Conformed Copy - C1874 - Priority Works Project - Project Agreement 1

Page 1 CONFORMED COPY CREDIT NUMBER 1874 GH (Priority Works Project) between INTERNATIONAL DEVELOPMENT ASSOCIATION and GHANA HIGHWAY AUTHORITY Dated February 18, 1988 PROJECT AGREEMENT AGREEMENT, dated February 18, 1988, between INTERNATIONAL DEVELOPMENT ASSOCIATION (the Association) and GHANA HIGHWAY AUTHORITY (GHA). WHEREAS (A) by the Development Credit Agreement of even date herewith between the Republic of Ghana (the Borrower) and the Association, the Association has agreed to make available to the Borrower an amount in various currencies equivalent to seven million eight hundred thousand Special Drawing Rights (SDR 7,800,000), on the terms and conditions set forth in the Development Credit Agreement, but only on condition that GHA agrees to undertake such obligations toward the Association as are set forth in this Agreement; (B) the proceeds of the credit allocated to Category (1) (a) in Schedule 1 to the Development Credit Agreement will be made available to GHA as a grant on terms and conditions satisfactory to the Association; and WHEREAS GHA, in consideration of the Association's entering Page 2 into the Development Credit Agreement with the Borrower, has agreed to undertake the obligations set forth in this Agreement; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I Definitions Section 1.01. Unless the context otherwise requires, the several terms defined in the Development Credit Agreement, the Preamble to this Agreement and in the General Conditions (as so defined) have the respective meanings therein set forth and the term "DRUs" means the District Roads Units mentioned in Section 2.01 (b) of, and Schedule 2 to, this Agreement. ARTICLE II Execution of the Project Section 2.01. (a) GHA declares its commitment to the objec- tives of the Project as set forth in Schedule 2 to the Development Credit Agreement and, to this end, shall carry out Parts A and E (1) of the Project with due diligence and efficiency and in conformity with appropriate administrative, financial, engineering and public works and employment practices, and shall provide, or cause to be provided, promptly as needed, the funds, facilities, services and other resources required for the Project. (b) GHA shall in consultation with the respective local councils of the DRUs: (i) establish and thereafter maintain in a form and with functions satisfactory to the Association a District Roads Unit for Tema (TDRU); and (ii) continue to maintain in a form and with functions satisfactory to the Association the District Roads Units established for Accra, Tema, Kumasi and Sekondi/Takoradi. Further provisions relating to the District Roads Units (DRUs) and GHA are set out in the Schedule to this Agreement, said Schedule being subject to modification by agree- ment between GHA and the Association. (c) Deposits into, and payments out of, the Special Account to be maintained for GHA pursuant to Section 2.02 (b) of the Development Credit Agreement shall be made in accordance with the provisions of Schedule 3 to the Development Credit Agreement. Section 2.02. 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 5 to the Development Credit Agreement. Section 2.03. GHA shall carry out the obligations set forth in Sections 9.03, 9.04, 9.05, 9.06, 9.07 and 9.08 of the General Conditions (relating to insurance, use of goods and services, plans and schedules, records and reports, maintenance and land acquisition, respectively) in respect of the GHA Project Agreement and Parts A and E (1) of the Project. Section 2.04. (a) GHA shall, at the request of the Associa- tion, exchange views with the Association with regard to the pro- gress of Parts A and E (1) of the Project, the performance of its obligations under this Agreement and other matters relating to the purposes of the Credit. (b) GHA shall promptly inform the Association of any condi- tion which interferes or threatens to interfere with the progress of Parts A and E (1) of the Project, the accomplishment of the purposes of the Credit, or the performance by GHA of its obligations under this Agreement. ARTICLE III Page 3 Management and Operations of GHA Section 3.01. GHA shall carry on its operations and conduct its affairs in accordance with sound administrative, financial, engineering and transportation practices under the supervision of qualified and experienced management assisted by competent staff in adequate numbers. Section 3.02. GHA shall at all times operate and maintain its plant, machinery, equipment and other property, and from time to time, promptly as needed, make all necessary repairs and renewals thereof, all in accordance with sound engineering and financial practices. Section 3.03. GHA shall take out and maintain with respon- sible insurers, or make other provision satisfactory to the Asso- ciation for, insurance against such risks and in such amounts as shall be consistent with appropriate practice. ARTICLE IV Financial Covenants Section 4.01. (a) GHA, with respect to the Project, shall maintain records and accounts adequate to reflect in accordance with sound accounting practices its operations and financial condition. (b) GHA shall: (i) have its records, accounts and financial statements (balance sheets, statements of income and expenses and related statements) for each fiscal year audited, in accordance with appropriate auditing principles consistently applied, by independent auditors acceptable to the Association; (ii) furnish to the Association as soon as available, but in any case not later than six months after the end of each such year: (A) certified copies of its financial statements for such year as so audited; and (B) the report of such audit by said auditors, of such scope and in such detail as the Association shall have reasonably requested; and (iii) furnish to the Association such other information concerning said records, accounts and financial statements as well as the audit thereof, as the Association shall from time to time reasonably request. Section 4.02. (a) For all expenditures with respect to which withdrawals from the Credit Account were made on the basis of statements of expenditures, GHA shall: (i) maintain or cause to be maintained in accordance with sound accounting practices, records and accounts reflecting such expenditures; (ii) ensure that all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures are retained 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 was made; and (iii) enable the Association's representatives to examine such records. (b) GHA shall: Page 4 (i) have the records and accounts referred to in para- graph (a) (i) of this Section and those for the Special Account for Parts A and E (1) of the Project 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 the report of such audit by said auditors, of such scope and in such detail as the Association shall have reasonably requested, including a separate opinion by said auditors as to whether the statements of expenditure submitted during such fiscal year, together with the proce- dures and internal controls involved in their pre- paration, can be relied upon to support the related withdrawals; and (iii) furnish to the Association such other information concerning said records and accounts and the audit thereof as the Association shall from time to time reasonably request. Section 4.03. GHA shall: (i) prepare annual and quarterly budgets for each component of the Project to be carried out by GHA; (ii) update the said budgets quarterly; and (iii) furnish to the Association no later than one month after the close of each quarter of the year, quarterly reports on actual and projected expenditure for each such component and the related Category of disbursement in Schedule 1 hereto. ARTICLE V Effective Date; Termination; Cancellation and Suspension Section 5.01. This Agreement shall come into force and effect on the date upon which the Development Credit Agreement becomes effective. Section 5.02. (a) This Agreement and all obligations of the Association and of GHA thereunder shall terminate on the earlier of the following two dates: (i) the date on which the Development Credit Agreement shall terminate in accordance with its terms; or (ii) the date 20 years after the date of this Agreement. (b) If the Development Credit Agreement terminates in accor- dance with its terms before the date specified in paragraph (a) (ii) of this Section, the Association shall promptly notify GHA of this event. Section 5.03. All the provisions of this Agreement shall continue in full force and effect notwithstanding any cancellation or suspension under the General Conditions. ARTICLE VI Miscellaneous Provisions Section 6.01. Any notice or request required or permitted to be given or made under this Agreement and any agreement between the parties contemplated by this Agreement shall be in writing. Such notice or request shall be deemed to have been duly given or made when it shall be delivered by hand or by mail, telegram, cable, telex or radiogram to the party to which it is required or permitted to be given or made at such party's address hereinafter specified or at such other address as such party shall have desig- Page 5 nated by notice to the party giving such notice or making such request. The addresses so specified are: For the Association: International Development Association 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: Telex: INDEVAS 440098 (ITT) Washington, D.C. 248423 (RCA) or 64145 (WUI) For GHA: The Chief Executive Ghana Highway Authority P.O. Box 1641 Accra, Ghana Cable address: HIGHWAYS Accra, Ghana Section 6.02. Any action required or permitted to be taken, and any document required or permitted to be executed, under this Agreement on behalf of GHA, or by GHA on behalf of the Borrower under the Development Credit Agreement, may be taken or executed by GHA's Chief Executive or such other person or persons as GHA shall designate in writing, and GHA shall furnish to the Associa- tion sufficient evidence of the authority and the authenticated specimen signature of each such person. Section 6.03. This Agreement may be executed in several counterparts, each of which shall be an original, and all collec- tively but one instrument. 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. INTERNATIONAL DEVELOPMENT ASSOCIATION By /s/ Edward V. K. Jaycox Regional Vice President Africa GHANA HIGHWAY AUTHORITY By /s/ Eric Otoo Authorized Representative SCHEDULE Provisions referred to in Section 2.01 (b) Page 6 A. District Roads Units (DRUs) 1. Each DRU shall report to the regional supervisor of GHA in the town or city in which the DRU operates and shall also be responsible for: (i) detailed identification of the infrastructure rehabilitation works to be executed in the project city or district; (ii) preparation of detailed designs, estimates and contract documentation; (iii) award of contracts for works; (iv) timely procurement of tools and equipment for works, with GHA's assistance; (v) supervision of works contracts; (vi) settle- ment of claims for work done; (vii) preparation and maintenance of project accounts; (viii) monitoring of the physical and financial progress under Part A of the Project; (ix) monthly reporting of project performance to GHA and the respective city or district council; and (x) liaising with agencies of the city or district council in the execution of project works. 2. A DRU shall be headed by a qualified engineer with at least five years of experience in infrastructure rehabilitation and maintenance works, assisted by at least two other graduate engineers, a qualified accountant, an assistant accountant, a computer programmer and at least four assistant engineers or works overseers. B. Ghana Highway Authority (GHA) 1. GHA's responsibilities with respect to Parts A and E (1) of the Project shall, without limitation or restriction on its other obligations under this Agreement, include: (i) finance and accounting; (ii) employment of consultants; (iii) budget and staffing of DRUs; (iv) technical and financial supervision of DRUs; (v) procurement of tools and equipment for project works; (vi) liaising with City and District Councils; (vii) preparation, and submission to TSC, of quarterly reports one month after each quarter on the financial status of Parts A and E (1) of the Pro- ject; and (viii) preparation, and submission to the Association, of quarterly reports on the physical and financial status of Parts A and E (1) of the Project. 2. GHA shall establish quarterly employment budgets and include in its quarterly reports to the Association details of employment generated under Parts A and E (1) of the Project.