Conformed Copy - C2206 - First Urban Project - Project Agreement

Page 1 CONFIRMED COPY CREDIT NUMBER 2206 UG (First Urban Project) between INTERNATIONAL DEVELOPMENT ASSOCIATION and KAMPALA CITY COUNCIL Dated March 12, 1991 CREDIT NUMBER 2206 UG PROJECT AGREEMENT AGREEMENT, dated , 1991, between INTERNATIONAL DEVELOPMENT ASSOCIATION (the Association) and KAMPALA CITY COUNCIL (KCC). WHEREAS (A) by the Development Credit Agreement of even date herewith between the Republic of Uganda (the Borrower) and the Association, the Association has agreed to make available to the Borrower an amount in various currencies equivalent to twenty million seven hundred thousand Special Drawing Rights (SDR 20,700,000), on the terms and conditions set forth in the Development Credit Agreement, but only on condition that KCC agree to undertake such obligations toward the Association as are set forth in this Agreement; (B) by a subsidiary loan agreement to be entered into between the Borrower and KCC, part of the proceeds of the credit Page 2 provided for under the Development Credit Agreement will be made available to KCC on the terms and conditions set forth in the Subsidiary Loan Agreement; and WHEREAS KCC, in consideration of the Association's entering 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 "FY" means the fiscal year of KCC, which begins on October 1 of each year and ends on September 30 of the following year. ARTICLE II Execution of the Project Section 2.01. (a) KCC declares its commitment to the objectives of the Project as set forth in Schedule 2 to the Development Credit Agreement and, to this end, shall carry out Parts A, B, C.1 and D.1 of the Project with due diligence and efficiency and in conformity with appropriate administrative, financial and engineering practices, and shall provide, or cause to be provided, promptly as needed, the funds, facilities, services and other resources required for the Project. (b) Without limitation upon the provisions of paragraph (a) of this Section and except as the Association and KCC shall otherwise agree, KCC shall carry out Parts A, B, C.1 and D.1 of the Project in accordance with the Implementation Program set forth in the Schedule to this Agreement. Section 2.02. Except as the Association shall otherwise agree, procurement of the goods, works and consultants' services required for Parts A, B, C.1 and D.1 of the Project and to be financed out of the proceeds of the Credit shall be governed by the provisions of Schedule 3 to the Development Credit Agreement. Section 2.03. KCC 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 Project Agreement and Parts A, B, C.1 and D.1 of of the Project. Section 2.04. KCC shall duly perform all its obligations under the Subsidiary Loan Agreement. Except as the Association shall otherwise agree, KCC shall not take or concur in any action which would have the effect of amending, abrogating, assigning or waiving the Subsidiary Loan Agreement or any provision thereof. Section 2.05. (a) KCC shall, at the request of the Association, exchange views with the Association with regard to the progress of the Project, the performance of its obligations under this Agreement and under the Subsidiary Loan Agreement, and other matters relating to the purposes of the Credit. (b) KCC shall promptly inform the Association of any condition which interferes or threatens to interfere with the progress of the Project, the accomplishment of the purposes of the Credit, or the performance by KCC of its obligations under this Agreement and under the Subsidiary Loan Agreement. ARTICLE III Page 3 Management and Operations of KCC Section 3.01. KCC shall carry on its operations and conduct its affairs in accordance with sound administrative and financial practices under the supervision of qualified and experienced management assisted by competent staff in adequate numbers. Section 3.02. KCC 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, financial and municipal practices. Section 3.03. KCC shall 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. ARTICLE IV Financial Covenants Section 4.01. (a) KCC shall maintain records and accounts adequate to reflect in accordance with sound accounting practices its operations and financial condition. (b) KCC 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. KCC shall, for the purposes of Parts A, B, C.1 and D.1 of the Project, open and maintain in a commercial bank, until the completion of the Project, an advance account and deposit therein an amount of the Uganda Shillings equivalent to twenty-seven thousand dollars ($27,000). Thereafter, KCC shall at the beginning of each quarter, deposit the amount estimated to be required to cover 50% of the expenditures for Parts A, B, C.1 and D.1 of the Project during such quarter which are not covered by withdrawals from the Credit Account, the GTZ Grant, or the NDF Loan. Section 4.03. KCC shall take all measures necessary to: (a) recover costs of providing municipal services through increases, in a timely manner, of user charges and fees for such services; and (b) ensure that the Uganda Land Commission within MLS and the Borrower's parastatal bodies settle all arrears on property charges due to KCC, in accordance with a schedule of payments satisfactory to the Association which shall include the collection by KCC of: (a) at least Uganda Shillings five hundred million (Ug. Sh. 500,000,000) by June 30, 1991; and (b) an additional amount of Page 4 one billion Uganda Shillings (Ug. Sh. 1,000,000,000) by June 30, 1992. Section 4.04. (a) KCC shall ensure that, unless otherwise agreed with the Borrower and the Association, the lines of credit available to KCC for recurrent expenditure with the banking system shall not exceed an amount in Uganda Shillings equal to the average of two months revenue collected by KCC in the preceding fiscal year. (b) For the purposes of this Section the average of one month's revenue collected shall be determined by dividing the aggregate amount of revenue collected by KCC during such year by twelve. Section 4.05. KCC shall take all measures necessary to ensure that the audited accounts for its FY 1989/90 are completed and copies thereof furnished to the Association by June 30, 1991. 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 KCC 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 25 years after the date of this Agreement. (b) If the Development Credit Agreement terminates in accordance with its terms before the date specified in paragraph (a) (ii) of this Section, the Association shall promptly notify KCC 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 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: Telex: INDEVAS 197688 (TRT), Page 5 Washington, D.C. 248423 (RCA), 64145 (WUI) or 82987 (FTCC) For Kampala City Council: Kampala City Council P.O. Box 7010 Kampala, Uganda 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 KCC, may be taken or executed by the Town Clerk or such other person or persons as the Town Clerk shall designate in writing, and KCC shall furnish to the Association sufficient evidence of the authority and the authenticated specimen signature of each such person. Section 6.03. This Agreement may be executed in several counterparts, each of which shall be an original, and all collectively but one instrument. IN WITNESS WHEREOF, the parties hereto, acting through their 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 KAMPALA CITY COUNCIL By /s/ Stephen K. Katenta-Apuli Authorized Representative SCHEDULE Implementation Program 1. KCC shall be responsible for the implementation of Parts A, B, C.1 and D.1 of the Project with the assistance of PCU. Part A of the Project: 2. In order to effectively improve Kampala's refuse collection and disposal system, KCC shall: (a) by April 30, 1992, define and adopt an environmental policy statement, satisfactory to the Association, with special emphasis on solid waste management; and (b) take all measures necessary to increase the monthly volume of waste disposed in Kampala from the present 7000 m3 to 16000 m3 by December 31, 1993. 3. KCC shall also prepare and submit to the Association by June 30, 1991, June 30, 1992, and June 30, 1993, respectively its proposed annual road maintenance program including an economic analysis, for the Association's review. Part B of the Project 4. KCC shall, with the assistance of MLS, ensure the timely Page 6 production of up-to-date maps of the Kampala area. 5. The Chief Physical Planner in MOHUD shall direct a multi-disciplinary team of planners, economists, engineers and financial analysts to be selected from KCC and the Physical Planning Department of MOHUD. The team shall, with the assistance of Ugandan and expatriate experts, undertake a two-year urban investment planning program to: (a) train 12 Ugandan planners with different professional backgrounds and an equal number of planning assistants in modern techniques of urban investment planning; (b) prepare outline structure plans and written statements covering the development of Kampala and at least one other local authority from 1990 - 2000; (c) prepare affordable investment programs, including relevant detail area development plans, preliminary engineering designs and cost estimates, for priority service sectors, for the period 1993 - 1998; and (d) organize a planning and programming unit within KCC. 6. KCC shall carry out Part B.2 (a) of the Project on a site of about 47 hectares in Kawaala, with the active participation of the local Resistance Council. KCC, shall also be responsible to make adequate budgetary allocations for the operating expenses of an elementary school, which shall be built as part of the development scheme of Kawaala. 7. KCC shall allocate serviced residential plots in Kawaala to heads of households who: (a) are citizens of Uganda of at least 21 years of age; (b) have regular incomes, not exceeding Uganda Shillings 100,000 per household per month; (c) have resided in greater Kampala for at least two years and; (d) do not already own a site or house in Kampala except those who already have a site in the Kawaala Project area. The standard agreement for plot allocation between KCC and heads of households shall be satisfactory to the Association. Part C of the Project 8. Since the municipal workshop will be repaired and equipped to provide only routine maintenance and servicing of vehicles and equipment, KCC undertakes to send all major repairs and servicing of vehicles and equipment to qualified private workshops. Part D.1 of the Project: 9. In order to strengthen its general financial and personnel management system and service operations KCC shall: (a) establish a linking arrangement with at least one local authority, outside Uganda that can provide long- and short-term technical specialists and practical attachments for KCC officers in specific operational areas in need of improvement; (b) establish a training unit within KCC that can mobilize and manage a full range of human resource development programs for KCC officials, officers and employees; (c) hire consultants and experts to assist the office of the Town Clerk in municipal management, organization development and the development of a personnel management system; and Page 7 (d) organize a wide range of short on-the-job, in-house and in-country training workshops and programs in such areas as financial management, revenue collection, market operations, general management, first-line supervision, street maintenance and other areas, as shall be satisfactory to the Association, and through a process of on-going needs assessment. 10. In order to implement the activities enumerated in paragraph 9 above KCC shall timeously employ a team of experts including: a municipal financial management specialist a revenue/audit/computer specialist an organizational development specialist a personnel systems specialist a market management specialist a vehicle maintenance specialist a solid waste management specialist a low-income housing specialist a road maintenance specialist and valuation and rating specialists. 11. KCC shall take all measures necessary to ensure that its revenue collection efficiency, measured as a percent of total outstanding revenue receivable shall be approximately: 27 percent in FY 1990 37 percent in FY 1991 47 percent in FY 1992 56 percent in FY 1993 87 percent in FY 1994.