 2.02 (d) Advance of this Agreement (6) Unallocated 3,350,000 __________ TOTAL 47,800,000 ========== 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; (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; (c) the term "operating costs" means: (i) for Category 4 (a), costs associated with refuse collection services to be carried out by private contractors; and (ii) for Category 4 (b), costs on account of project implementation for office expenses, utilities, fuel, supplies and vehicle maintenance; 3. Notwithstanding the provisions of paragraph 1 above, no with- drawals shall be made in respect of: (a) payments made for expenditures prior to the date of this Agreement; and (b) payments made for expendi- tures under Category (1) (a) for solid waste landfills for each MA until land for such landfills within the MA concerned has been acquired in a manner satisfactory to the Association. 4. The Association may require withdrawals from the Credit Account to be made on the basis of statements of expenditure for expenditures for: (a) goods under contracts not exceeding $200,000 equivalent, (b) works under contracts not exceeding $500,000 equivalent, (c) services with consultants' firms under contracts not exceeding $100,000 equivalent, (d) expenditures for individual consultants under contracts not exceeding $50,000 equivalent, and (e) operating costs, all under such terms and conditions as the Association shall specify by notice to the Borrower. Page 10 SCHEDULE 2 Description of the Project The objectives of the Project are to: (a) improve living conditions for lower income urban residents, (b) improve institutional and financing mechanisms in the urban sector, and (c) build up the capacity of the Metropolitan and Municipal Assemblies to manage environmental sanitation services. The Project consists of the following parts, subject to such modifications thereof as the Borrower and the Association may agree upon from time to time to achieve such objectives: Part A: Storm Drainage 1. Accra (a) Dredging and reconstruction of about seven km of the city's primary drainage channel. (b) Reconstruction of about 20 km of secondary drains. 2. Kumasi (a) Construction of about four new secondary drains. (b) Widening of the existing primary channel. (c) Reconstruction of about four km of the Nsuben primary channel. 3. Sekondi-Takoradi Restoration of the capacity of existing drains in the Market Circle area. Part B: Sanitation 1. Construction of about 5,500 household latrines in all Project Cities. 2. Construction of new, and rehabilitation of existing, public sanitation facilities in all Project Cities. 3. Construction of about 300 sanitation facilities at primary and junior secondary schools in all Project Cities. 4. Construction of a septage treatment facility in each Project City. 5. Rehabilitation of selected portions of the Tema sewer system. 6. Construction of an abattoir in Tamale. Part C: Solid Waste 1. Provision of technical and financial support for waste collection in the Project Cities. 2. Construction of sanitary landfills in Kumasi, Shama-Ahanta East and Tamale. 3. Provision of equipment for disposal of solid waste. Part D: Community Infrastructure Upgrading 1. Improvement of basic infrastructure in selected low-income areas of Accra, Kumasi and Sekondi-Takoradi through rehabilitation of access roads, storm water drainage, sanitation facilities, solid waste management facilities, water supply and street lighting. 2. Construction of community water facilities in Tema. Part E: Institutional Strengthening Page 11 1. Provision of technical advisory services and training on environ- mental sanitation and municipal finance through: (a) MLGRD, and (b) the Assemblies. 2. Provision of vehicles and equipment. 3. Strengthening of field operations and records management of the Survey Department, the Land Title Registry and the Lands Commission through the provision of technical advisory services and training. * * * The Project is expected to be completed by June 30, 2002. SCHEDULE 3 Procurement and Consultants' Services Section I. Procurement of Goods and Works Part A: General Goods and works shall be procured in accordance with the provisions of Section I of the "Guidelines for Procurement under IBRD Loans and IDA Credits" published by the Bank in January 1995 (the Guidelines) and the following provisions of this Section, as applicable. Part B: International Competitive Bidding 1. Except as otherwise provided in Part C of this Section, goods and works shall be procured under contracts awarded in accordance with the provisions of Section II of the Guidelines and paragraph 5 of Appendix 1 thereto. 2. The following provision shall apply to goods and works to be procured under contracts awarded in accordance with the provisions of paragraph 1 of this Part B. Preference for Domestically Manufactured Goods and Domestic Contractors The provisions of paragraphs 2.54 and 2.55 of the Guidelines and Appendix 2 thereto shall apply to goods manufactured in the territory of the Borrower and works to be carried out by domestic contractors. Part C: Other Procurement Procedures 1. National Competitive Bidding Works estimated to cost less than $2,000,000 equivalent per contract, up to an aggregate amount not to exceed $16,200,000 equivalent, may be procured under contracts awarded in accordance with the provisions of paragraphs 3.3 and 3.4 of the Guidelines. 2. National Shopping Vehicles, equipment and supplies estimated to cost less than $50,000 equivalent per contract, up to an aggregate amount not to exceed $500,000 equivalent, may be procured under contracts awarded on the basis of national shopping procedures in accordance with the provisions of paragraphs 3.5 and 3.6 of the Guidelines. 3. Community Participation Works for household sanitation program under Part B of the Project costing less than $10,000 equivalent per contract, up to an aggregate amount not to exceed $1,400,000 equivalent, shall be procured in accordance with procedures acceptable to the Association. Part D: Review by the Association of Procurement Decisions 1. Procurement Planning Page 12 Prior to the issuance of any invitations to prequalify for bidding or to bid for contracts, the proposed procurement plan for the Project shall be furnished to the Association for its review and approval, in accordance with the provisions of paragraph 1 of Appendix 1 to the Guidelines. Procurement of all goods and works shall be undertaken in accordance with such procurement plan as shall have been approved by the Association and with the provisions of said paragraph 1. 2. Prior Review With respect to: (i) each contract for works estimated to cost the equivalent of $1,000,000 or more, and (ii) each contract for goods estimated to cost the equivalent of $200,000 or more, the procedures set forth in paragraphs 2 and 3 of Appendix 1 to the Guidelines shall apply. 3. Post Review With respect to each contract not governed by paragraph 2 of this Part, the procedures set forth in paragraph 4 of Appendix 1 to the Guidelines shall apply. Section II. Employment of Consultants 1. Consultants' services shall be procured under contracts awarded in accordance with the provisions of 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 (the Consultant Guidelines). For complex, time-based assignments, such contracts shall be based on the standard form of contract for consultants' services issued by the Association, with such modifications thereto as shall have been agreed by the Association. Where no relevant standard contract documents have been issued by the Association, other standard forms acceptable to the Association shall be used. 2. Notwithstanding the provisions of paragraph 1 of this Section, the provisions of the Consultant Guidelines requiring prior Association review or approval of budgets, shortlists, selection procedures, letters of invitation, proposals, evaluation reports and contracts, shall not apply to: (a) contracts for the employment of consulting firms estimated to cost less than $100,000 equivalent each, or (b) contracts for the employment of individual consultants estimated to cost less than $50,000 equivalent each. However, said exceptions to prior Association review shall not apply to: (a) the terms of reference for such contracts, (b) single-source selection of consulting firms, (c) assignments of a critical nature, as reasonably determined by the Association, (d) amendments to contracts for the employment of consulting firms raising the contract value to $100,000 equivalent or above, or (e) amendments to contracts for the employment of individual consultants raising the contract value to $50,000 equivalent or above. SCHEDULE 4 Implementation Program Project Implementation 1. MLGRD shall have overall responsibility for Project implementation and shall coordinate the activities of TSC and the Assemblies. 2. The Borrower shall implement the Project in accordance with the procedures set out in the Project Implementation Manual, and, except as the Association shall otherwise agree, the Borrower shall not assign, amend, abrogate or waive any provision thereof so as to materially and adversely affect the implementation of the Project. 3. The Borrower shall, not later than twelve months after the Effective Date, issue regulations under the Local Government Act permitting the Assemblies to enact by-laws enabling the Waste Management Departments of each Assembly to: (a) levy user charges on piped sewage, public toilets, and refuse collection, (b) manage a separate account utilizing revenues from such charges, (c) privatize Page 13 selected aspects of their services, and (d) regulate and enforce waste generation, hauling and disposal. Annual Project Review 4. Not later than September 30 of each year, representatives of each Assembly, MLGRD, MWH, TSC and the Ministry of Finance shall meet with the Association to review the progress made in respect of Project implementation, including, without limitation, physical implementation, institutional issues, procurement, disbursements, the involvement of the private sector and progress towards the objectives of the Project for the preceding year. Progress Reports 5. Not later than 45 days after the end of each quarter, TSC shall prepare and furnish to the Borrower and the Association a quarterly progress report: (a) comparing actual and forecast progress and evaluating such progress against project monitoring indicators agreed with the Borrower and the Association, including, inter alia, standard agreed performance indicators monitoring the physical, financial and operational progress and performance of all components of the Project, (b) on procurement of civil works, goods and services required for the carrying out of the Project, (c) on supervision of contracts, and (d) the financial administration of the Project. Terms and Conditions of Grant Agreements Required Pursuant to Section 3.01 (c) of this Agreement 6. The terms and conditions of the Grant Agreements shall include the following obligations of the MAs to: (a) carry out Parts B.1, B.2, B.3, B.6, C.1, D and E.1 (b) of the Project with due diligence and efficiency, in conformity with appropriate administrative, financial and engineering practices, with due regard to environmental factors, and in accordance with the Project Implementation Manual; and provide, or cause to be provided, promptly as needed, the facilities, services and other resources required for said Parts of the Project, including their counterpart contributions at levels satisfactory to the Association. (b) comply with the procedures for procurement of goods and works set forth in Schedule 3 to this Agreement; (c) comply with the record keeping, auditing and report require- ments set forth in Section 4.01 of this Agreement, with respect to Parts B.1, B.2, B.3, B.6, C.1, D and E.1 (b) of the Project, including the annual auditing of its accounts and financial statements (balance sheets, statements of income and expenses and related statements) required by the Borrower to meet its obligations under Section 4.01 of this Agreement; (d) carry out their own operations and conduct their affairs in accordance with sound administrative, financial and engineering practices; (e) take out and maintain with responsible insurers, or make other provision satisfactory to the Association for, insurance against such risks and in such amounts as shall be consistent with appropriate practice; (f) in accordance with Section 3.04 of this Agreement, (i) participate in the review of the progress made in carrying out Parts B.1, B.2, B.3, B.6, C.1, D and E.1 (b) of the Project, and (ii) thereafter prepare and implement an action plan, satisfactory to the Association, for the further implementation of said Parts of the Project; (g) at the request of the Borrower or the Association, exchange views with the Borrower and the Association with regard to the progress of Parts B.1, B.2, B.3, B.6, C.1, D and E.1 (b) of the Project and the performance of their obligations under their respective Grant Agreements; (h) promptly inform the Borrower and the Association of any condition which interferes or threatens to interfere with the progress Page 14 of Parts B.1, B.2, B.3, B.6, C.1, D and E.1 (b) of the Project or the performance by the MAs of their obligations under the respective Grant Agreements; and (i) except as the Borrower and the Association shall otherwise agree, neither take nor concur in any action which would have the effect of amending, abrogating, assigning or waiving their respective Grant Agreements. 7. The Grant Agreements shall include provisions to the effect that each Assembly shall: (a) award the following contracts financed under the Project in their respective cities: (i) Civil Works: (A) community infrastructure upgrading (roads, footpaths, drains, water supply, sanitation, solid waste collection and street lighting), (B) household sanitation facilities, (C) public and school sanitation facilities, (D) construction of the abattoir, and (E) water supply at Tema. (ii) Consultancy Services for: (A) design and supervision of works, and (B) technical assistance and training. (iii) Operations: solid waste collections. (b) establish and maintain, until completion of the Project, separate budget lines in its budget for waste management and drain maintenance, and every year, beginning with the 1999 fiscal year, allocate amounts for such activities as agreed upon with the Association; (c) not later than twelve months after the Effective Date, establish a Waste Management Department, with staff in adequate numbers and with qualifications and experience satisfactory to the Association, and make appropriate allocations for salaries for Waste Management Department staff; (d) not later than twenty-four months after the Effective Date, enact by-laws in relation to the matters referred to in paragraph 3 above; (e) at all times until completion of the Project, maintain Project staff in adequate numbers with qualifications and experience satisfactory to the Association; and (f) provide the required information to TSC on the progress of Project implementation within fourteen days of the end of each quarter. SCHEDULE 5 Special Account 1. For the purposes of this Schedule: (a) the term "eligible Categories" means the Categories set forth in the table in paragraph 1 of Schedule 1 to this Agreement; (b) the term "eligible expenditures" means expenditures in respect of the reasonable cost of works, goods and services required for the Project and to be financed out of the proceeds of the Credit allocated from time to time to the eligible Categories in accordance with the Page 15 provisions of Schedule 1 to this Agreement; and (c) the term "Authorized Allocation" means an amount equivalent to $3,000,000 to be withdrawn from the Credit Account and deposited into the Special Account pursuant to paragraph 3 (a) of this Schedule, provided, however, that unless the Association shall otherwise agree, the Authorized Allocation shall be limited to an amount equivalent to $2,000,000 until the aggregate amount of withdrawals from the Credit Account plus the total amount of all outstanding special commitments entered into by the Association pursuant to Section 5.02 of the General Conditions shall be equal to or exceed the equivalent of $8,000,000. 2. Payments out of the Special Account shall be made exclusively: (a) for eligible expenditures in accordance with the provisions of this Schedule, and (b) in accordance with paragraph 7 of this Schedule. 3. After the Association has received evidence satisfactory to it that the Special Account has been duly opened, withdrawals of the Authorized Allocation and subsequent withdrawals to replenish the Special Account shall be made as follows: (a) For withdrawals of the Authorized Allocation, the Borrower shall furnish to the Association a request or requests for a deposit or deposits which do not exceed the aggregate amount of the Authorized Allocation. On the basis of such request or requests, the Association shall, on behalf of the Borrower, withdraw from the Credit Account and deposit into the Special Account such amount or amounts as the Borrower shall have requested. (b) (i) For replenishment of the Special Account, the Borrower shall furnish to the Association requests for deposits into the Special Account at such intervals as the Association shall specify. (ii) Prior to or at the time of each such request, the Borrower shall furnish to the Association the documents and other evidence required pursuant to paragraph 4 of this Schedule for the payment or payments in respect of which replenishment is requested. On the basis of each such request, the Association shall, on behalf of the Borrower, withdraw from the Credit Account and deposit into the Special Account such amount as the Borrower shall have requested and as shall have been shown by said documents and other evidence to have been paid out of the Special Account for eligible expenditures. All such deposits shall be withdrawn by the Association from the Credit Account under the respective eligible Categories, and in the respective equivalent amounts, as shall have been justified by said documents and other evidence. 4. For each payment made by the Borrower out of the Special Account or by the Assemblies out of any of the Advance Accounts, the Borrower shall, at such time as the Association shall reasonably request, furnish to the Association such documents and other evidence showing that such payment was made exclusively for eligible expenditures. 5. Notwithstanding the provisions of paragraph 3 of this Schedule, the Association shall not be required to make further deposits into the Special Account: (a) if, at any time, the Association shall have determined that all further withdrawals should be made by the Borrower directly from the Credit Account in accordance with the provisions of Article V of the General Conditions and paragraph (a) of Section 2.02 of this Agreement; (b) if the Borrower shall have failed to furnish to the Association, within the period of time specified in Section 4.01 (b) (ii) of this Agreement, any of the audit reports required to be furnished to the Association pursuant to said Section in respect of the audit of the records and accounts for the Special Account or the Advance Accounts; Page 16 (c) if, at any time, the Association shall have notified the Borrower of its intention to suspend in whole or in part the right of the Borrower to make withdrawals from the Credit Account pursuant to the provisions of Section 6.02 of the General Conditions; or (d) once the total unwithdrawn amount of the Credit allocated to the eligible Categories, less the amount of any outstanding special commitment entered into by the Association pursuant to Section 5.02 of the General Conditions with respect to the Project, shall equal the equivalent of twice the amount of the Authorized Allocation. Thereafter, withdrawal from the Credit Account of the remaining unwith- drawn amount of the Credit allocated to the eligible Categories shall follow such procedures as the Association shall specify by notice to the Borrower. Such further withdrawals shall be made only after and to the extent that the Association shall have been satisfied that all such amounts remaining on deposit in the Special Account as of the date of such notice will be utilized in making payments for eligible expenditures. 6. If the Association shall have determined at any time that any payment out of the Advance Account or the Special Account: (i) was made for an expenditure or in an amount not eligible pursuant to paragraph 2 of this Schedule; or (ii) was not justified by the evidence furnished to the Association, the Borrower shall, promptly upon notice from the Association: (A) provide such additional evidence as the Association may request; or (B) deposit into the Special Account (or, if the Association shall so request, refund to the Association) an amount equal to the amount of such payment or the portion thereof not so eligible or justified. Unless the Association shall otherwise agree, no further deposit by the Association into the Special Account shall be made until the Borrower has provided such evidence or made such deposit or refund, as the case may be. 7. (a) The Borrower shall withdraw from the Special Account and deposit into each Advance Account funds to assist the beneficiary of such account to pay for works, goods and services under the Project. Such withdrawals and deposits shall be in amounts sufficient to assist each beneficiary, in the manner contemplated in Schedule 4 to this Agreement, to pay for such goods, works and services in due course, provided that at no time shall the Borrower cause the amount held in any Advance Account to exceed the equivalent of $200,000 each for Accra, Kumasi and Shama- Ahanta East, and $100,000 each for Tema and Tamale. (b) Payments out of Advance Accounts shall only be made for eligible expenditures in respect of Categories (1) to (4) set forth in the table in paragraph 1 of Schedule 1 to this Agreement. (c) Any withdrawal from any Advance Account must be justified to the Borrower by the same documentation and other evidence regarding eligible expenditures provided for under paragraph 3 of this Schedule. (d) If the Association or the Borrower shall have determined at any time that any amount outstanding in any Advance Accounts will not be required to cover further payments for eligible expenditures, the beneficiary of such Advance Account shall, promptly upon notice from the Association or the Borrower, refund to the Special Account such out- standing amount.