Conformed Copy - C3282 - Second Community Water and Sanitation Project - Project Agreement

Page 1 CONFORMED COPY CREDIT NUMBER 3282-GH Project Agreement (Second Community Water and Sanitation Project) between INTERNATIONAL DEVELOPMENT ASSOCIATION and COMMUNITY WATER AND SANITATION AGENCY Dated December 14, 1999 CREDIT NUMBER 3282-GH PROJECT AGREEMENT AGREEMENT, dated December 14, 1999, between INTERNATIONAL DEVELOPMENT ASSOCIATION (the Association) and COMMUNITY WATER AND SANITATION AGENCY (CWSA). 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 lend to the Borrower an amount in various currencies equivalent to eighteen million seven hundred thousand Special Drawing Rights (SDR 18,700,000), on the terms and conditions set forth in the Development Credit Agreement, but only on condition that CWSA agrees to undertake such obligations toward the Association as are set forth in this Agreement; and (B) by a subsidiary agreement to be entered into between the Borrower and CWSA, the proceeds of the Credit provided for under the Development Credit Agreement will be made available to CWSA on terms and conditions set forth in said Subsidiary Agreement; and WHEREAS CWSA, 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 Page 2 Definitions Section 1.01. Unless the context otherwise requires, the several terms defined in the Development Credit Agreement have the respective meanings therein set forth. ARTICLE II Execution of the Project Section 2.01. (a) CWSA 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 the Project with due diligence and efficiency and in conformity with appropriate administrative, financial, engineering, environmental, and technical 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 CWSA shall otherwise agree, CWSA shall carry out the Project in accordance with the Implementation Program set forth in Schedule 2 to this Agreement. Section 2.02. Except as the Association shall otherwise agree, procurement of the 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 2 to this Agreement. Section 2.03. (a) CWSA 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) in respect of the Project Agreement. (b) For the purposes of Section 9.07 of the General Conditions and without limitation thereto, CWSA shall: (i) 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 Association and CWSA, a plan for the future operation of the Project; and (ii) afford the Association reasonable opportunity to exchange views with CWSA on said plan. Section 2.04. CWSA shall duly perform all its obligations under the Subsidiary Agreement. Except as the Association shall otherwise agree, CWSA shall not take or concur in any action which would have the effect of assigning, amending, abrogating, or waiving the Subsidiary Agreement or any provision thereof. Section 2.05. (a) CWSA 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 Agreement, and other matters relating to the purposes of the Credit. (b) CWSA 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 CWSA of its obligations under this Agreement and under the Subsidiary Agreement. ARTICLE III Management and Operations of CWSA Section 3.01. CWSA shall carry on its operations and conduct its affairs in accordance with sound administrative, financial, and engineering practices under the supervision of qualified and experienced management assisted by competent staff in adequate numbers. Page 3 Section 3.02. CWSA 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, water and sanitation practices. Section 3.03. CWSA 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) CWSA shall establish and maintain a financial management system, including records and accounts, and prepare financial statements, all in accordance with accounting standards acceptable to the Association and consistently applied, adequate to reflect its operations and financial condition and to register separately the operations, resources, and expenditures for and in connection with the carrying out of the Project. (b) CWSA 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 standards 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)