Page  1
CONFORMED COPY
CREDIT NUMBER 3544-UG
Development Credit Agreement
(Project in Support of the Road Development Program Phase II)
between
THE REPUBLIC OF UGANDA
and
INTERNATIONAL DEVELOPMENT ASSOCIATION
Dated August 16, 2001
CREDIT NUMBER 3544-UG
DEVELOPMENT CREDIT AGREEMENT
AGREEMENT, dated August 16, 2001, between THE REPUBLIC OF UGANDA (the Borrower) 
and the INTERNATIONAL DEVELOPMENT ASSOCIATION (the Association).
WHEREAS (A) the Association has received a letter dated January 17, 2001 from 
the Borrower describing a program of actions, objectives and policies designed to 
reinforce the Borrower’s efforts towards the promotion of cheaper, efficient and 
reliable transport services as a means of facilitating economic development (the 
Program) and declaring the Borrower's commitment to the execution of the Program; 
(B)
the Borrower has requested that the Association support its execution of 
the Program through a series of Credits over a period of about eight years, the 
proceeds of such Credits to be utilized by the Borrower for implementing the Program; 
(C)
the Borrower and the Association have entered into a development credit 
agreement dated November 22, 1999 under which the Association has lent SDR 67,200,000 
in support of the first phase of the Program (the First Credit);
(D)
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 which constitutes the second 
phase of the Program; 
(E)
the Borrower intends to contract from the Nordic Development Fund (NDF) a 
credit in an amount equivalent to 8,900,000 US Dollars (the NDF Credit) to assist in 
Page  2
financing Parts E and F of the Project on the terms and conditions set forth in an 
agreement to be entered into between the Borrower and NDF; and
WHEREAS 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, (as amended through October 6, 
1999), with the modifications set forth below (the General Conditions), constitute an 
integral part of this Agreement.
(a)
A new paragraph (12) is added to Section 2.01 to read as set forth below, 
and the existing paragraphs (12) through (14) of said Section are accordingly 
renumbered as paragraphs (13) through (15):
"12. ‘Participating Country’ means any country that the Association determines 
meets the requirements set forth in Section 11 of Resolution No. 194 of the 
Board of Governors of the Association, adopted on April 8, 1999; and 
‘Participating Countries’ means, collectively, all such countries."; and 
(b)
The second sentence of Section 5.01 is modified to read:
"Except as the Borrower and the Association shall otherwise agree, no 
withdrawals shall be made: (a) on account of expenditures in the territories 
of any country which is not a Participating Country or for goods produced in, 
or services supplied from such territories; or (b) for the purposes of any 
payment to persons or entities, or for any import of goods, if such payment or 
import, to the knowledge of the Administrator, 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 and in the Preamble to this Agreement have the respective 
meanings therein set forth and the following additional terms have the following 
meanings:
(a)
"MOWHC" means the Borrower’s Ministry of Works, Housing and 
Communications;
(b)
"Special Account" means the account referred to in Part B.1 of Schedule 1 
to this Agreement;
(c)
"Eligible Categories" means categories (1), (2), and (3) set forth in the 
table in Part A.1 of Schedule 1 to this Agreement;
(d)
"Eligible Expenditures" means the expenditures for works, goods and 
services referred to in Section 2.02 of this Agreement;
(e)
"Project Account" means the account referred to in Section 3.04 (a) of 
this Agreement;
(f)
"RAFU" means the Road Agency Formation Unit established within MOWHC in 
September 1998;
(g)
"Road Agency" means the agency which the Borrower intends to establish 
under the Program to be responsible for all roads in the Borrower’s territory;
Page  3
(h)
"Project Implementation Plan" and "PIP" mean the comprehensive plan for 
the implementation of the project referred to in Paragraph 1 (c) of Schedule 4 to this 
Agreement;
(i)
"Financial Management Manual" means the finance, administration, and 
procurement manual referred to in Section 6.01 (c) (i) of this Agreement, which shall 
include the internal control procedures relating to the civil works and consulting 
services to be carried out under the Project, a chart of accounts,  and the format and 
content of financial reports and cash flow forecasts; 
(j)
"Project Management Report" means each report prepared in accordance with 
Section 4.02 of this Agreement; 
(k)
"Uganda Shilling" and "Ug. Sh." mean the currency of the Borrower;  
(l)
"NDF" means the Nordic Development Fund; 
(m)
"Environmental Mitigation Plan" means the Borrower’s plan dated April 
2000 and May 2000, related to the carrying out of all civil works under the Project in 
accordance with appropriate environmental standards and guidelines, and includes the 
preparation of plans of action to mitigate adverse environmental effects; 
(n)
"Resettlement and Land Acquisition Policy Framework" means the Borrower’s 
document that defines the principles and the procedures for resettlement and 
compensation allocations to impacted people related to the carrying out of all civil 
works under the Project;
(o)
"Resettlement Action Plan" means the Borrower’s plan related to the 
carrying out of all civil works under Part A of the Project in accordance with the 
Resettlement and Land Acquisition Policy Framework defined in Section 1.02 (n); and
(p)
"FY" or "Financial Year" means the Borrower’s financial year commencing 
on July 1 and ending on June 30 of the subsequent year.
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 fifty million nine hundred thousand Special Drawing 
Rights (SDR 50,900,000).
Section 2.02. The amount of the Credit may be withdrawn from 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.
Section 2.03. The Closing Date shall be June 30, 2006 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 canceled; and (ii) at 
the rate set as of the June 30 immediately preceding the accrual date and 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 date in 
Page  4
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 percent (3/4 of 1%) per annum on the principal amount of 
the Credit withdrawn and outstanding from time to time.
Section 2.06. Commitment charges and service charges shall be payable 
semiannually on March 15 and September 15 in each year.
Section 2.07. (a) Subject to paragraphs (b), (c), and (d) below, the Borrower 
shall repay the principal amount of the Credit in semi-annual installments payable on 
each March 15 and September 15 commencing September 15, 2011 and ending March 15, 
2041.  Each installment to and including the installment payable on March 15, 2021, 
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 per capita gross national product (GNP), as 
determined by the Association, shall have exceeded for three consecutive years the 
level established annually by the Association for determining eligibility to access 
the Association's resources; 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 
repayment of installments under paragraph (a) above by: (A) 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; and (B) requiring the Borrower to commence 
repayment of the principal amount of the Credit as of the first semiannual payment 
date referred to in paragraph (a) above falling six months or more after the date on 
which the Association notifies the Borrower that the events set out in this paragraph 
(b) have occurred, provided, however, that there shall be a grace period of a minimum 
of five years on such repayment of principal.
(c)
If so requested by the Borrower, the Association may revise the 
modification referred to in paragraph (b) above 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.
(d)
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 carry 
out the Project through MOWHC with due diligence and efficiency and in conformity with 
appropriate administrative, financial, engineering, environmental, and technical 
practices, and shall provide, promptly as needed, the funds, facilities, services, and 
Page  5
other resources required for the Project.
(b)
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 
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 purposes of Section 9.06 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. Without limitation to its obligations under Section 3.01 of this 
Agreement, the Borrower shall:
(a)
open and maintain an account (the Project Account) in Uganda Shillings in 
a commercial bank on terms and conditions satisfactory to the Association;
(b)
promptly thereafter, make an initial deposit into such account, in an 
amount in Ug. Sh. equivalent to $3,000,000, to finance the Borrower's contribution to 
the Project; 
(c)
thereafter deposit into the Project Account by January 15, April 15, July 
15 and October 15 in each year during Project Implementation, such amounts as shall be 
required to timely replenish the Project Account back to the amount of the initial 
deposit referred to in paragraph (b) above; and
(d)
use the Project Account funds exclusively to finance expenditures under 
the Project.
Section 3.05. The Borrower shall take all measures necessary to mitigate adverse 
environmental effects, all in accordance with the Environmental Mitigation Plan, in a 
manner satisfactory to the Association. 
Section 3.06. The Borrower shall furnish to the Association and thereafter 
implement: 
(a)
a revised Resettlement and Land Acquisition Policy Framework satisfactory 
to the Association; 
(b)
a revised Resettlement Action Plan for civil works to be carried out 
under Part A of the Project during the first year after the Effective Date; and
(c)
within ten months after the Effective Date, a revised Resettlement Action 
Plan related to the carrying out of each of the remaining civil works to be carried 
out under Part A of the Project.
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 
Page  6
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 the Project 
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, 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 and 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 was 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.
Section 4.02. (a) Without limitation upon the provisions of Section 4.01 of this 
Agreement, the Borrower shall carry out a time-bound action plan acceptable to the 
Association for the strengthening of its financial management system for the Project 
in order to enable the Borrower, not later than eighteen months after the Effective 
Date or such later date as the Association shall agree, to prepare quarterly Project 
Management Reports, acceptable to the Association, each of which:
(i)
(A) sets forth actual sources and applications of funds for the 
Project, both cumulatively and for the period covered by said 
report, and projected sources and applications of funds for the 
Project for the six-month period following the period covered by 
said report, and (B) shows separately expenditures financed out of 
the proceeds of the Credit during the period covered by said 
report and expenditures proposed to be financed out of the 
proceeds of the Credit during the six-month period following the 
period covered by said report;
(ii)
(A) describes physical progress in Project implementation, both 
cumulatively and for the period covered by said report, and (B) 
explains variances between the actual and previously forecast 
implementation targets; and
(iii)
sets forth the status of procurement under the Project and 
expenditures under contracts financed out of the proceeds of the 
Credit, as at the end of the period covered by said report.
(b)
Upon the completion of the action plan referred to in paragraph (a) of 
Page  7
this Section, the Borrower shall prepare, in accordance with guidelines acceptable to 
the Association, and furnish to the Association not later than 45 days after the end 
of each calendar quarter, a Project Management Report for such period.
ARTICLE V
Remedies of the Association
Section 5.01 Pursuant to Section 6.02 (l) of the General Conditions, the 
following additional event is specified, namely that an extraordinary situation shall 
have arisen which shall make it improbable that the Program or a significant part 
thereof will be carried out.
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 Borrower has established the Project Account and deposited therein 
the initial deposit referred to in Section 3.04 (b) of this Agreement;
(b)
the Borrower has furnished to the Association evidence that it has:
(i)
committed adequate counterpart funds for the carrying out of the 
Project in the Financial Years 2001/2 through 2003/4; and 
(ii)
established an accounting system satisfactory to the Association;
(c)
the Borrower has: (i) adopted the Financial Management Manual, in form 
and substance satisfactory to the Association; (ii) completed the computerization of 
the financial management system; and (iii) prepared quarterly and annual cash flow 
forecasts for the Financial Years 2001/2 through 2005/6; and
(d)
the Borrower has furnished to the Association (i) a revised Resettlement 
and Land Acquisition Policy Framework, satisfactory to the Association, and (ii) a 
revised Resettlement Action Plan for civil works to be carried out under Parts A and B 
of the Project during the first year after the Effective Date. 
Section 6.02. 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
Representative of the Borrower; Addresses
Section 7.01. The Minister of the Borrower at the time responsible for finance 
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 purposes of Section 
11.01 of the General Conditions:
For the Borrower:
Ministry of Finance, Planning and Economic Development
P. O. Box 8147
Kampala
Uganda
Cable address: 
Telex:
    FINSEC
61170
    Kampala
For the Association:
Page  8
International Development Association
1818 H Street, N.W.
Washington, D.C. 20433
United States of America
Cable address: 
Telex:
    INDEVAS
248423 (MCI) or
    Washington, D.C.
 64145 (MCI)
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.
THE REPUBLIC OF UGANDA
By /s/ John Nasasira
Authorized Representative
INTERNATIONAL DEVELOPMENT ASSOCIATION
By /s/ Theodore Ahlers
Acting Regional Vice President
Africa
SCHEDULE 1
Withdrawal of the Proceeds of the Credit 
A.
General
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 Allocated
   % of
(Expressed in Expenditures
Category
SDR Equivalent0
to be Financed
(1)
Civil works
   40,720,000 75%
(2)
Goods
230,000
100% of foreign
expenditures
(3)
Consultants'
    5,840,000 80%
services,
Training and
Audits Fees
(4)
Unallocated
    4,110,000
TOTAL
   50,900,000
2.
For the purposes of this Schedule, the term "foreign expenditures" means 
expenditures in the currency of any other country other than that of the Borrower, for 
goods or services supplied from the territory of any country other than that of the 
Borrower. 
Page  9
3.
Notwithstanding the provisions of paragraph 1 above, no withdrawals shall be 
made in respect of payments made for expenditures prior to the date of this Agreement.
4.
The Association may require withdrawals from the Credit Account to be made on 
the basis of statements of expenditure for expenditures for: (a) works and goods 
costing less than $250,000 equivalent per contract; and (b) consultants’ services 
under contracts costing less than $100,000 equivalent for firms and $50,000 equivalent 
each for individuals, under such terms and conditions as the Association shall specify 
by notice to the Borrower.
B.
Special Account
1.
The Borrower shall open and maintain in dollars a separate special deposit 
account (the Special Account) in a commercial bank, on terms and conditions 
satisfactory to the Association, including appropriate protection against set-off, 
seizure and attachment.
2.
After the Association has received evidence satisfactory to it that the Special 
Account has been opened, withdrawals from the Credit Account of amounts to be 
deposited into the Special Account shall be made as follows:
(a)
until the Association shall have received: (i) the first Project 
Management Report referred to in Section 4.02 (b) of this Agreement; and (ii) a 
request from the Borrower for withdrawal on the basis of Project Management Reports, 
withdrawals shall be made in accordance with the provisions of Annex A to this 
Schedule 1; and
(b)
upon receipt by the Association of a Project Management Report pursuant 
to Section 4.02 (b) of this Agreement, accompanied by a request from the Borrower for 
withdrawal on the basis of Project Management Reports, all further withdrawals shall 
be made in accordance with the provisions of Annex B to this Schedule 1.
3.
Payments out of the Special Account shall be made exclusively for Eligible 
Expenditures.  For each payment made by the Borrower out of the Special Account, 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.
4.
Notwithstanding the provisions of Part B.2 of this Schedule, the Association 
shall not be required to make further deposits into the Special Account:
(a)
if the Association determines at any time that any Project Management 
Report does not adequately provide the information required pursuant to Section 4.02 
of this Agreement;
(b)
if the Association determines at any time that all further withdrawals 
should be made by the Borrower directly from the Credit Account; or
(c)
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 (A) the records and accounts for the Special Account or (B) 
the records and accounts reflecting expenditures with respect to which withdrawals 
were made on the basis of Project Management Reports.
5.
The Association shall not be required to make further deposits into the Special 
Account in accordance with the provisions of Part B.2 of this Schedule 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 Section 6.02 of the General Conditions. Upon such notification, the 
Association shall determine, in its sole discretion, whether further deposits into the 
Special Account may be made and what procedures should be followed for making such 
deposits, and shall notify the Borrower of its determination.
6.
(a)
If the Association determines at any time that any payment out of the 
Special Account was made for an expenditure which is not an Eligible Expenditure, or 
was not justified by the evidence furnished to the Association, the Borrower shall, 
promptly upon notice from the Association, provide such additional evidence as the 
Association may request, or 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.  Unless the Association shall otherwise agree, no further deposit by the 
Page  10
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.
Annex A to SCHEDULE 1
Operation of Special Account
When Withdrawals Are Not Made
On the Basis of Project Management Reports
1.
For the purposes of this Annex, the term "Authorized Allocation" means an amount 
equivalent to $3,000,000 (three million dollars) to be withdrawn from the Credit 
Account and deposited into the Special Account pursuant to paragraph 2 of this Annex; 
provided, however, that, unless the Association shall otherwise agree, the Authorized 
Allocation shall be limited to an amount equivalent to $1,500,000 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 equal or exceed the equivalent of SDR 6,000,000.
2.
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 deposit into the Special Account of an 
amount or amounts which in the aggregate do not exceed the Authorized Allocation. 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.
(b)
For replenishment of the Special Account, the Borrower shall furnish to 
the Association requests for deposit into the Special Account at such intervals as the 
Association shall specify. 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 
Part B.3 of Schedule 1 to this Agreement 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. Each such deposit into the Special Account shall be 
withdrawn by the Association from the Credit Account under one or more of the Eligible 
Categories.
3.
The Association shall not be required to make further deposits into the Special 
Account, once the total unwithdrawn amount of the Credit allocated to the Eligible 
Categories minus the total amount of all outstanding special commitments entered into 
by the Association pursuant to Section 5.02 of the General Conditions in respect of 
expenditures to be financed out of the proceeds of the Credit allocated to said 
Categories, shall equal the equivalent of twice the amount of the Authorized 
Allocation. Thereafter, withdrawal from the Credit Account of the remaining 
unwithdrawn amount of the Credit allocated to said 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.
Annex B to SCHEDULE 1
Operation of Special Account
When Withdrawals Are Made
On the Basis of Project Management Reports
1.
Except as the Association may otherwise specify by notice to the Borrower, all 
withdrawals from the Credit Account shall be deposited by the Association into the  
Special Account in accordance with the provisions of Schedule 1 to this Agreement. 
Each such deposit into the Special Account shall be withdrawn by the Association from 
the Credit Account under one or more of the Eligible Categories.
2.
Each application for withdrawal from the Credit Account for deposit into the 
Special Account shall be supported by a Project Management Report.
3.
Upon receipt of each application for withdrawal of an amount of the Credit, the 
Association shall, on behalf of the Borrower, withdraw from the Credit Account and 
Page  11
deposit into the  Special Account an amount equal to the lesser of: (a) the amount so 
requested; and (b) the amount which the Association has determined, based on the 
Project Management Report accompanying said application, is required to be deposited 
in order to finance Eligible Expenditures during the six-month period following the 
date of such report; provided, however, that the amount so deposited, when added to 
the amount indicated by said Project Management Report to be remaining in the Special 
Account, shall not exceed the equivalent of $11,000,000.
SCHEDULE 2
Description of the Project
The objective of the Project is to improve access to rural areas and 
economically productive areas and to enhance the Borrower’s road sector planning and 
management, and road safety management.
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:
Upgrading and Strengthening of National Roads 
1.
Upgrading to paved (bitumen) standard of: (a) about 46 km of the Karuma-Olwiyo 
gravel road; and (b) about 62 km of the Olwiyo-Packwach gravel road. 
2.
Strengthening of about 163 km of the Katunguru-Kasese-Fort Portal road, the 
Kasese-Mpondwe (Equator) road, and the Kasese-Kilembe road.
Part B:
Road Safety Improvement and Audit Study Action Plan
1.
The carrying out of design, construction, and monitoring of safety improvements 
on identified black-spots along the Kampala-Jinja and Kampala-Entebbe roads.
2.
(a)
Carrying out of a comprehensive revision of the road safety sections of 
the roads design manual and the general specifications for road works. 
(b)
Development of: (i) a manual for traffic signs and road markings, and 
(ii) a manual to prevent hazards at road construction and rehabilitation sites.
(c)
The provision of training, in the use and application of relevant manuals 
and the database system, to the staffs of MOWHC and RAFU. 
(d)
The provision of technical advisory services to the staff of the National 
Road Safety Council.
3.
(a)
The acquisition of enforcement equipment for speed control and breath 
alcohol measurement for use by the police and the provision of training.
(b)
Reviewing and updating the Highway code and development of a curriculum 
for Driving Instructors and Driving Schools, and development of road safety as a 
subject to be included in the curriculum of schools. 
(c)
The provision of technical advisory services to the Borrower’s Ministry 
of Health to research the epidemiology of road traffic injury trauma and for 
identification of interventions required to reduce its impact on public health in the 
Borrower's territory.
Part C:
Consultants' Services for Civil Works Supervision
The provision of technical advisory services for the supervision of civil works 
to be carried out under Parts A and B of the Project.
Part D:
Preparation of Transport Master Plan 
The provision of technical advisory services for the preparation and 
implementation of a national transport master plan inclusive of  the Greater Kampala 
metropolitan area.
Part E:
Innovative Technologies for Construction of Low-Volume Traffic Roads
The provision of technical advisory services and civil works (related to the 
Page  12
Matugga-Semuto-Kapeeka road) for the preparation of: (i) a feasibility study, 
including socioeconomic and environmental impact assessment, costs and potential cost 
benefits, and detailed project monitoring program during and after construction; (ii) 
designs for all proposed methods of construction; (iii) construction; (iv) supervision 
during construction; (v) monitoring program during and after construction; and (vi) 
design manuals, specifications, and guidelines, based on detailed analysis of data 
obtained through the monitoring program. 
Part F:
National Road Agency Building
The carrying out of a feasibility study, detailed design, and supervision of 
construction of the National Road Agency building.
* * *
The Project is expected to be completed by December 31, 2005.
SCHEDULE 3
Procurement and Consultants' Services
Section I.
Procurement of Goods and Works
Part A:
General
1.
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 and revised in January and August 1996, September 1997 and January 1999 
(the Guidelines), subject to (a) the modifications thereto set forth in paragraph 2 of 
this Part A (the Guidelines), and (b) the following Parts of this Section I.
2.
In paragraphs 1.6 and 1.8 of the Guidelines, the references to "Bank member 
countries" and "member country" shall be deemed to be references, respectively, to 
"Participating countries" and "Participating Country".
Part B:
International Competitive Bidding
1.
Except as otherwise provided in Part C of this Section 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 provisions shall apply to works to be procured under contracts 
awarded in accordance with the provisions of paragraph 1 of this Part B.
(a)
Preference for domestic contractors
The provisions of paragraphs 2.54 and 2.55 of the Guidelines and Appendix 2 
thereto shall apply to works to be carried out by domestic contractors.
(b)
Notification and Advertising 
The invitation to prequalify for each civil works contract estimated to cost 
$10,000,000 equivalent, and the invitation to bid for all contracts estimated to cost 
$200,000 or more, shall be advertised in accordance with the procedures applicable to 
large contracts under paragraph 2.8 of the Guidelines.
Part C:
Other Procurement Procedures
1.
National Competitive Bidding
Works contracts for black-spot improvements in Part B 1. of the Project 
estimated to cost up to an aggregate of $2,580,000 equivalent, may be procured under 
contracts awarded in accordance with paragraphs 3.3 and 3.4 of the Guidelines.
2.
Limited International Bidding 
Equipment for road safety in Part B of the Project estimated to cost less than 
$300,000 equivalent, may be procured under contracts awarded on the basis of limited 
international bidding procedures in accordance with paragraphs 3.2 of the Guidelines.
Page  13
Part D:
Review by the Association of Procurement Decisions
1.
Procurement Planning
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 each contract for: (a) works estimated to cost the equivalent of 
$250,000 or more; and (b) goods estimated to cost the equivalent of $250,000 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
Part A:
General
1.
Consultants’ services shall be procured in accordance with: (a) the provisions 
of the Introduction and Section IV of the "Guidelines: Selection and Employment of 
Consultants by World Bank Borrowers" published by the Bank in January 1997 and revised 
in September 1997 and January 1999, subject to (a) the modifications thereto set forth  
in paragraph 2 of this Part A, (the Consultant Guidelines); and (b) the provisions of 
the following Parts of this Section II.
2.
In paragraph 1.10 of the Consultant Guidelines, the references to "Bank member 
countries" and "member country" shall be deemed to be references, respectively, to 
"Participating Countries" and "Participating Country".
Part B:
Quality- and Cost-Based Selection
1.
Except as otherwise provided in Part C of this Section, consultants’ services 
shall be procured under contracts awarded in accordance with the provisions of Section 
II of the Consultant Guidelines, paragraph 3 of Appendix 1 thereto, Appendix 2 
thereto, and the provisions of paragraphs 3.13 through 3.18 thereof applicable to 
quality- and cost-based selection of consultants.
2.
The following provisions shall apply to consultants’ services to be procured 
under contracts awarded in accordance with the provisions of the preceding paragraph.  
The shortlist of consultants for services for supervision of civil works estimated to 
cost less than $200,000 equivalent per contract, may comprise entirely national 
consultants in accordance with the provisions of paragraph 2.7 of the Consultant 
Guidelines.
Part C:
Other Procedures for the Selection of Consultants
1.
Single Source Selection
Services for tasks that meet the requirements set forth in paragraph 3.8 to 3.11 
of the Consultant Guidelines, may, with the Association's prior agreement, be procured 
on single source basis. 
2.
Individual Consultants
Services for tasks that meet the requirements set forth in paragraph 5.1 of the 
Consultant Guidelines shall be procured under contracts awarded to individual 
consultants.
Part D:
Review by the Association of the Selection of Consultants
1.
Selection Planning 
Prior to the issuance to consultants of any requests for proposals, the proposed 
Page  14
plan for the selection of consultants under 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 Consultant Guidelines.  Selection of all consultants’ 
services shall be undertaken in accordance with such selection plan as shall have been 
approved by the Association, and with the provisions of said paragraph 1.
2.
Prior Review
(a)
With respect to each contract for the employment of consulting firms 
estimated to cost the equivalent of $200,000 or more, the procedures set forth in 
paragraphs 1, 2 (other than the third subparagraph of paragraph 2 (a)) and 5 of 
Appendix 1 to the Consultant Guidelines shall apply.
(b)
With respect to each contract for: (i) the employment of consulting firms 
estimated to cost the equivalent of $100,000 or more, but less than the equivalent of 
$200,000; and (ii) the employment of consultants on a single source basis pursuant to 
Part C 1 above, the procedures set forth in paragraphs 1, 2 (other than the second 
subparagraph of paragraph 2 (a)) and 5 of Appendix 1 to the Consultant Guidelines 
shall apply.
(c)
With respect to each contract for the employment of individual 
consultants estimated to cost the equivalent of $50,000 or more, the qualifications, 
experience, terms of reference and terms of employment of the consultants shall be 
furnished to the Association for its prior review and approval.  The contract shall be 
awarded only after said approval shall have been given.
3.
Post Review
(a)
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 Consultant Guidelines 
shall apply.
(b)
With respect to each contract referred to in subparagraph (a) of this 
paragraph 3, the terms of reference shall be furnished to the Association for its 
prior review and approval. The contract shall be awarded only after said approval 
shall have been given.
SCHEDULE 4
Implementation Program
1.
(a)
MOWHC shall have overall responsibility for the implementation of the 
Project through RAFU.  To this end, MOWHC shall continue to maintain RAFU with 
staffing and terms of reference satisfactory to the Association.
(b)
The Borrower shall: (i) take all measures necessary, including, if 
required,  the preparation of appropriate legislation, to establish the Road Agency; 
and (ii) if established thereafter, transfer to the Road Agency, RAFU’s responsibility 
for Project implementation.
(c)
MOWHC shall ensure that Project implementation shall at all times be 
carried out in accordance with the PIP and the Financial Management Manual
and, except 
as the Association shall otherwise agree, MOWHC shall not amend or waive any provision 
of the PIP or the Financial Management Manual so as to materially and adversely affect 
the implementation of the Project.
2.
The Borrower shall:
(a)
maintain policies and procedures adequate to enable it to monitor and 
evaluate on an ongoing basis, in accordance with the indicators set forth in Schedule 
5 to this Agreement, the carrying out of the Project and the achievement of the 
objectives thereof;
(b)
prepare, under terms of reference satisfactory to the Association, and 
furnish to the Association, on or about 18 months after the Effective Date, a report 
integrating the results of the monitoring and evaluation activities performed pursuant 
to paragraph (a) of this Section, on the progress achieved in the carrying out of the 
Project during the period preceding the date of said report and setting out the 
measures recommended to ensure the efficient carrying out of the Project and the 
Page  15
achievement of the objectives thereof during the period following such date; and
(c)
review with the Association, by 24 months after the Effective Date, or 
such later date as the Association shall request, the report referred to in 
subparagraph (b) of this paragraph, and, thereafter, take all measures required to 
ensure the efficient completion of the Project and the achievement of the objectives 
thereof, based on the conclusions and recommendations of the said report and the 
Association views on the matter.
SCHEDULE 5
Performance Indicators
PLEASE SEE ORIGINAL FOR PERFORMANCE INDICATORS, FORMAT WOULD NOT FIT INTO THE 
DATABASE