CURRENCY EQUIVALENTS

(Exchange Rate Effective April 1997)

Currency Unit = Uganda Shillings (USh)USh = US$0.001US$ = USh 1000

FISCAL YEAR

July 1 - June 30

ABBREVIATIONS AND ACRONYMS

CAS Country Assistance StrategyEFMP 1 First Economic and Financial Management ProjectGoU Government of UgandaFUP First Urban ProjectICB International Competitive BiddingICBP Institutional Capacity Building ProjectIRR Economic Intemal Rate of ReturnIDA International Development AssociationKCC Kampala City CouncilLGDP Local Government Development ProgrammeM&E Monitoring and EvaluationMoFPED Ministry of Finance, Planning and Economic DevelopmentMoLG Ministry of Local GovernmentNCRP Nakivubo Channel Rehabilitation ProjectNGO Non Governmental OrganizationNPV Net Present ValueO&M Operation and MaintenanceSDR Special Drawing RightsSFR Strategic Framework for ReformSOE Statement of Expenditure

Vice President Callisto E. MadavoCountry Director James W. AdamsSector Manager Jeffrey S. RackiTask Team Leader Gautam Sengupta

REPUBLIC OF UGANDANAKIVUBO CHANNEL REHABILITATION PROJECT

TABLE OF CONTENTS

Project Financing Data ....................................................... i

A. Project Development Objective ................................................... 11. Project development objective and key performance indicators ........................... 12. Key Performance Indicators ...................................................... 1l

B. Strategic Context ...................................................... 1l

1. Sector-related CAS goal supported by the project ................................................. 12. Main sector issues and Government strategy ....................................................... 23. Sector issues to be addressed by the project and strategic choices ....................... 3

C. Project Description Summary ....................................................... 4

1. Project components ....................................................... 62. Key policy and institutional reforms supported by the project ............................... 63. Benefits and target population ....................................................... 74. Institutional and implementation arrangements ...................................................... 8

D. Project Rationale ....................................................... 9

1. Project alternatives considered and reasons for rejection ...................................... 92. Major related projects financed by the Bank

and/or other development agencies ...................................................... I 13. Lessons learned and reflected in proposed project design ..................................... 114. Indications of borrower commitment and ownership ... 1............. .... 2.... 125. Value added of Bank support in this project ...................................................... 13

E. Summary Project Analyses ...................................................... 13

1. Economic ...................................................... 132. Financial ...................................................... 143. Technical ...................................................... 174. Institutional ...................................................... 185. Social ...................................................... 1.86. Environmental assessment ...................................................... 187. Participatory approach ...................................................... 19

F. Sustainability and Risks ...................................................... 2.0

1. Sustainability ...................................................... 202. Critical risks ...................................................... 213. Possible controversial aspects ...................................................... 2 .1

G. Main Loan Conditions ..................................................... 22

1. Effectiveness conditions ................................................ 222. Other ................................................ 22

H. Readiness for Implementation ..................................................... 22

I. Compliance with Bank Policies ..................................................... 23

Annexes

Annex 1. Project Design Summary .24Annex 2. Detailed Project Description .29Annex 3. Estimated Project Costs .33Annex 4. Cost-Benefit Analysis Summary .34Annex 5. Financial Summary .40Annex 6. Procurement and Disbursement Arrangements .42

Table A. Project Costs by Procurement Arrangements .......................................... 47Table Al. Consultant Selection Arrangements ................................................ 48Table B. Thresholds for Procurement Methods and Prior Review .. 49Table C. Allocation of Loan Proceeds .......................................... 50

Annex 7. Project Processing Budget and Schedule .51Annex 8. Documents in Project File .52Annex 9. Statement of Loans and Credits .53Annex 10. Country at a Glance .5.6Annex 11 Procurement Strategy and Implementation Schedules .58

Maps: IBRDNo. 30199IBRD No. 30200

-i-

The Republic of UgandaNakivubo Channel Rehabilitation Project

Project Appraisal Document

Africa Region - Country Department 4

Date: April 13, 1999 Team Leader: Gautam SenguptaCountry Manager/Director: James W. Adams Sector Manager/Director: Jeffrey S. RackiProject ID: 59223 Sector(s): UY - Other Urban DevelopmentLending Instrument: Specific Investment Loan (SIL) Theme(s): Urban Drainage Infrastructure Rehabilitation

Poverty Targeted Intervention: No

Project Financing Data Loan [ Credit [X] Grant [ ] Guarantee [] Other (Specify) []

For Loans/Credits/Others:Amount (US$m) 22.38

Proposed Terms: [X] Multicurrency [ ] Single CurrencyGrace period (years) 10 [ Standard Variable [ ] Fixed [ LIBOR-basedYears to maturity 40Commitment fee : 0.50%Service charge 0.75%

Financing Plan:

Source Local Foreign Total

IDA 7.17 15.21 22.38KCC 0.97 1.57 2.54Total: 8.14 16.78 24.92

Borrower: Republic of UgandaGuarantor: Not ApplicableResponsible agency: Kampala City CouncilImplementing agency(ies): Kampala City Council

Address: Office of the Town Clerk, P.O. Box 7232, Kampala, UgandaContact Person: Mr. David Kiggundu-Tamale

Telephone: (256-41) 258-505/344-535 Fax: (256-41) 231-916 Email: urban@,imul.com

Estimated disbursements (Bank FY/US$M):FY 2000 2001 2002 2003

Annual 10.880 11.620 1.945 0.475Cumulative 10.880 22.500 24.445 24.920

Project implementation period: 3 years

Expected effectiveness date: July 1, 1999 Expected closing date: June 30, 2002

Project Appraisal Document Page 1Country: Uganda Project Title: Nakivubo Channel Rehabilitation Project

A: PROJECT DEVELOPMENT OBJECTIVE

1. Project development objective: (see Annex 1)

1. The project's physical objective aims at making a positive impact on the drainage and road networkin Kampala by alleviating the frequent and increasing incidence of flooding which has adverse effects on theroad network, traffic flow, economic activity and overall living conditions in the city. The institutionalobjectives of the project are: (a) to encourage and enhance the Kampala City Council's (KCC) ability to plan,manage and execute complex investment decisions and programs; and (b) to establish the primacy ofmaintenance of key infrastructure investments. This operation, which will be the largest civil works projectthat the KCC has ever undertaken, would therefore serve as a testing ground to support KCC's reformprogram initiated under the ongoing IDA financed First Urban Project (Credit 2206-UG).

2. Key performance indicators: (see Annex 1)

2. Progress in achieving these objectives by the project closing date of June 30, 2002 will be evaluatedon the basis of the following performance indicators:

* on schedule, on budget completion of construction program;* initiation of a fully funded routine and periodic maintenance program by KCC;* reduced incidence of flooding;• less complaints about flooding from the media and other public fora; and* reduction of flood-related traffic congestion delays.

B: STRATEGIC CONTEXT

. Sector-related Country Assistance Strategy (CAS) goal supported by the project: (see Annex])

Document number: 16540 Date of latest CAS discussion: May 20, 1997

3. A primary objective of IDA's strategy for Uganda is alleviation of poverty through increasedeconomic activity. An assumed basic element in support of this CAS goal is efficient service delivery at thelocal level. The rationale for the proposed project lies in the premise that improvement in the quality andreliability of basic infrastructure facilities in the public domain will promote industrial and commercialdevelopment, support employment generation and thus alleviate poverty.

4. The proposed Nakivubo Channel Rehabilitation Project (NCRP) will support IDA's strategy forUganda in the following ways:

(i) Improving the reliability of urban road usage will reduce transportation costs thus encouraging industrialand commercial development leading to job creation which will support poverty alleviation.

(ii) Reduction in the frequency and volume of flooding will result in appreciation of urban land/propertyvalues for Kampala, thus improving the city's capacity for economic development.

(iii) Less disruptions to the city residents' social and economic life will improve their well-being and capacityfor productive work.

5 . KCC, the largest urban center in the country, is also very significant to the overall national economy.Benefits of an efficiently managed and well-serviced Kampala will accrue to the country at large. Theproposed investments will be carried out in the context of a comprehensive and long-term program ofinstitutional, financial and operational reforms currently underway in the context of the ongoing First UrbanProject. This reform program, developed internally within KCC in a collaborative manner, is embodied in a


policy document entitled the "Strategic Framework For Reform" (SFR). The contents of the SFR was agreedwith IDA and formally adopted by the Kampala City Council in September 1998. While the proposedproject has its anchor in the ongoing reform program within KCC, IDA's future participation in Kampala'scontinuing development efforts will depend on its adherence to the reform program.

2. Main sector issues and Government strategy:

6. As a part of its Public Investment. Plan, the Government of Uganda (GoU) has been engaged inrebuilding key infrastructure to promote economic growth and alleviate poverty. The proposed NakivuboChannel Rehabilitation Project represents a major deferred investment in the capital city of the country and isapart of the Government's Public Investment Plan. To support financing of this investment the Governmentintends to borrow under the IDA credit and pass on the resources as a grant to the Kampala City Council.

7. The proposed NCRP has its origin in the IDA-financed First Urban Project which has been ongoingsince November 1991. During the October 1993 mid-term review, the Government and IDA agreed that KCCshould concentrate on actions to rebuild its institutional capacity and develop and implement a plan of actionto improve KCC's finances and operations. The Govermment and IDA agreed on a restructured project alongthese lines in April 1994. However, given the slow pace of progress in achieving the targets put forth in therestructured project, around November 1996, a proposal was made to restructure and reorganize the KCC andhave it implement a program of "Strategic Framework for Reform". It was also recognized that fundamentalchanges in the way KCC is managed and run needed to be made in the context of the overall policy ofdecentralization in the country where financial resources and functions were being devolved to lower levels ofgovernment to ensure more efficient and effective delivery of basic services. Though IDA provided input onthe guiding principles of the SFR, the program itself was developed in-house in the KCC with full buy-infrom all the relevant stakeholders in the organization including the Council, the management of KCC and thelabor union. The main elements of the SFR are:

* downsizing of KCC's staff base to retain just core staff for functional responsibilities associated withmoving from the traditional department-based organization to a service-based cost center structure;

* contracting out all non-statutory functions (both service delivery and management); and* improving financial management practices.

8. Appreciable progress has been made since the inception of the SFR in January 1997. KCC hasundertaken some fundamental policy reforms which include: (i) Private sector involvement in the provision ofbasic services through contracting out revenue collection from taxi parks, markets and street parking; smallworks such as road sweeping, grass cutting and desilting in the Central Division of Kampala; KCC's securityservices; and refuse collection whereby seven companies have been authorized to collect refuse fromhomesteads. This contracting out of basic service delivery functions has resulted in reducing KCC's overheadexpenditures and improved service delivery standards. (ii) Organizational restructuring with a view torationalizing the structure of KCC through reductions in the workforce has already resulted in substantiallyreduced wage bills from USh 480 million (US$480,000) in 1996/97 to USh 200 million (US$200,000) in1998/99. KCC has also instituted a Core Team to act as a management tool in monitoring and implementingthe SFR. (iii) To ensure sound financial management practices and accountability the following has beendone: introduction of cost center budgeting; preparation of realistic budgets; introduction of more rigorousinternal financial regulations and procedures to complement the Local Government Financial Regulations of1998; and strengthening of the Internal Audit unit. (iv) A detailed review to update the legal framework isunderway. (v) Divestiture of unproductive assets such as old vehicles, plant and equipment has happened-these assets have been sold off by tender. (vi) KCC has also instituted a policy of stakeholder involvement inthe decision making process for some of its recent special projects. These include the Kyaggwe RoadCorridor Traffic Improvement Project financed under the First Urban Project, consultation with private refusecollectors on the draft solid waste management ordinance, and conducting a social impact assessment for theproposed Nakivubo Channel Rehabilitation Project.


9. The Government's strategy with regard to Kampala is anchored in its objective to restore keyinfrastructure in Kampala to make it a more efficient and livable city. In this context the rehabilitation of theNakivubo Channel is significant given that it is the main drainage channel in Kampala. It used to be an earthdrain which was channeled in the 1 930s through some civil works and functioned fairly well till about the1960s. Gradually, however, because of non-maintenance its efficacy declined. The channel floods frequentlyduring rains causing considerable hindrance to economic activity in the populated areas such as the CentralBusiness District of Kampala, deterioration of the adjacent road network and suffering to the populace atlarge. This situation was further exacerbated by the El Nifno rains in 1997-98 which were particularly heavy.Under the First Urban Project, some monies had been set aside to do some rehabilitation work along certainsections of the channel. However, given the state of deterioration of the channel, it was rightly felt that merepatchwork would not suffice and the significance of the channel to the Greater Kampala area being what it is,it was proposed that a holistic rehabilitation of the channel should be undertaken. There was not enoughmoney under the First Urban Project, however, to undertake the full scale of work and, at the same time,supportthe fundamental objectives and initiatives underthe SFR. Consequently, the GovernmentrequestedIDA assistance to fully finance a new operation, i.e., the NCRP. The Government's strategic objective forKampala, through the NCRP therefore includes the following:

• Less flooding of Kampala's Central Business District streets which will increase their economic lifethus providing savings in maintenance costs leading to more efficient delivery of other basic urbanservices.

* Ensuring appropriate maintenance discipline thus enhancing sustainability of infrastructureinvestments.

• The need for improved infrastructure services to facilitate commercial and industrial development andthus support poverty alleviation efforts.

3. Sector issues to be addressed by the project and strategic choices:

(i) Reduction of flooding of the Nakivubo Channel will attract more private investment in areas originallyflooded, thus creating jobs and reducing poverty.

(ii) The project will promote privatization/contracting out of the operations and maintenance (O&M)activities of the rehabilitated channel, thereby building local capacity in maintenance of drainage channels.This will lead to privatization/contracting out of maintenance activities of other drainage systems in the city.It should be noted here that under the Strategic Framework for Reform initiative begun under the First UrbanProject, various non-statutory functions have already been contracted out by KCC. In certain instances whereadequate private sector capacity does not exist for assuming some of these functions, e.g., solid wastecollection, transportation and disposal, KCC is assisting by enacting enabling bylaws for the creation of thisprivate sector capacity. In addition, KCC was given assistance in developing simple contract documents forsmall works which will be reviewed against the ones that the Bank has developed for small works projects inAfrica and further refined.

(iii) Financing of operations and maintenance costs to be done by KCC to ensure sustainability of theinvestment. KCC has contracted out a major portion of its revenue generating activities. KCC has alreadyagreed to put some of these commercial revenues into an escrow account for financing the O&M costs of therehabilitated channel. This will be reflected as a specific financial covenant.

(iv) Capacity building for KCC, local consultants and contractors during project preparation, implementation,operation and maintenance will be addressed. Technical assistance toward developing adequate procurementprocedures and controls within an appropriate regulatory framework will be provided through KCC'stechnical cooperation partner, the Kirklees Metropolitan Council of the U.K., currently financed under theFirst Urban Project to assist KCC in various areas such as organizational restructuring, financial management,solid waste management, engineering issues especially related to transport, etc. This arrangement is unique in


that unlike traditional consultancies, technical assistance is provided by a fellow practitioner, in this case, acity government coming from a similar experience base. Some key success stories in this regard pertain to theremediation of the Mpererwe landfill site, improvements in traffic management along selected road corridors,organizational restructuring and financial management system reforms.

(v) KCC's management and supervision capacity of a large investment of this nature to be supplemented by aConstruction Supervision Consultant who will ensure skills transfer to the KCC staff.

C. PROJECT DESCRIPTION SUMMARY

10. The project has the following specific components to be financed by IDA with KCC providing thecounterpart funds:

* Civil Works comprising of the Main Channel, Auxiliary Works and Priority Drainage "BlackSpots" Rehabilitation.

* Project Implementation Support i.e. a consultant for Construction Supervision.* Program and Policy Studies consisting of the Kampala Drainage Master Plan Study and the

Kampala Urban Transportation Improvement Programme Study.* Institutional Support to KCC's Strategic Framework for Refonn Program, initiated under the First

Urban Project and to be further deepened under the proposed project, includes RevenueEnhancement Activities; Seed Funds to Facilitate Contracting out of Basic Service DeliveryFunctions; and Implementation Support and Training. In addition, a framework for developing along-tenn Kampala City Development Strategy which brings together these various initiatives in acohesive manner will also be supported under this component.

(i) Civil Works

(a) Main Channel Works: Under this component 9 km of channel will be de-silted and rehabilitated,the major part having sides lined with gabions to the top including free board and the bed in unlinedearth. All along the rehabilitated channel from upstream to downstream, the various existing culvertsand bridges will be widened to accommodate the new channel widths. Similarly, existing footbridgeswill be replaced with larger ones while several new ones will be constructed at points of increasedpedestrian traffic. Guardrails and rubbish screens will be installed at various strategic points along thechannel. Realignment and/or protection of existing utility services such as water mains, sewer mains,telephone and electricity cables will be done where necessary. The channel is designed for a ten yearreturn period storm, while all culverts along the channel and bridges are designed for a one hundred yearreturn period storm.

(b) Auxiliary Works: In addition, the following four major auxiliary drainage works close to theNakivubo Channel or its tributaries which also contribute to the flooding problem, will be rehabilitatedto handle a ten year return period storm. (i) Clock Tower Roundabout where proposed improvementsinclude construction of stone pitched and concrete lined drains across the road width; installation of largediameter culverts and box culverts; construction of large diameter storm water catch pits to replaceexisting 150mm-200mm ones; and clearing of existing underground drains; (ii) Lugogo/UgandaManufacturers'Association 's Showground where improvements include widening and lining of about200m of channel and drain; and construction of large diameter storm water catch pits and accessculverts; (iii) Kafumbe Road/Kisenyi Lane Junction where improvements include demolishing andremoval of existing pipe culverts and replacement with box culvert across the road; blockage of severalpipe culverts and diversion of storm water to an adjacent open drain; reconstruction and widening of anexisting drain; and reconstruction of Kisenyi Lane over a portion of proposed box culvert; and (iv)Makerere Road/Aga Khan Secondary School where improvements include demolishing of an existing


culvert and replacing with two large diameter pipes; trimming, shaping and stone lining 50m of channel;construction of a silt trap and reconstruction of a section of road over the proposed culvert.

(c) Priority Drainage "Black Spots"Rehabilitation Program: For further enhancement of storm waterflow and minimizing of traffic congestion, 27 drainage "black spots" have been identified forrehabilitation within the Nakivubo channel catchment. Under this component drains, channels and catchpits will be desilted, rehabilitated and widened in various problem areas in Kampala city and within theNakivubo Channel catchment.

(ii) Project Implementation Support i.e. Construction Supervision: Under this component consultantservices for supervision of construction of civil works will be provided through a Construction SupervisionConsultant. The primary objective is to ensure that the physical works implementation ofthe NakivuboChannel Rehabilitation Project is accomplished to a high degree of workmanship and quality of materials, onschedule and within budget, in accordance with the contract drawings and specification, and to acceptable'environmental standards.

(iii) Program and Policy Studies: (a) Kampala Drainage MasterPlan Study: A comprehensive Kampaladrainage master plan study will be undertaken. In the study a survey and update of Kampala's drainagesystems, environmental and social/economic status will be carried out. The Plan will come up with ananalytical report on the current situation and projections into a twenty-year horizon, including preliminarydesigns and costs for the necessary improvements. (b) Kampala Urban Transportation ImprovementProgramme Study (KUTIP): A comprehensive study for long-term improvement of urban transportation inKampala will be undertaken. Given the inherent inter-linkages between roads, drainage and transportationKUTIP is intended to provide a framework for addressing these issues in a coherent and coordinated manner.

(iv) Institutional Support: Under this component immediate and long-term measures will be implemented insupport of the ongoing initiatives under KCC's Strategic Framework for Reform Program for a broader andlong-term agenda of policy, institutional and operational reforms: (a) The process of developing a KampalaCity Development Strategy will be initiated, whose immediate objective is to pilot a participatory, replicableand sustainable process or approach to maximize the potential for growth with poverty reduction. (b) RevenueEnhancement activities will be initiated in the form of immediate improvement of property tax revenues.(c) Seed Funds to Facilitate Contracting out of Basic Service Delivery Functions-Under the SFR, KCCmade an executive decision that in order to improve basic service delivery in its five divisions, various minorworks would be contracted out. The main problem, however, is that the divisions are currently very cashstrapped and require some financial assistance in the interim period, before benefits from revenueenhancement measures can be realized, to specifically pay for contracted out services. Seed funds willtherefore be provided in the five divisions of KCC. (d) Institutional Support -The Strategic Frarnework forReform Program is being managed by the Core Team in KCC which will receive the necessary resources inthe form of hiring of local resource persons along with the attendant administrative and office support andtraining.


1. Project components (see Annex 2for a detailed description and Annex 3for a detailed cost breakdown):

Indicative % of Bank- - % ofComponent Sector Costs Total financing Bank-

(US$M)* (US$M) financing

A. Civil Works(i) Main Channel, Auxiliary Drains UY - Other 20.40 68.23 15.30 75and Priority Drainage "Black Spots" UrbanRehabilitation Development

B. Consultancy Services(i) Construction Supervision UY - Other 1.44 4.82 1.20 83.33

UrbanDevelopment

C. Program and Policy Studies(i) Kampala Drainage Master Plan UY - Other 1.44 4.82 1.20 83.33Study Urban

Development(ii) Kampala Urban Transportation TU - Urban 1.56 5.22 1.30 83.33Improvement Programme Study Transport

D. Institutional Support(i) KCC Reform Program under SFR UY - Other 4.68 15.65 3.12 66.67• Kampala City Development Urban

Strategy Development* Revenue Enhancement

Programme* Seed Funds to Facilitate

Contracting out of Basic ServiceDelivery Functions

. Implementation Support andTraining

(ii) Goods UY - Other 0.38 1.27 0.26 68.42UrbanDevelopment

Total Project Costs 29.90 100 22.38 75

Total Financing Required 24.92** 100 22.38 90

* Includes contingencies of 25 percent and taxes and duties of 17 percent.** Excluding taxes and duties.

2. Key policy and institutional reforms supported by theproject:

11. A key policy issue has to do with the demarcation of flood-prone areas during project design, andappropriate zoning of these areas by KCC and strict enforcement of the use of these zones.

12. Institutional reforms include: (a) establishing the primacy of maintenance of key infrastructureinvestments to be financed by KCC; (b) contracting out of operations and maintenance responsibility to theprivate sector; and (c) revenue enhancement activities.


3. Benefits and target population:

13. In general, the proposed project will: (i) reduce the risk of flood damage to property and infrastructureand result in time and cost savings in transport operations both in Central Kampala and in the outlying areas;(ii) reduce flood occurrence in central Kampala; (iii) serve as a vehicle for building the institutional andmanagerial capability of KCC for planning, implementation and instituting measures to ensure sustainabilityof future investment projects; and (iv) improve commercial and industrial activities, land use and healthbenefits.

14. The economic analysis noted that four main quantified benefits are estimated:

* Reduction in damages to building structures and property, adjacent to the channel, due to recurrentemergency costs (rental differential between flooded and non-flooded areas);

* Reduction in damage to road assets;* Savings in vehicle operating costs; and* Passenger time savings.

15. Non-quantified benefits are:

* KCC will get the opportunity to build its institutional and managerial capability for planning,implementation and institution of measures to ensure sustainability of future investment projects;

* Health benefits from a reduction in water-borne diseases due to improved drainage;* Unhindered access to raw material and finished products to markets especially in the industrial area;

and* Improved land value in the Nakivubo catchment area which comprises about two-thirds of the whole

district of Kampala.

16. Several groups stand to benefit from the project:

e commercial, industrial and residential property owners and tenants;* the Government of Uganda and Kampala City Council;* vehicle operators;* passengers; and* the general public.

17. Most of the quantifiable benefits from the project would accrue to commercial, industrial andresidential property owners and tenants within the areas who will be relieved from the cost of repairs andrecurrent emergency expenses.

18. The improved reliability of urban road usage, besides reduced transport costs, could possiblyencourage industrial and commercial development in Kampala, resulting in increased economic activities inthe industrial and commercial zones, and job creation.

19. The project will also have a substantial fiscal impact. The Government of Uganda and the KampalaCity Council would benefit from savings due to deferral of major investments arising from prematuredeterioration of the road pavement. In addition, the reduction in frequent flooding and size of flooded areawould result in possible appreciation in the values of urban land and property in Kampala. This is likely togenerate an increase in revenue from property taxation and can have a positive fiscal impact on the city'sfinances and its capacity for economic development.

20. As a result of reduced flooding, vehicle operators would have lower vehicle operating costs.


21. Passengers would benefit from the restoration of accessibility during and following periods ofrainfall.

22. Also, the Kampala City Council, the residents of Kampala and the traveling public, all stand tobenefit from the non-quantifiable benefits.

23. Most important in the course of implementation of the project, KCC will get the opportunity to buildits institutional and managerial capability for planning and implementation of future investment projects, amajor institutional development objective in itself.

24. Although it is difficult to assign a direct link between disease and quantify the economic benefits,because of the possibilities of infections in other areas, the functioning of the Nakivubo Channel drainageworks will yield positive environmental and social benefits associated with the reduction of health hazardsposed by flood aftermath and risks to life. It will benefit low-income families who are engaged in commercialactivities and suffer substantial income losses annually as a result of the floods.

4. Institutional and implementation arrangements:

25. The overall project implementation period is 3 years. The duration for construction as stated in thebid documents is two years. This is considered reasonable, given the repetitive nature of many of theconstruction activities, and relatively simple technology involved. In addition, pre-qualification criteria havebeen prepared to ensure that bidding will be limited to competent international contractors.

26. The institutional and implementation arrangements of the project will include the following:

(i) The respective roles and responsibilities of the Central Government and Local Government are definedunder the Uganda Constitution and the Local Government Act of 1997. While the Local Governments inUganda are independent corporate entities in the context of the country's decentralization program, theCentral Government, through the Ministry of Local Government (MoLG), exercises broad oversight onthe performance of all Local Authorities, including the KCC. Under this project, the MoLG'sresponsibilities include performance monitoring, compliance verification with the provisions of thenational statutes as well the legal agreements under the project, and mentoring. While KCC is theimplementing agency, MoLG will be consulted on key management, financial and operational actionswhich have a direct bearing on project implementation. These principles will be reflected in theSubsidiary Agreement to be entered into between GOU, as the Borrower and KCC.

(ii) Kampala City Council, which is currently undergoing substantial reorganization through the StrategicFramework for Reform initiative started under the First Urban Project will be the implementing agency.KCC has established a Core Team within its organizational structure which consists of a group ofprofessionals selected by KCC from its own staff, under contractual terms, to carry out managementfunctions for the implementation of its reform program initiated under the Strategic Framework forReform and execute its special projects such as the IDA-financed First Urban Project and the KCCcomponent of the proposed Local Government Development Programme. The Nakivubo ChannelRehabilitation Project will also be handled as a special project of KCC under the overall management ofthe Town Clerk. However, the Nakivubo Channel Rehabilitation Project requires an effective capacityfor the procurement, supervision and management of works and consultant services within the time-framerequired and KCC has traditionally had limited capacity in this regard. The capacity of KCC to do theabove will be reviewed, and augmented through the provision of technical advisory services from itstechnical cooperation partner, the Kirklees Metropolitan Council of the U.K. and other sources asnecessary. The Kirklees Metropolitan Council is currently being financed under the ongoing First UrbanProject till June 30, 2000 after which it will be funded through the proposed Local GovernmentDevelopment Programme which is expected to become effective in FY2000.


The specific responsibilities and functions of the Core Team will be:a) overall project management;b) planning, budgeting, and quality assurance of works and services;c) design review;d) initiate and take a lead role in institutional reforms;e) procurement management and contract administration;f) project accounting, financial management and control (see [iii] below);g) general administration and facilities management; andh) monitoring and evaluation (see [iv] below).

(iii) Construction supervision of the civil works will be provided through a Construction SupervisionConsultant appointed by KCC and financed from the project. This shall be a practicing consultingengineering firm who will be engaged for the management and quality control of the civil worksconstruction contract. In addition, this consultant will carry out the following tasks: (a) assist KCC in-themanagement of the project including procurement for construction works and services, contractmanagement and administration, monitoring and evaluation; and (b) provide on an ad hoc basis advice ontechnical matters such as construction methods and quality of materials. It is expected that KCC'scapacity to manage and supervise a large investment of this nature will be enhanced through the transferof requisite skills from the Construction Supervision Consultant to KCC.

(iv) Accounting, Financial Reporting and AuditingKCC will:

a) maintain accounts and records as per Government of Uganda and intemationalrequirements;

b) Separate financial accounts will be kept for the project as per IDA requirements;c) Audits will be undertaken annually by an independent auditor acceptable to IDA and

submitted within 6 months of the end of each fiscal year; andd) A special report on Statements of Expenditure (SOEs) or Project Monitoring Reports

(PMRs) will be submitted to IDA within 6 months of the end of each fiscal year.

(v) Monitoring and EvaluationThe system that has been developed in the Project Implementation Plan (see Documents in the ProjectFile, [Annex 8 to this PAD] for further details) includes monthly reports, quarterly quality assurancereports, semi-annual reports, a mid-term review and a Inplementation Completion Report submitted sixmonths after the credit closing date. The KCC Core Team in charge of special projects will be responsiblefor conducting the monitoring and evaluation with additional input and assistance from the faculty andstudents of Makerere University and other relevant institutions in Kampala.

D: PROJECT RATIONALE

1. Project alternatives considered and reasons for rejection:

27. The Nakivubo Channel follows an existing vatercourse, which flows through a well-defined andextensive floodplain along many portions of the channel. Over the years since the construction of thechannel, considerable development has taken place, notably within the limits of Kampala City and itsindustrial area. This development has progressively encroached on the channel's floodplain, and severelylimited the options for increasing the flow carrying capacity of the channel.

28. The 'Without Project" alternative would entail improving the maintenance of the existing channelone in one- and one-half- year return period. This alternative does not present any medium-term solution. Atbest what it can do is help reduce, by a small fraction, the delay of traffic flow by allowing more rapid flowsof the storm water. The economic life of improved maintenance will be three years and needs to be repeated


every three years to sustain the benefit. The expected incremental benefit from the investment is marginalreduction in travel time. The impact on ameliorating damages to roads and buildings would not besignificant. Based on this, therefore, the real choice facing the Kampala City Council is not the "WithoutProject" alternative, i.e., improving the maintenance of the existing channel, but to make investment choicesamong the three design scale options, based on technical, economical, environmental and fiscal considerationsand the probabilities of occurrence of the storms over the design life of the project.

29. The project design is based on an initial examination of channel flows along the length of theNakivubo Channel, resulting from varying return-period storms. The design options that were considered areas follows:

(i) one in ten-year return storm period;(ii) one in fifty-year return storm period; and(iii) one in one hundred-year return storm period.

30. Based on a 40-year design life of the project, the following five channel linings were evaluated inrelation to their sustainability (maintainability), availability of land, technical, social and fiscal constraints.

* Grass earth side slope (Earth);* Stone masonry (Stone);* Wire mesh gabions and mattresses (Gabions);* Reinforced concrete for side slopes and retaining walls (Concrete); and* Hybrid (a combination of all of the above as appropriate-wire mesh, gabions and mattresses, stone

and reinforced concrete).

Attributes of the Different Channel Linings(e.g. for the 1 in 10-year Return Period)

Methods of Cost (US$'000) Financial Sustainability Implementation Criteriaconstruction- Estimated Expected Feasibility Ranking (Land Acquisitionlining construction O&M** Ranking requirement (hectares)(principal costcharacteristic)Design option- 1:10 1:10 1:10 1:50 1:100Return period (million USh) (million USh)1. Earth 10860.9 106.3 First Fourth 1.32 8.46 10.562. Gabions 16874.9 102.0 Second Second 0.82 6.89 9.433. Hybiid 18158.7 107.3 Second First 0.0 7.22 9.74. Stone 28015.3 95.8 Fourth Third 0.0 3.32 5.485. Concrete 30277.4 96.5 Fifth Fifth 0.0 3.03 4.04

* No additional land is required for the I in I 0-year return storm period forthe hybrid, stone and concrete channel linings. Additional land will needto be acquired if the other linings are selected.

* * Maximum maintenance planned expenditure in a single year in the first five years of the Project (see Appendix A.2 of the Economic Analysis inDocuments in the Project File, [Annex 8 to this PAD] for details.)

31. The five channel linings were evaluated in relation to their sustainability (maintainability),availability of land, technical, social and fiscal constraints. Overall, the hybrid channel lining was assessed toprovide the optimum solution. The hybrid channel lining not only merges the best attributes of the other fouroptions along the different sections of the channel, it is also deemed the most sustainable (maintainable) overthe design life of the project. The hybrid channel lining also approaches the most sustainable least costsolution. For the one in ten-year storm return period with the hybrid channel lining, for a 40 year project lifeand estimated investment costs of US$18.2 million equivalent, the estimated Net Present Value is US$15.1million equivalent and Internal Rate of Retum is 24%.


2. Major relatedprojectsfinanced by the Bank and/or other development agencies (completed,ongoing and planned).

Latest Supervision (PSR) Ratings(Bank-fimanced projects only)

Sector Issue Project Implementation DevelopmentProgress (IP) Objective (DO)

Bank-financed

Restoration of key infrastructure services First Urban Project S SImprovement of service delivery (Credit 2206-UG)standardsInstitutional strengthening of KampalaCity Council to support the developmentof decentralized local urban managementRole of central govemnment under Local Government Planned project Planned projectdecentralized governance DevelopmentParticipatory planning, allocation and Programmeinvestment managementCapacity building for decentralizedgovernanceTesting out the intergovernmental fiscaltransfer systemSmall scale infrastructure rehabilitation Program for S Sto improve the living standards and Alleviation ofworking conditions of some of the Poverty and Socialpoorest communities Costs of AdjustmentLow-cost sanitation improvement to (Credit 2088-UG)improve the access of urban residents Project has beenliving in hazardous environmental completedconditions to adequate water supply andsanitation facilities in the RubagaDivision of Kampala City Council

Other development agenciesx. Capacity building of local communities Katwe Pilot Urban

in maintenance of drainage structures Project, financed byUNDP.

* Community-based improvement of Kalerwe Comnnunitydrainage structures Based Drainage

Upgrading PilotProject, financed byUNDP/ILO

IP/DO Ratings: HS (Highly Satisfactory), S (Satisfactory), U (Unsatisfactory), HJ (Highly Unsatisfactory)

3. Lessons learned and reflected in the project design:

32. Lessons learned from previous projects include:

(i) Lack of ownership due to inadequate involvement of the client in the decision making process;(ii) Unsustainable investments due to inadequate attention to operations and maintenance;(iii) Lack of community consultation resulting in adverse public reaction;(iv) Absence of pre-qualification of contractors in large civil works contracts resulting in award of

contract to lowest bidder but without the requisite capacity;


(v) Weak capacity in some local consulting firms resulting in inadequate and inappropriate advice to theclient;

(vi) Lack of capacity in the client to effectively supervise civil works contracts; and(vii) Inherent inefficiencies in certain service delivery functions using force account.

33. Successful implementation of this project will, therefore, be dependent on a strong sense ofownership by the borrower, identification of the most appropriate, affordable, cost-effective solutions takinginto account both capital and maintenance costs, proper design, selection of qualified contractors, a strongconstruction supervision team, and proper provision for operations and maintenance.

34. The proposed project design incorporates the following:

(i) Pre-qualification of civil works contractors and international competitive bidding;(ii) Provision of Construction Supervision Consultancy services;(iii) The major consultancies for construction supervision, the Kampala Urban Transportation

Improvement Programme Study, and the Kampala Drainage Master Plan Study will be procuredinternationally using the Quality- and Cost-Based Selection method.

(iv) Detailed day-to-day oversight of design and construction supervision by KCC project managementteam;

(v) Operations and maintenance of the completed project to be financed by KCC to ensure sustainabilityof investments;

(vi) A detailed Social Impact Assessment of the project has been carried out to ensure that properconsultation has been carried out with various segments of the population;

(vii) Institutional support to KCC to build its capacity in the areas of program management, etc.(viii)Address weaknesses in force account service delivery through altemative service delivery

approaches such as contracting out certain service delivery functions.

4. Indications of borrower commitment and ownership:

35. Kampala City Council's commitment to and ownership of the project is evidenced by the following:

(i) Assigning a group of professionals with attendant support within the KCC Core Team in charge ofspecial projects with responsibility for implementing the NCRP; one engineer has been appointedexclusively to liaise full-time with the design consultants.

(ii) Participation in meetings with the design consultant; the Town Clerk, KCC has chaired weeklyprogress meetings with the design consultants.

(iii) Addressing the issue of ownership, acquisition and compensation of land required adjacent to thechannel for its construction, in a timely manner. KCC has provided a copy of the single,consolidated title deed providing unencumbered rights to the entire 9 km length of the Nakivubochannel reserve, including additional lands required on either side for the channel widening. Itshould be noted here that the acquisition of this land did not involve any resettlement issues as theland was owned primarily by private holders, and some major utilities such as the Uganda Railways,National Water and Sewerage Corporation, Uganda Petroleum, etc. who were compensated.

(iv) Appointing an independent design review consultant to review the design consultant's outputs inorder to meet IDA requirements for appraising the project, as well as to assist in building up in-country capacity in this area.

(v) Preparation of documentation for pre-qualification of contractors, placing of advertisements in thelocal and regional press, and delivery of the same to foreign legations in Uganda.

(vi) Under the Strategic Framework for Reform initiated under the First Urban Project, KCC has agreedto set aside the proceeds from the sale of KCC-owned housing stock as counterpart funding for theNCRP. In addition, KCC has agreed to set up a separate escrow account into which a portion of itscommercial revenues will be channeled to provide for operations and maintenance costs for thechannel in the future.


5. Value added of Bank support in this project:

36. It should be noted that the World Bank is the only donor agency active in the urban sector in Uganda.The Bank has supported improved service delivery in Kampala City Council through the First Urban Projectand through parish level investments for Kampala City Council. It has also supported the Govemment ofUganda in its decentralization program through financing of administrative and financial reforms, and trainingunder the ongoing Institutional Capacity Building Project (ICBP) and the First Economic and FinancialManagement Project (EFMP I). The proposed Nakivubo Channel Rehabilitation Project is fully consistentwith the objectives of the CAS Report No. 16540-UG (April 30, 1997), the National Development Strategy(1998/99), and the Poverty Eradication Action Plan (1997) in terms of providing for improved servicedelivery and interventions for poverty alleviation through decentralized development funds to localgovernments.

37. In this project the Bank will:

(i) further support the KCC's Strategic Framework for Reform initiative; and

(ii) continue to support the key institutional and financial reforms initiated under the First UrbanProject.

E. SUMMARY PROJECT ANALYSIS (Detailed assessments are in the projectfile, see Annex 8)

1. Economic (supported by Annex 4):

Economic evaluation methodology:

[X ] Cost benefit [ ] Cost effectiveness t ] Other (specify)

Summarize issues below [X] To be defined [ ] None [

38. Methodology Adopted: The basis of the economic evaluation is cost benefit analysis with the "with"and "without" project situation. Construction costs estimates forthe three storm return periods consideredwere based on engineering estimates. However, estimating the quantifiable benefits/savings presentedsignificant data problems. To overcome the lack of these data problems, different approaches were used toestimate each proxy variable. The approaches are explained for each variable in the main report (see theEconomic Analysis in the Documents in the Project File [Annex 8 to this PAD] for further details).

39. Based on certain assumptions (see Annex 4 for details and the main report mentioned above) andmethodology, the estimated net present value and internal rates of return for the one in ten-year, the one infifty-year and the one in one-hundred-year storm return periods with each of the five alternative channellinings were calculated and are summarized below. Also shown is the net present value for the "without"project case based on reduction of about 10% in flooding time due to improved maintenance.


Summary of NPV & IRR Estimates*

(NPV in billion Ugandan Shillings)Construction Methods/ Stone ReinforcedStorm Return Period Earth Gabions Hybrid Pitching Concrete"Without" ProjectNPV 18.5 N.A N.A N.A N.AIRR* 15% N.A N.A N.A N.A"With" Project1 in 10-yearNPV 20,640 16,385 15,067 8,493 6,889IRR 37% 26% 24% 17% 16%1 in 50-yearNPV 14,055 10,636 8,341 1,762 2,177IRR 22% 19% 17% 13% 13%1 in 100-yearNPV 12,456 8,664 6,408 (1,560) (2,441)IRR 20% 17% 15% 11% 11%

If expected damages tobuildings are included**1 in 50-yearNPV 24,382 20,963 18,668 12,088 12,504EIRR 29% 24% 22% 17% 17%1 in 100-year jNPV 27,277 23,486 21,224 13,262 12,381IRR 2% 24% 22% 17% 16%* Includes all the four quantified benefits. Present value based on 12% discount rate and 40-year design life of theproject.** Result if current land use is kept.

40. Overall, the hybrid channel lining was assessed to provide the optimum solution. The hybrid channellining not only merges the best attributes of the other four options along the different sections of the channel,it is also deemed the most sustainable (maintainable) over the design life of the project. The hybrid channellining also approaches the most sustainable least cost solution. For the one in ten-year storm return periodwith the hybrid channel lining, for a 40 year project life and estimated investment costs of US$18.2 millionequivalent, the estimated Net Present Value is US$ 15.1 million equivalent and Internal Rate of Return is24%. A 12% discount rate is used in the economic analysis, and cash flows are presented in terms ofUgandan Shillings and converted at a rate of US$ 1=1000 UShs. The result is robust and does not depend onany one single variable. The ten-year storm return period design option with the hybrid channel lining willrequire no additional land acquisition. The one in ten-year storm return period will have substantial impact inreducing the frequency and incidence of flooding. The chance that a storm of a scale of 1 in 100 period mayhappen is less than 25% (1-0.6689=0.231 1).

2. Financial (see Annex 5): NPV=; FRR= %

Summarize issues below [XI To be defined [ I None[ I]

(i) Analysis ofthe Financial Structure, Efficiency and Viability of the Project Entity: To ensure thesustainability of on-going investments, and as an integral part of the Strategic Framework for Reform, KCChas recently embarked on a broad program of financial management improvements. The main elements ofthese improvements include:

a) gradually downsizing the establishment, thereby reducing proportionately high employee costs;


b) improving revenue mobilisation efforts, particularly the property tax management system, to beundertaken under the project;

c) more realistic service/cost centre oriented budgeting practices and expenditure managementsystems;

d) reorganising from a traditional department-based institution into a service/cost centre-basedorganisation; and

e) involving the private sector in the performance of many of its non-statutory functions in order toimprove on service delivery.

The change to a service/cost centre-based organisation would enable KCC to match its costs to actualfunctions and thereby evaluate and assess the efficiency of its service delivery functions accurately and on anindividual basis. It must be noted that it is too early to assess what the exact impact of the various initiativesmay be over the medium to long term on the overall financial health of KCC. However, some improvementshave been noted in its revenue mobilisation and expenditure management efforts in recent years. The bottomline is that KCC still remains financially dependent on external resources to meet its capital investment needs.To put this into perspective, KCC's overall budget (actual) over the recent past has been about US$10-12million annually. Of this, KCC has spent about US$9-10 million on recurrent costs, leaving only marginalamounts for capital investments. Very broad conservative estimates indicate that KCC would continue to runan operating deficit, on a gradually declining basis, for at least another eight to ten years, beyond which it canreasonably be expected to finance fully all operating and maintenance costs from internally generatedrevenues and to begin to marginally contribute towards capital expenditure budgets. In the interim, muchneeded investments to rehabilitate key infrastructure will have to be financed by the Government throughexternal donor support.

(ii) Operations and Maintenance Costs: As part of the NCRP, KCC has prepared an Operations andMaintenance Plan (Routine, Periodic and Emergency) following construction and hand over of the civilworks. It is intended that routine, periodic and emergency maintenance will be carried out under contract, andwill be renewable annually based on performance by the contractor. The KCC Core Team will supervise thiscontractor and monitor the work.

Normal operations will include reading the installed meteorological equipment (part of channel installations),analyzing the data and preparing reports. Routine maintenance will include minor cleaning, replacing brokengabions, stones and mortar; cutting grass; and maintaining foot paths and trees. Periodic maintenance willinclude major cleaning, de-silting, and replacement of large sections of the channel. Emergency repairs willbe carried out as the need arises. It is intended that these activities will be carried out under contract. Theroutine maintenance contract will be renewed or contracted out annually while the periodic maintenancecontract will be renewed or contracted out every three years depending on the contractor's performance.Monitoring and evaluation of routine and periodic maintenance activities in order to ensure that the channelwill be maintained efficiently will be a key activity. The Core Team will undertake performance evaluationusing both qualitative and quantitative indicators (see the Project Implementation Plan in the Documents inthe Project File [Annex 8 to this PAD] for further details).


Summary of O&M Costs

Activity Amount Period Average Annual(in '000 USh) Costs in '000

USh1 Operation 5,130 Annual 5,1302 Routine Maintenance 18,480 Annual 18,4803 Periodic Maintenance 78,500 3 years 26,1704 Replacement of Parts 43,500 10 years 4,3505 Emergency Maintenance 4,860 Spread over 3 yrs. 1,6206 Management 3,600 Annual 3,600

TOTAL I _I 59,350

KCC has agreed to set up a separate escrow account into which a portion of its commercial revenues will bechanneled to provide for operations and maintenance costs, of about USh 60 million per year, for the channelin the future. This will also be reflected as a financial covenant.

(iii) Financial Covenants: KCC has indicated that it will set aside proceeds from the sale of its housing stock,an unproductive asset, as counterpart funding for the NCRP. KCC is currently working on the modalities ofthe sale which is due to begin shortly. A duly authorized valuation list of KCC-owned staff houses certifiedby the Chief Governnent Valuer would be a condition of credit effectiveness. In addition, a duly authorizedvaluation list for all KCC-owned housing estates and other houses owned by KCC certified by the ChiefGovernment Valuer to be submitted by December 31, 1999 will be a financial covenant. The completion ofthe sale of KCC's staff houses by June 30, 2000 and its housing estates and its other houses by June 30, 2001would also be reflected as financial covenants. Also, KCC will be required to furnish quarterly returns on theproceeds from the sale of its housing stock being deposited by KCC into the Project Account. In addition,KCC has agreed to set up a separate escrow account into which a portion of its commercial revenues will bechanneled to provide for operations and maintenance costs for the channel in the future. In this regard, byJuly 1,1999 KCC will be required to establish an Operations and Maintenance Escrow Account and depositUsh 15 million on a quarterly basis starting from the quarter ending September 30, 1999 through June 30,2002 into this account. It should be noted that in the short term (until a revised property tax administrationsystem is fully operational) a significant property tax base increase to support O&M is not expected.Therefore, commercial revenues are earmarked for covering O&M costs. KCC will set up an improved andmore efficient property tax administration under this project as a first step to determining and realizingrevenue effectively from this revenue base and allocating the revenue through a budgetary process. Onedirect impact of this exercise would be to capture increased land/property tax value arising out of theimprovements under the NCRP.

Fiscal Impact:

Increase in Recurrent Costs Resulting from the Project and Prospects for Financing this Increase: Asdiscussed above, the proposed investments would add about US$60,000 annually to KCC's recurrent budgetto cover the O&M costs to maintain the investments. This is being fully finded through an escrow account tobe set up specifically for this purpose and to be reflected as a financial covenant.

The Availability and Certainty of Counterpart Funds for the Project: Availability of counterpart funding fromKCC for this project would be ensured through the proceeds of the sale of its housing stock. A dulyauthorized valuation list of KCC-owned staff houses certified by the Chief Government Valuer would be acondition of credit effectiveness. The completion of the sale of KCC's staff houses by June 30, 2000 and itshousing estates and its other houses by June 30, 2001 would be reflected as financial covenants.


Budgetary Impact: The NCRP is a part of the national Public Investment Plan. IDA resources would bepassed on to KCC from the Central Government as a grant and would capitalize KCC towards financingdeferred investments.

3. Technical:

Summarize issues below [X] To be defined [ ] None [ I

41. In reviewing technical alternatives for the design and construction of the project, a number of factors,including availability of skilled and unskilled labor and materials and equipment were taken into account. Inaddition, physical restrictions imposed by existing development were also considered. The economic analysishas examined the impact of widening the present channel right-of-way to enable flow discharges up to andincluding those corresponding to a 1:100 year storm. The economic analysis shows that widening of thepresent channel limits would require demolishing of residential, commercial and industrial facilities along thelength of the channel which would not be economically viable. In addition, such widening would result inprotracted delays in negotiating for the acquisition of the additional land, and require some resettlement ofpopulation.

42. The following options have been limited to using materials and technologies which are readilyavailable in Uganda. The following altematives have been considered to be appropriate for channel lining:grass banks; masonry stone; wire mesh filled stone (gabions and mattresses); reinforced concrete; and a

,brid of all the previous linings. Channel cross sections which have been considered include trapezoidalseetions with 1:1 or 1 :1.5 side slopes, and rectangular sections.

43. The project design will be based on the use of appropriate technologies, the intended project life,costing of proposed altematives, construction methods, and physical constraints. Issues which will beaddressed during project design and implementation include:

(i) Use of appropriate technologies: Uganda is a country with limited skilled labor resources, but plentyof availability of unskilled labor, and low labor costs. It has limited in-country capacity for cementmanufacture, hence high cement prices. A high percentage of the country's cement is imported.Quarry stone, clay and sand, however, are raw materials which are in abundant supply. Other locallymanufactured items such as reinforcement steel are in short supply and need to be supplementedthrough imports. The design alternative has taken these factors into consideration.

(ii) The selected altemative for channel design was reviewed from a point of view of cost, channelhydraulics, and physical constraints. The channel has low gradients along most of its length, exceptalong its uppermost reach where gradients may reach 17% but channel flows are low. The proposedchannel rehabilitation works generally follow the existing channel centerline, with widening anddeepening of the channel being the preferred option for increasing the channel's discharge capacity.Physical constraints, including the presence of existing industrial facilities alongside the existingNakivubo channel, will likely affect channel hydraulics and dictate special treatment of channelprofiles and lining materials in selected locations.

(iii) Special attention will be required in addressing existing perennial channel flows, includingcontributions from industrial discharges into the channel. Construction of the channel rehabilitationworks will be particularly hindered during the rainy seasons and special measures, including flowdiversion works, will be required. The attention of bidders for the construction of the civil workswill be drawn both through the bidding documentation and during the pre-bid site visit and meeting.


4. Institutional:

44. Executing agencies: There are capacity constralints in KCC regarding project design, management,implementation and maintenance. This is further manifested by inadequate service delivery standards and thelack of adequate financial management procedures. Under the ongoing First Urban Project, KCC hasundergone major restructuring in how it conducts its business. This restructuring is an ongoing process,which is embodied in the institutional and operational reform program i.e., the Strategic Framework forReform, a home-grown plan of action at KCC resulting from much internal discussion, coordination through atechnical cooperation arrangement with the Kirklees Metropolitan Council in the U.K., and workshopsconducted by KCC with all relevant groups within the Kampala City Council. As a result of this reformprogram, KCC has set up a Core Team responsible for the various project components within the First UrbanProject, and designated a Core Team engineer to work full-time on coordinating the work being undertakenunder the NCRP.

45. Project management: In this context, the KCC Core Team will need to:

(i) Monitor the performance of the contractor closely. This will be achieved through (a) day-to-daycoordination between the designated KCC engineering supervision team and the residentConstruction Supervision Consultant; and (b) regular progress meetings with the ConstructionSupervision Consultant and the contractor.

(ii) Enhance its monitoring and evaluation (M&E) capabilities, by appointing one of its members to bein charge of M&E both during implementation of construction and following project completion.This officer will need to liaise closely with KCC's service division responsible for roads anddrainage following hand-over by the contractor.

(iii) An independent quality assurance consultant will be engaged by the Bank to undertake regular (e.g.quarterly) supervision missions.

(iv) Ensure that a strong financial management system is maintained for the project.

5. Social:

46. A Social Impact Assessment was carried out during the project design phase. This study wasintended to identify any significant social risks resulting from implementation of the NCRP. It is notanticipated that implementation of the NCRP will carry significant social risks. There are no permanentstructures located within the proposed channel widening reserve. Some temporary structures used for vendingwill be relocated by KCC as part of the preparatory works before project implementation. The project isexpected to have a significant overall benefit to low-income groups, through flood alleviation, particularly inthe areas adjacent to open air market activities near the channel.

47. People who reside in the areas have strong views about the present state of the Channel and areparticularly concerned about the flooding problem, damages to household property and a wide range ofhygienic issues. The business community is similarly concemed about flooding problems, rubbish in theirwork environment as well as the loss of business and income whenever flooding occurs after rains. It is forthis reason that these people have requested KCC to have the Channel rehabilitated. Flooding is the mostcommon problem, followed by loss of business activities and income. It will also be observed that hygienicissues (pollution, diseases) have been mentioned by all the three categories of the communities interviewed.

6. Environmental assessment: Environment Category B

48. The investments under this program focus on flood alleviation and improvement of drainage in thelow-lying areas of Kampala within the Nakivubo channel catchment area. The project therefore focuses onimprovement of parameters which lead to a safer, more sanitary, and environmentally improved livingenviromnment.


49. The project falls under category B because of its limited environmental impact, primarily duringconstruction activities due to noise, dust, increased vehicular activity and aesthetics. The scope of theenvironmental assessment covers impacts and mitigation measures in the areas of flood alleviation, soilerosion, transport and disposal of excavated materials, flow diversion, relocation of utilities, provision offootbridges, aesthetics, and health and safety during construction activities and following project completion.

50. The bid documents have incorporated mitigation measures to be applied during construction. Theproject will be subjected to this checklist of mitigation measures to ensure that it meets the environmentalrequirements, prior to implementation.

51. There are no resettlement issues involved, other than minor temporary relocation of make-shiftvending displays within the existing Nakivubo Channel property limits. This temporary relocation will bedone in collaboration with the vendors' associations during construction. It will generally involve shiftingbusiness from areas where construction is taking place to areas where construction is yet to begin or has beencompleted.

52. Other issues relate to residential, commercial and industrial facilities located within the existingNakivubo Channel flood plain. The proposed project will have a beneficial effect in terms of alleviatingflooding problems in these areas. However, it is anticipated that some properties within the 1 00-year floodzone will continue to be affected by exceptional rainstorm events. The limits of the areas likely to be affectedby the 1 in 100 year storm after project implementation have been identified during project design. KCC isundertaking an appropriate zoning of flood-prone areas for use as recreational and other activities with minorimpacts resulting from exceptional rainstorm events.

53. The Environmental Impact Assessment for the project was received in November 1998.

7. Participatory Approach (key stakeholders, how involved, and what they have influenced or mayinfluence; if participatory approach not used, describe why not applicable):

Primary beneficiaries and other affected groups:

[X] Name and describe groups, how involved, and what they have influenced.

[ ] Not applicable (describe why participatory approach not applicable with these groups)

54. Primary beneficiaries and other affected groups have been involved in, and have influenced, theproject formulation in the following manner:

(i) Intensive consultations were undertaken with vendors at Kiseka and Owino markets, the NakivuboSettlement Primary School, the Aga Khan Primary and Secondary Schools, the Police Fire Brigade,property owners and operators, industrialists including Mukwano and subsistence cultivators at thedownstream end of the channel. All these are located within the vicinity of the channel.Considerable interaction with these communities took place during the carrying out of the SocialImpact Assessment and there was universal support for the proposed project.

(ii) Other stakeholders are utility companies whose services cross the channel at various places. TheNational Water and Sewerage Corporation was consulted about designs of alterations to their servicelines. The Uganda Telecommunications company and the Uganda Electricity Board prepareddesigns and cost estimates for alterations to their services which have been incorporated in theworks.

Other key stakeholders:

[X ] Name and describe groups, how involved, and what they have influenced.


55. The Kampala City Council Executive Committee and the National Parliament through the SectoralCommittee on Local Government have been informed about the rehabilitation work on the channel. Therehave also been several press conferences where KCC executives have informed the general public about theimpending rehabilitation work on the channel. All these groups have echoed the need for rehabilitating thechannel.

F: SUSTA1NABILITY AND RISKS

1. Sustainability:

56. As part of the NCRP, KCC has prepared an Operations and Maintenance Plan (Routine, Periodic andEmergency) following construction and handover of the Nakivubo Channel. It is intended that routine,periodic and emergency maintenance will be carried out under contract. This contract will be renewableannually based on performance by the contractor. The KCC Core Team will supervise this contractor andmonitor the work.

57. KCC has agreed to set up a separate escrow account into which a portion of its commercial revenueswill be channeled to provide for operations and maintenance costs, of about USh 60 million per year, for thechannel in the future. This will also be reflected as a financial covenant. It should be noted that in the shortterm (until a revised property tax administration system is fully operational) a significant property tax baseincrease to support O&M is not expected. Therefore, commercial revenues are earmarked for covering O&.8v!costs. KCC will set up an improved and more efficient property tax administration under this project as a firststep to determining and realizing revenue effectively from this revenue base and allocating the revenuethrough a budgetary process.

58. The project design has taken into consideration both capital and maintenance costs in determnining thmost cost-effective alternative. In addition, availability of locally available materials and requisite labor skillfor undertaking routine and periodic maintenance were factors in the project design, to ensure projectsustainability.


2. CriticalRisks (reflecting assumptions in the fourth column of Annex 1):

Risk Risk Rating Risk Minimization MeasureFrom Outputs to ObjectiveKCC's commitment to sustained efforts at M * Availability of the Core Teamimproving program management and delivery * Support for alternative basic service deliverycapacity * Critical review of organizational changes

_ _ _ * Strict monitoring and evaluationKCC's ability provide the required counterpart N * A condition of credit effectiveness will befunds submission to IDA of a duly-authorized

valuation list of KCC-owned staff houses,proceeds of the sale of which will be used ascounterpart funds for the project, certified bythe Chief Government Valuer.

* 3 Credit covenantsKCC's ability to set aside the required funds for N . 2 Credit covenantsO&M * Dedicating commercial revenues to O&MKCC ensuring adequate quality of civil works N . Availability of a CSCconstruction: * Availability of the Core Team

KCC's commitment to the SER M * Implementation of organizational reforms* Availability of the Core Team

Ensuring ownership of development strategies by M . Implementation of organizational reformsthe Divisions * Availability of the Core TeamDivisions and Center realigning from ad hoc day- M * Implementation of organizational reformsto-day interventions to strategic management . Availability of the Core TeamEffective governance at all levels M . Implementation of organizational reforms

* Availability of the Core TeamKCC's adoption of a rationalized revenue N . Implementation of organizational reformsmobilization strategy * Availability of the Core TeamKCC's adoption of a rational and prioritized S . Implementation of organizational reformsexpenditure framework * Availability of the Core TeamFrom Components to OutputsCapacity of international and local contractors to N * Actions already undertaken to prequalifyeffectively complete the works contractors for the civil works

. A competent international consultant tosupervise the contractors

Appropriate selection of consultants N * Action already taken to select competentconsultants through internationaladvertisement

a QCBS selection procedure to be used.Adherence to the principles and modalities of the M . Availability of the Core TeamSFR implementation plan . Strict monitoring and evaluation

* Periodic exposure of members of Counciland staff to best practices

* Continued sensitization of stakeholders.Overall Risk Rating M * All the above

Risk Rating - H (High Risk), S (Substantial Risk), M (Modest Risk), N (Negligible or Low Risk)

3. Possible ControversialAspects

59. None


G: MAIN LOAN CONDITIONS

1. Effectiveness Conditions

(i) A duly authorized valuation list of KCC-owned staff houses, proceeds from the sale of which willbe used as counterpart funds for the project,certified by the Chief Government Valuer.

(ii) Signed subsidiary agreement between the Government of Uganda and KCC whereby proceeds ofthe IDA credit would be made available to KCC as a grant from GoU.

(iii) KCC to submit consolidated audited financial statements for the year ending June 30, 1998.

2. Other [classify according to covenant types used in the LegalAgreements.]

(i) Accounts/Audits: (a) KCC will maintain accounts and records as per Government of Uganda andintemational requirements; (b) Separate financial accounts for the project will be kept as per IDArequirements; (c) Audits will be undertaken annually by an independent auditor acceptable to IDA andsubmitted within 6 months of the end of each fiscal year; (d) A special report on Statements of Expenditure(SOEs)/Project Management Reports (PMRs) will be submitted to IDA within 6 months of the end of eachfiscal year; and (e) KCC to maintain a Project Account, Special Account and Operations and MaintenanceEscrow Account in a commercial bank acceptable to IDA.

(ii) Counterpart Funding: (a) A duly authorized valuation list of KCC-owned estate housing and other housesowned by KCC certified by the Chief Government Valuer to be submitted by December 31, 1999; (b)Completion of the sale of KCC's staff houses by June 30, 2000; completion of the sale of KCC's housingestates and all its other houses by June 30, 2001; (c) KCC to submit quarterly returns on actual proceeds fromthe sale of KCC's housing stock being deposited into the Project Account starting from the quarter endingSeptember 30, 1999.

(iii) Operations and Maintenance Escrow Account: (a) KCC to establish an Operations and MaintenanceEscrow Account in a commercial bank, acceptable to IDA, by July 1, 1999; (b) KCC to deposit USh 15million on a quarterly basis starting from quarter ending September 30, 1999 through the project closing dateof June 30, 2002.

(iv) Management Aspects of the Project: KCC shall maintain with staffing and function, satisfactory to IDA,its Core Team responsible for the implementation of the project.

(v) Monitoring, Review and Reporting: KCC to submit quarterly Project Management Reports (PMRs),acceptable to IDA, as per LACI requirements.

(vi) Financial Management Aspects: KCC to carry out a time-bound action plan for the strengthening of itsfinancial system for the project by September 30, 1999.

(vii) Any Other Project Implementation: KCC to implement the project in accordance with the ProjectImplementation Plan agreed at negotiations.

H. READINESS FOR IMPLEMENTATION

[X] The engineering design documents for the first year's activities are complete and ready for the start ofproject implementation.[ ] Not applicable.[X] The procurement documents for the first year's activities are complete and ready for the start of projectimplementation.[X] The Project Implementation Plan has been appraised and found to be realistic and of satisfactory quality.[ ] The following items are lacking and are discussed under loan conditions (Section G):


I. COMPLIANCE WiTH BANK POLICIES

[X] This project complies with all applicable Bank policies.[ ] The following exceptions to Bank policies are recommended for approval. The project complies with allother applicable Bank policies.

Sengupta Jeffrey S. Racki James W. AdamsTeam Leader Sector Manager Country Director


Annex 1: Project Design Summary

UGANDA: Nakivubo Channel Rehabilitation Project

Hierarchy of Objectives Key Performance Indicators Monitoring & Evaluation Critical Assumptions

Sector-related CAS Goal: Sector Indicators: Sector/ country reports: (from Goal to Bank Mission)

Efficient service delivery at the Improved service delivery Periodic service delivery Improved program and financiallocal govemnment level. standards. output and impact reports management capacity.

to be done by KCC.

Project Development Objective: Outcome / Impact Indicators: Project reports: (from Objective to Goal)

Alleviate the frequent and * Reduced incidence of Semi-annual physical Adequate and competentincreasing incidence of flooding in flooding inspections and surveys of management and staff base.inKampala * Less complaints about flood prone areas in the KCC

flooding from the media and cityother public fora L l i rReduction of flood-related Less political interference intraffic congestion delays KCC management

Encourage and enhance KCC's On schedule, on budget Budget and progressability to plan, manage and execute completion of construction reports which adhere to thecomplex investment decisions and programprograms Project Implementation

Plan

Establish the primacy of Initiation of a fully funded Semi-annual financial andmaintenance of key infrastructure routine and periodic maintenance technical auditsinvestments program by KCC

Output from each component: Output Indicators: Project reports: (from Outputs to Objective)Restoration and efficient For the main channel: Monthly progress reports KCC's comnnitinent to sustainedfunctioning of the main channel * I km rehabilitated in 2nd efforts at improving program

and drainage network half of 1999 management and delivery* 2.5 km rehabilitated 1st half capacity

of 2000* 2.5 km rehabilitated 2nd KCC's ability to provide the

half of 2000 required counterpart funds* 3 km rehabilitated in It half

of 2001 KCC's ability to set aside theFor the auxiliary works: required funds for O&M* 1 work completed in 1999* 1 work completed in Ist half

of 2000* 2 works completed in 2nd

half of 2000For the priority drainage "BlackSpots":* 7 completed in 1999* 10 completed in It half of

2000* 10 completed in 2nd half of

2000



Efficient management and quality The Construction Supervision * Monthly progress KCC ensuring adequate qualitycontrol of the civil works Consultant will: reports of civil works constructionconstruction * Hold monthly site meetings * Quarterly report on

* Make timely submission of CSC servicesthe monthly progress * Inception reportreports * Completion report on

* Make timely submission of completion ofquarterly report on CSC constructionservices * Final completion

* Make submission of reportinception report within twoweeks of substantialmobilization by thecontractor

* Make submission ofcompletion report oncompletion of constructionworks in the 4th quarter of2001

* Make submission of finalcompletion report after thedefects liability period inthe 4t quarter of 2002within 4 weeks.

Kampala Drainage Master Plan The Consultant will:* Make submission of * Inception report

inception report after four * Quarterly progressweeks within the date of reportscommencement * Preliminary report

* Make submission of * Draft final reportquarterly progress reports * Final report

* Make submission of thepreliminary report within10 months after the date ofcommencement

* Make submission of thedraft fmal report after 18months after the date ofcommencement

* Make submission of thefinal report after 24 monthsafter the date ofcommencement

Kampala Urban Transportation The Consultant will:Improvement Programme Strategy * Make submission of * Inception report

inception report after four * Quarterly progressweeks within the date of reportscommencement * Interim report

* Make submission of * Draft final reportquarterly progress reports * Final report


Hierarchy of Objectives Key Performance indicators Monitoring & Evaluation Critical Assumptions* Make submission of the

draft interim report within10 months after the date ofcommencement

* Make submission of thedraft final report after 18months after the date ofcommencement

* Make submission of thefmal report after 24 monthsafter the date ofcommencement

Kampala City Development * Investment and action plans * Analytical outputs on * KCC' s continuedStrategy reflecting a bottom-up poverty, social commitment to the SFR

approach and ownership by assessment, economic * Ensuring ownership ofDivisions by March 31, and financial labor development strategies by2000 markets and infonnal the Divisions

* 5-year Divisional sector * Divisions and CenterDevelopment Strategies * Divisional 5 year realigning from ad hoc day(DDS) for ensuring growth plans articulating to day interventions toand poverty reduction by participatory planning strategic managementSeptember 30, 2000 * Setting up a city- * Effective governance at all

* Consolidated summary of 5 umbrella structure for levelsDDS from the 5 Divisions the CDSby March 31, 2001 * Comprehensive

* Start participatory pilot quarterly reports byinvestments at the parish Divisions and Centerlevel in each division byJune 30, 2001

Comprehensive revenue Under a rates administration * Revenue mobilization KCC's adoption of a rationalmobilization strategy improvement program it is strategy report revenue mobilization strategy

expected that: * Rates administration* In FY2001 rates will go up improvement strategy

from USh 2 billion (from * Business licenseFY 1998 levels) to 4 billion reform strategy

* In FY2002 rates will go upfrom USh 4 billion to 6billion

Under a business license refonnstrategy:* In FY2001 business license

revenues will be increasedfrom USh 1.3 billion (fromFY 1998 levels) to 2 billion

Increased proportion of private By June 30, 2002 the followingsector delivery of services will be done:

* 100% of grass cutting, treecutting and gardening to becontracted out



* 50% of refuse collection,transportation and disposal

to be contracted out* 75% of all road patching,

sweeping, grading and re-graveling to be contractedout

* 75% of all cleaning andmaintenance of drains to becontracted out

* 100% of routinemaintenance and majorrepairs of KCC's fleet ofvehicles and equipment tobe contracted out

* 70% of maintenance ofstreet lights and trafficsignals to be contracted out

* 100% building maintenanceto be contracted out

Effective and timely delivery of * Adoption of service-based Monthly progress reports KCC ' s adoption of a rationalKCC's SFR annual budgets by June 30, and prioritized expenditure

2000 framework* 100% of rationalization of

the legal framework to becompleted by June 30, 2001

* 75% of the implementationof the restructuredorganizational set-up ofKCC will be completed byJune 30, 2002

Project Components I Sub- Inputs: (budget for each Project reports: (from Components tocomponents: component) Outputs)

A. Main channel and feeder 9.3 km of channel works and Capacity of international anddrainage rehabilitation and Black auxiliary works at 4 locations as local contractors to effectivelySpot emergency drainage program well as Black Spot emergency complete the works.(ancillary drains) works within the channel

catchment (US$17 million)

B. Consultancy Services Procurement of a Construction Appropriate selection of(i) Construction Supervision Supervision Consultant (US$1.2 consultants

million)

C. Program and Policy Studies Procurement of a design Appropriate selection of(i) Kampala Drainage Master Plan consultant (US$1.2 million) consultants

(ii) Kampala Urban Transportation Procurement of a urban transport Appropriate selection ofImprovement Prograrmme consultant (US$1.3 million) consultants



D. Institutional support(i) KCC Reform Program underthe SFR

* Kampala City Development Procurement of consultants and Adherence to the principles andStrategy works (US$0.5 million) modalities of the SFR

* Revenue Enhancement Procurement of consultants and implementation plan.Programme works (US$1.0 million)

. Conracin ou Service Provide seed funds to theContracting ounctiasi Divisions to procure servicesDelivery Functions (USI.3 million)

* linplementation Support and Procurement of local consultants,Training training, etc. (US$1.1million)

(ii) Goods Procurement of goods (US$0.32million)

Project Appraisal Document Page 29Country: Uganda Project Ttle: Nakivubo Channel Rehabilitation Project

Annex 2: Project Description


1. The Nakivubo Channel Rehabilitation Project is largely a civil works project aimed at enhancingthe capacity of the main drainage channel, feeder drains and key ancillary drainage to reduce the incidenceand frequency of flooding in Kampala. In this context, it includes some important studies such as thedevelopment of a Drainage Master Plan for Kampala and a Kampala Urban Transportation ImprovementProgramme to address the issue of urban transport management which is becoming critical given the rapidgrowth that the city is experiencing. In addition, the long-term aim of this project is to further fundamentalinstitutional reforms by supporting the KCC's institutional reform program under the Strategic Framework forReform initiated under the First Urban Project.

2. The project's physical objective is to alleviate the frequent and increasing incidence of floodingin Kampala, which has adverse effects on the road network, traffic flow, and overall urban living conditionsin Kampala. Design for a 1: 100 year return-period storm, the preferred option, is not a practical option,owing to physical constraints, including existing development on either side of the present channel reserve.Instead, due to these constraints and in order to allow rapid implementation of the project with minimalimpact on adjacent residential and other development, the flow carrying capacity of the Nakivubo Channelwill be increased under NCRP to allow discharge of the runoff within the catchment area for the 1: 10 yearreturn-period storm. Bridges and other concrete structures along the channel will be designed to allow freedischarge through the structures of the 1: 100 year storm, thereby allowing future improvements to the channelflow carrying capacity to be carried out without requiring costly alterations to these structures.

3-. The project's institutional objective aims toward: (i) encouraging and enhancing KCC's abilityto plan, manage, and execute complex investment decisions and programs by using this operation, which willbe the largest civil works project that KCC has ever undertaken, as a testing ground to support KCC's reformprogram; and (ii) establishing the primacy of maintenance of key infrastructure investments. Activities tofurther support this objective include formulation of a comprehensive City Development Strategy for themedium to long term, undertaking revenue enhancement activities specifically property tax reforms andproviding support to firther KCC's institutional reform program under the Strategic Framework for Reforminitiated under the First Urban Project.

By Component:

A. Project Component 1 - US$17 million

Civil Works

(a) Main Channel Works: Under this component 9 km of channel will be de-silted and rehabilitated, themajor part having sides lined with gabions to the top including free board and the bed in unlined earth.Starting upstream, chainage 0+390 to 0+950, minor repairs to the concrete and stone pitching lining will becarried out. From chainage 0+950 to 1+435, repair of existing stone pitching and raising of the sides will bedone. From chainage 1+435 to 2+625 widening and replacement of the existing dry weather flow channelwith a concrete one will be carried out. From chainage 2+625 to 6+950 channel sides will be constructed withgabion boxes. From chainage 6+950 to 9+000 earth channel having sides planted with grass will beconstructed. At several special sections due to space restrictions or sharp bends reinforced concrete will beconstructed i.e. chainages 2+625 to 2+680; the "S" bend after Mukwano Industry near chainage 4+000, about40m long; 6+950 to 7+100 (bend after 5th street).


All along the rehabilitated channel from upstream to downstream, the various existing culverts andbridges will be widened to accommodate the new channel widths. Similarly, existing footbridges will bereplaced with larger ones while several new ones will be constructed at points of increased pedestrian traffic.Guardrails and rubbish screens will be installed at various strategic points along the channel. Realignmentand/or protection of existing utility services such as water mains, sewer mains, telephone and electricitycables will be done where necessary.

The channel is designed for a ten year return period storm, while all culverts along the channel andbridges are designed for a one hundred year return period storm.

(b) Auxiliary Works: In addition, four major auxiliary drainage works close to the Nakivubo Channel or itstributaries which also contribute to the flooding problem, will be rehabilitated to handle a ten year returnperiod storm. These are:

(i) Clock Tower Roundabout where proposed improvements include construction of stone pitched andconcrete lined drains across the road width; installation of large diameter culverts and box culverts;construction of large diameter storm water catch pits to replace existing 150mm-200mm ones; andclearing of existing underground drains.

(ii) Lugogo/Uganda Manufacturers 'Association 's Showground where improvements include wideningand lining of about 200m of the channel and drain; and construction of large diameter storm water catchpits and access culverts.

(iii) Kafumbe Road/Kisenyi Lane Junction where improvements include demolishing and removal ofexisting pipe culverts and replacement with box culvert across the road; blockage of several pipe culvertsand diversion of storm water to an adjacent open drain; reconstruction and widening of an existing drain;and reconstruction of Kisenyi Lane over a portion of the proposed box culverts.

(iv) Makerere Road/Aga Khan Secondary School where improvements include demolishing of an existingculvert and replacing with two large diameter pipes; trimming, shaping and stone lining 50m of channel;construction of a silt trap and reconstruction of a section of road over the proposed culvert.

(c) PriorityDrainage "Black Spots"Rehabilitation Program: For farther enhancement of storm water flowand minimizing of traffic congestion, 27 drainage "black spots" have been identified for rehabilitation withinthe Nakivubo channel catchment. Under this component drains, channels and catch pits will be desilted,rehabilitated and widened in the following problem areas in Kampala city and within the Nakivubo Channelcatchment:

Mengo Hill Road (opposite Pan Africa Square); Kafumbe Mukasa Road; Nakivubo Place (Road) No. 1;Nakivubo Place (Road) No.2; Nakivubo Green; Nakivubo Road (adjacent to Afrique Guest House); AllenRoad (at Junction with Namirembe Road) ;Wilson Road/Burton Street; Station Approach (adjacent toRailway Station main entrance);Nile Avenue (Crested Tower Roundabout); Jinja Road/Yusuf Lule RoadRoundabout; Mukwano Road; Seventh Street next to Caltex Depot; Fifth/Seventh Street Junction; OldPort Bell Road (opposite Uganda Meat Packers); Old Port Bell Road (adjacent to Wankoko); Old Port BellRoad next to Shell Petrol Station; Old Port Bell Road next to Bugolobi Market; Luthuli Avenue next toBandali Rise; First Street (adjacent to Ange Noir Night Avenue); Lugogo Bypass/Coronation Avenue;Kira Road (near the market); Kira Road (near Mariandina Clinic); Acacia Avenue/Mabua Road Junction;Yusuf Lule Road (North) Roundabout; Bombo Road/Gayaza Road Roundabout; and Makerere Hill Road(opposite Baptist Church).


B. Project Component 2 - US$1.2 million

Project Implementation Support i.e. Construction Supervision

Under this component consultant services for supervision of construction of civil works will beprovided through a Construction Supervision Consultant. The primary objective is to ensure that the physicalworks implementation of the Nakivubo C.hannel Rehabilitation Project is accomplished to a high degree ofworkmanship and quality of materials, on schedule and within budget, in accordance with the contractdrawings and specification, and to acceptable environmental standards.

C. Project Component 3 - US$2.5 million

Program and Policy Studies

(a) Kampala Drainage Master Plan Study: Under this sub component a comprehensive Kampala drainagemaster plan study will be undertaken. In the study a survey and update of Kampala's drainage systems,environmental and social/economic status will be carried out. The Plan will come up with an analytical reporton the current situation and projections into a twenty year horizon, including preliminary designs and costsfor the necessary improvements. A phasing of the proposals will also be included to allow for a stagedimplementation program.

(b) Kampala Urban Transportation Improvement Programme Study: Under this sub component acomprehensive study for long-term improvement of urban transportation in Kampala will be undertaken.Given the inherent inter-linkages between roads, drainage and transportation KUTIP is intended to provide aframework for addressing these issues in a coherent and coordinated manner. This will then enableimplementation of phased priority programs for the improvement of urban transport. The study will include astatus survey and future projections of transportation issues including environmental, socio/economic andphysical development of Kampala City.

Project Component 4 - US$4.2 million

Institutional Support

Under this component immediate and long-term measures will be implemented in support of theongoing initiatives under KCC's Strategic Framework for Reform Program for a broader and long-termagenda of policy, institutional and operational reforms.

(a) The process of developing a Kampala City Development Strategy will be initiated, whose immediateobjective is to pilot a participatory, replicable and sustainable process or approach to urban/local developmentin Uganda that can maximize the potential for growth with poverty reduction.

(b) Revenue Enhancementactivities will be initiated in the form of immediate improvement of property taxrevenues. This will be done by restructuring the "collection privatization" system and improving theadministration and incentive structure for billing, delivery, collection and enhancement. In the short-term, aFiscal Cadastre at two pilot sites shall be built for developing a data management system and mobilizing datacollection systems. For the long-term, mass valuation alternatives for the City of Kampala will be explored.In addition, enhancement of KCC's other revenues such as license fees will also be addressed.

(c) Under the SFR, KCC made an executive decision that in order to improve basic service delivery in its fivedivisions, various minor works such as maintenance of smaller feeder drainage, cleaning and maintenance ofrefuse skips, grass cutting, small road maintenance works such as patching, etc. would be contracted out. The


main problem, however, is that the divisions are currently very cash stapped and require some financialassistance in the interim period, before benefits from revenue enhancement measures can be realized, tospecifically pay for contracted out services. In this context, Seed Funds to Facilitate Contracting out ofBasic Service Delivery Functions in the five divisions of KCC will be provided.

(d) The Strategic Reform Program is being managed by the Core Team in KCC which will receiveimplementation support in the form of resources required to hire local consultants along with the requisiteadministrative and office support and training and some equipment.


Annex 3: Estimated Project Costs


Project Cost By Component US$ million Fore gn Total

Civil Works 3.400 10.200 13.600Consultancy Services 0.336 0.624 0.960Program and Policy Studies 0.600 1.400 2.000Institutional Support 2.176 1.200 3.376

Total Baseline Cost 6.512 13.424 19.936

Physical Contingencies 0.326 0.671 0.997Price Contingencies 1.302 2.685 3.987

Total Project Costs 8.140 16.780 24.920

Total Financing Required 8.140 16.780 24.920

Local Foreign TotalProject Cost By Category US$ million US$ million US$ million

Goods 0.030 0.290 0.320Works 4.250 12.750 17.000Services 3.530 3.470 7.000Training 0.060 0.240 0.300Other 0.270 0.030 0.300

Total Project Costs 8.140 16.780 24.920

Total Financing Required 8.140 16.780 24.920


Annex 4: Cost Benefit Analysis Summary


Summary of Economic Analysis:

1. Recommendation: The hybrid channel lining was assessed to provide the optimum solution. For theone in ten-year storm return period with the hybrid channel lining, for a 40 year project life and estimatedinvestment costs of US$18.2 million equivalent, the estimated Net Present Value is US$ 15.1 millionequivalent and Internal Rate of Retum is 24%. A 12% discount rate is used in the study, and cash flows arepresented in terms of Ugandan Shillings and converted at a rate of US$ 1=1000 UShs. The result is robustand does not depend on any one single variable. The ten-year storm return period design option with hybridchannel lining will require no additional land acquisition. The one in ten-year storm return period will havesubstantial impact in reducing the frequency and incidence of flooding. The chance that a storm of the scaleof 1 in 100 year return period may happen is less than 25% (1-0.6689=0.2311).

2. Methodology Adopted: The basis of the economic evaluation is cost benefit analysis with the "with"and "without" project situation. Construction costs estimates for the three storm return periods consideredwere based on engineering estimates. However, estimating the quantifiable benefits/savings presentssignificant data problems. To overcome the lack of these data problems, different approaches are used toestimate each proxy variable. The approaches are explained for each variable in the main report (see theEconomic Analysis in the Documents in the Project File [Annex 8 to this PAD] for further details).

3. Main Assumptions:

Main Assumption:Design life of the Channel : 40 yearsConstruction commencement! Base year : 2000Traffic growth : 3% per annum, 1999- 2010Traffic growth : 2% per annum, 2010-2040Real discount rate :12% per annumResidual value : zero

Cashflows: Cash flows are presented in terms of Uganda Shillings, with foreign exchangerequirements converted at an exchange rate of USD 1=lOOOUSh (the average exchange rate betweenthe period 1992 and 1998 inclusive was USDl=106OUsh).

Construction period: A two-year construction period is assumed in the preparation of the biddocument. This is considered reasonable, given the repetitive nature of many of the constructionactivities and relatively simple technology.


Frequency, Duration and Coverage of Flooding: In the memory of the people interviewed, floodingoccurs 10 to 15 times a year and the most intense flooding in the 1990s was the one in 1996. Thefrequency of flooding varies over the length of the channel. In the upper part of the channel theflooding frequency is three to four annually. According to the tenants and govemment officialsinterviewed, after every heavy rain, the Clock Tower Roundabout and surrounding area, the AccessRoad to the Clock Tower and the Industrial Area are flooded. For the purpose of the benefit estimatesthe average frequency of 10 floods per year is assumed. The duration of the flood lasts on the averageabout two to three hours after heavy rains. An average of two hours is taken as a basis of benefitestimates.

4. Design Scale Choice - Altemative Storm Retum Periods: The technical study generated and evaluatedtechnical solutions for channel design criteria, channel alignments and channel sections. Based upon these,the following design scale of the project options were identified for the economic evaluation:

* one in ten-year return storm period;* one in fifty-year storm return period; and* one in one hundred-year storm return period.

5 . Table 1 summarizes buildings, roads etc. that could be affected in the event of a 1 in 1 0-year, 1 in 5 0-year or 1 in 100-year storm occurrence.

Table 1: Property Affected by Different Flooded Zone

Impact of Design 1 in 10-Year Storm Return Period (hectares) lZone \ land use Buildings Roads & squares Vegetation's Others Total %Absolute value

1 in 10-year 12.4 10.0 55.4 14.6 92.41 in 50-year 51.9 24.7 82.6 35.6 194.8

I in 100-year 1 81.5 1 28.6 97.6 48.7 256.4Incremental Values

1 in 10-year 12.4 10.0 55.4 14.6 92.4 1 36%1 in 50-year 39.5 14.7 27.2 21.0 102.4 40%I in 100-year 29.7 3.9 15.0 13.1 61.7 24%

Total 81.5 28.6 97.6 48.7 J 256.4 100%

6. Technology Choice -Five Alternative Channel Linings: Based on a 40-year design life of the project,the following five channel linings were evaluated in relation to their sustainability (maintainability),availability of land, technical, social and fiscal constraints. Overall, the hybrid channel lining is assessed toprovide optimum solution. The hybrid channel lining not only merges the best attributes of the other fouroptions along the different sections of the channel, it is also deemed most sustainable (maintainable) over thedesign life of the project. The hybrid channel lining also approaches the least cost solution.

* Grass earth side slope (Earth);* Stone masonry (Stone);* Wire mesh gabions and mattresses (Gabions);* Reinforced concrete for side slopes and retaining walls (Concrete); and* Hybrid (a combination of all of the above as appropriate - earth, stone, gabions and

reinforced concrete).


7. Channel Alignment: For the most part the design maintained the existing channel alignment and hasnot made any major alteration in the channel route except for the elimination of the local meandering.

8. Land Acquisition: KCC has already acquired adequate land for the one in ten-year return period for thehybrid, stone and concrete channel linings. Additional land will only be required for the earth and gabionchannel linings for the 1 in 10-year storm and for all linings for 1 in 50-year, 1 in 100-year storm returnperiods.

9. Cost and benefit variables used in the analysis: The four variables used to estimate the costs are: (i)construction cost; (ii) land acquisition cost; (iii) operations and maintenance costs; and (iv) cost ofconstruction impact mitigation. The four main quantified variables used to estimate benefits are: (i) reductionin damages to building structures and property due to recurrent emergency costs (rental differential betweenflooded and non-flooded areas); (ii) reduction in damage to road assets; (iii) savings in vehicle operatingcosts; and (iv) passenger time savings.

10. Results of Economic Analysis: Based on the foregoing assumptions and methodology, the estimatednet present value and intemal rate of retums for the I in 10-year, the I in 50-year and the I in 100-year stonnreturn periods with each of five alternative channel linings were calculated and are summarized below. Alsoshown is the net present value for the "without" project case based on reduction of about 10% in floodingtime due to improved maintenance.

Table 2: Summary of NPV & IRR Estimates*

(NPV in billion Ugandan Shillings)Construction Methods/ Stone ReinforcedStorm Return Period Earth Gabions Hybrid Pitching Concrete

"Without" ProjectNPV 18.5 N.A N.A N.A N.AIRR* 15% N.A N.A N.A N.A

"With" Project1 in 10-year

NPV 20,640 16,385 15,067 8,493 6,889IRR 37% 26% 24% 17% 16%

1 in 50-yearNPV 14,055 10,636 8,341 1,762 2,177IRR 22% 19% 17% 13% 13.0%

1 in 100-yearNPV 12,456 8,664 6,408 (1,560) (2,441)IRR 20% 17% 15% 11% 11%

If expected damages to buildings are included**1 in 50-year

NPV 24,382 20,963 18,668 12,088 12,504IRR 29% 24% 22% 17% 17%

1 in 100-yearNPV 27,277 23,486 21,224 13,262 12,381IRR 29% 24% 22% 17% 16%

* Includes all the four quantified benefits. Present value based on 12% discount rate and 40-year design life of theproject

** Result if current land use is kept


11. For the 1 in 10-year storm return period with the hybrid channel lining, for 40 year project life andestimated investment costs of US$18.2 million equivalent, the estimated Net Present Value is US$ 15.1million equivalent and intemal rate of return is 24 %. A 12 % discount rate is used in the study, and cashflows are presented in terms of Ugandan Shillings and converted at a rate of US$ 1=1000 UShs.

12. Substantial Net Present Values and IRRs are demonstrated for the rehabilitation/restoration of theNakivubo Channel. The main sources of benefit are savings from reduction in damages to buildings and otherproperties.

13. The 1 in 10-year storm return period design option with hybrid channel lining will require no additionalland acquisition. The 1 in 10-year storm return period will have substantial impact in reducing the frequencyand incidence of flood. The chance that a storm of scale of 1 in 100 period may happen is less than 25% (1-0.6689=0.231 1).

14. Two sets of NPV and IRR estimates are made for the 1 in 50-year and 1 in 100-year storm returnperiods. The first is based on socially (market) recognized values as reflected in rent differential. The surveydid not reveal any systemic differences in the "non-flooded" area, as the zone outside the I in 10-year stormarea is popularly recognized. The second is that given the probability of occurrence that storms of 1 in 50-year and 1 in 100-year return periods is significant (Table 4), the damage, i.e. the costs of removing debrisand repairing damages are related to the frequencies of the flooding incidents. The result based on this latterassumption provides significant returns, assuming that the land use pattern remains the same over the nextforty years (Table 2).

15. Sensitivity of results: The benefit variables which most influence the project net benefits are notedbelow.

Table 3: Summary of Results of Switching Values for 1 in 10-yearHybrid Channel Lining

Variable Switching valueConstruction costs 106%Savings from Property Damages 70%Savings in Road investnents Does not reduce NPV to zero at 100% of value of

incremental road hinvestmecnt Vehicle Operating Cost Savings Not sensitive at 100% of value

16. The switching of the values indicates that the most critical value is the differential rent. A decrease ofmore than 70% will be required to reduce the net present value to zero. In other words, only 12%(=40%*30%) of the total aerial area needs to be rented to reduce the NPV to zero at 12% of discount rate.

17. However, even here, the probabilities of the expected values for each return period, that is 4 storms ofa I in 10, one storm each of I in 50, and I in 100-year return period can happen in the design life of theproject is shown below in Table 4. Also shown are the probabilities that no storm may happen during the 40-year life of the project.


Table 4: Probability of Exceedance of Storm

Probability of Expected value of Probability that expected Probability ofexceedance in exceedance (no of storm will occur over the zero occurrence

Storm Scale any one year (p) storms) over the life design life of the project of 1 in 10; 1 inof the project of 40 fx (4, 40, 0.1) 50; and 1 inyears (n); n*p 100.

I in 10-year Storm 0.1 4 0.2059 0.01478return Period1 in-50-year Storm 0.02 0.8 (= 1) 0.3638 0.4457Return Period1 in 100-year Storn 0.01 0.4 (=1) 0.2703 0.6689Return Period

18. Project Beneficiaries: The project benefits several groups:* the commercial, industrial and residential property owners and tenants;* the Government of Uganda and Kampala City Council;* vehicle operators;* passengers; and the* general public.

19. Most of the quantifiable benefits from the project would accrue to commercial, industrial andresidential property owners and tenants within the areas which are relieved from cost of repairs and recurrentemergency expenses.

20. The improved reliability of urban road usage, beside reduced transport costs, is likely to encourageindustrial and commercial development in Kampala, resulting in increased economic activities in theindustrial and commercial zones, and job creation.

21. The project will also have substantial fiscal impact. The Government of Uganda and Kampala CityCouncil would benefit from savings due to deferral of major investments arising from premature deteriorationof the road pavement. In addition, the reduction in frequent flooding and size of flooded area would result inpossible appreciation in the values of urban land and property in Kampala. This is likely to generate increasesin revenue from property taxation and can have positive fiscal impact on the City's finances and its capacityfor economic development.

22. As a result of reduced flooding, vehicle operators would have lower vehicle operating costs.Passengers will benefit from the restoration of accessibility during and following periods of rainfalls.

23. Also, the City Council of Kampala, the residents of Kampala and the traveUling public, aU stand tobenefit from the non-quantifiable benefits. Most important in the course of implementation of the project,KCC will get the opportunity to build its institutional and managerial capability for planning andimplementation of future investment projects and develop a culture for infrastructure maintenance, which aremajor objectives in themselves.

24. Although it is difficult to assign a direct link between disease and quantify the economic benefits,because of the possibilities of infections in other areas, the functioning of Nakivubo Channel drainage workswill yield positive environmental and social benefits associated with reduction of health hazard, posed byflood aftermath and risks to life. It will benefit low-income families who are engaged in commercialactivities and suffer substantial income loses annually as a result of the floods.


25. Prospects for Cost Recovery: The prospect for cost recovery from each of the beneficiaries is high, atleast for funding sustainable maintenance. Vehicle operating cost savings and higher rents are real resourcesavings which the KCC can claim. Also, because of improved amenities, merchants on either side of thechannel can contribute to cost recovery. The City itself will have more financial resources to use for thebetter development of the city with less outlays for road rehabilitation and maintenance. The increase inproperty value can lead to higher tax income. It is understood that the whole property tax system will takesome time to establish. In the mean time to assure sustainability of the benefits from the project, some short-term measures are being put in place.

26. Economic and Financial Sustainability: As noted above, the real resource savings in vehicle operatingcosts to road users are mainly out-of-pocket expenses. Indeed, the private financial savings to users exceedsthe social economic cost savings due to taxes on spare parts, fuel etc. Therefore, these users can be expectedto be willing to pay an amount up to the savings in exchange for the improved conditions. Similarly,landlords are going to raise rents they charge to tenants, which up to now have been lower in "flooded" areasto compensate tenants for the damages the tenants suffer and out-of-pocket expenses they incur in removingdebris and making repairs after each flood. The landlords must be willing to pass on to KCC in taxes, theincreases in rent in exchange for gains they receive from reduced flooding. The thousands of traders alongthe banks of the channel can also be asked to pay higher fees for the amenities they enjoy and the time theygain from transactions due to reduced flooding.

27. To assure sustainability of the project benefits, until cost recovery through taxing is instituted, KCCwill finance the maintenance costs of the project from a separate escrow account into which a portion of itscommercial revenues will be channeled to provide for the operations and maintenance costs for the channel.

28. Risks: The risks to the project implementation and sustainability of benefit arise from three sources:* financial risks associated with inadequate counterpart funds and inadequate maintenance funding;* institutional capacity risks associated with inadequate commitment to the strategic reform program

embodied in the institutional and operational reform program initiated under the ongoing First UrbanProject; and

* the risks that a 1 in 10-, 1 in 50- and/or 1 in 100-year storm may occur in the coming three years,before the project is realized.

29. The financial risk is associated with the sale of KCC's housing stock for generating the requiredcounterpart funds for the project. It is essential that this financing risk be addressed up front as a condition ofproject effectiveness. The other financial risk is the availability of adequate funds for the operations andmaintenance of the channel. Although, this may not be an issue immediately, cost recovery measuresdesigned to improve the overall tax base will have to be pursued under the project.

30. Since the probability of a 1 in 50 or 1 in 100-year storm return periods is real (see Table 4), KCCshould go ahead with mitigating measures such as delineating the flood plain area. The risk that over thedesign life of the 40-year period the recommended 1 in 1 0-year design return period may be exceeded isestimated to be 99%. That is, there is only a 1% chance that over the design life of the project the 1 in 10-year storm return period could accommodate all the flooding that may occur over the design life of theproject. The risk could be reduced by choosing the 1 in a 50-year return option or 1-in 100-year return option.These design scales will reduce the risk to 55% and 33% respectively. However, the tradeoff will requireaccepting a lower economic rate of return for the same channel lining or accepting a channel lining that has alower construction cost. In addition, this strategy will cause inordinate delays due to land acquisitionproblems thus postponing the benefits to be derived by adopting the 1 in 10-year alternative.


Annex 5: Financial Summary


Years Ending June 30

(US$ Millions)

I IMPLEMENTATION PERIODYear 1 Year 2 Year3 Year 4

Total Financing Required

Project CostsInvestment Costs 10.880 11.470 1.795 0.475Recurrent Costs 0.000 0.150 0.150 0.0

Total Project Costs 10.880 11.620 1.945 0.475

Total Financing 10.880 11.620 1.945 0.475

FinancingIDA 9.809 10.426 1.708 0.432KCC 1.071 1.194 0.237 0.043

Total Project Financing 10.880 11.620 1.945 1 0.475

OPERATIONAL PERIODYear 1 Year 2 Year3 Year4 YearS i Year 6 Year 7

Total Financing Required

Project CostsInvestment Costs 0.000 0.000 0.000 I 0.000 0.000 0.000 0.000Recurrent Costs 0.060 .0.060 0.060 0.060 l 0.060 0.060 0.060

Total Project Costs 0.060 0.060 0.060 0.060 0.060 0.060 0.060

Total Financing 0.060 i 0.060 0.060 l 0.060 0.060 0.060 ! 0.060

j FinancingIDA 0.000 0.000 0.000 0.000 0 000 0.000 0.000KCC 0.060 0.060 0.060 0.060 0.060 0.060 0.060

| ~ ~ ~ ~_ I_ i __ I _

Total Project Financing 0.060 0.060 0.060 0.060 l 0.060 0.060 0.060

Main assumptions:

Accounting Responsibility

1. KCC will be the implementing agency for NCRP. It will be supported by a Core Team within KCCwhich will be responsible for project implementation, overall project planning, accounting, monitoring andreporting.


Overview of Financial Management System

2. Accounting System and Procedures: KCC is currently undergoing a restructuring of its accountingsystem under the Strategic Framework for Reform. Progress has been made towards achieving a stronger andmore integrated financial management system but more actions need to be taken before the necessary reformsare complete. The financial management system in KCC is mainly designed to meet the requirements of theLocal Governments Financial and Accounting Regulations 1998 and with reforms not yet completed, it is notsuited for reporting the project's financial performance in accordance with the requirements of LACI. However,KCC is also the implementing agency for the IDA-financed First Urban Project, and initially, the financialmanagement arrangements for NCRP will be based on those of the First Urban Project.

3. Manual Accounting System: The system currently in place is a manual based system, withaccounting transactions being recorded manually into books of accounts and reports and analyses beingproduced on computer spreadsheets. The main books of accounts are: (i) Cash Book, (ii) Ledgers, (iii) JournalVouchers and (iv) Fixed Asset Register.

4. Internal Controls: There are no manuals that document accounting procedures and internal controls.There are also no clearly documented guidelines for the review of financial information that is generated fromthe accounting system and reporting lines for financial management are not defined.

5. Fixed Assets: A fixed assets register is used to record the project's fixed assets.

6. Staffing of Accounting Department and Responsibilities: Even though large sums of money areinvolved, there is a relatively small number of transactions handled by the First Urban Project. Theaccounting unit is headed by the Programme Accountant. He is assisted by the Assistant ProgrammeAccountant and an accounts assistant. The Programme Accountant's responsibilities are outlined in the CoreTeam's schedule of duties.

7. Audit Arrangements: The First Urban Project's accounts are audited by a private firm of auditorsappointed by the Auditor General. The final report is signed by the Auditor General and is based on testscarried out and conclusions reached by the appointed private auditors. The project's accounts have beensubmitted to IDA as required by the terms of the credit agreement. Similar arrangements will be adopted forthe NCRP and the terms of reference for the annual audit will also be developed and included in the FinancialManagement Manual.

8. Bank Accounts: The First Urban Project operates two bank accounts, a Special Account and a ProjectAccount. NCRP will open 3 bank accounts for project purposes: a Special Account denominated in USDollars, a Project Account and an Escrow Account. The operations and maintenance funds for themaintenance of the civil works investments financed under NCRP will be deposited into the Escrow Account.Control procedures over all bank transactions will be fully documented in the Financial Management Manual.

9. The Project Management Reports (PMR): Formats of the Project Management Reports (PMR)required by the Bank under LACI are to be developed in accordance with IDA requirements by September 30,1999.

10. Conclusion: The financial management arrangements that are currently in place for the First UrbanProject are to be used for the NCRP. Based on an assessment carried out by a financial managementspecialistthey meet the minimum financial management requirements under OP/BP1O.20, but are notadequate to provide, with reasonable assurance, accurate and timely information on the status of the project asrequired by IDA for PMR-based disbursements. A plan of actions that will be required to be undertaken inorder to achieve this compliance has been drawn up in Chapter 8 on Financial Management of the ProjectImplementation Plan (see Annex 8: Documents in the Project File of this PAD).


Annex 6: Procurement and Disbursement Arrangements


Procurement

Procurement Methods (Table A)

Procurement for Project Preparation

1. The major consultancy undertaking during project preparation work was engineering design for theCivil Works. This was financed under IDA funding through the ongoing First Urban Project and wascontracted following IDA guidelines for the use of consultants. The summary of the proposed procurementarrangements are presented in Table A.

Procurement under the Project

2. Table Al: Consultant Selection Arrangements provides a summary thereof. Total value of IDA-supported consulting assignments will be US$5.7 million. These assignments mainly comprise policyanalysis, planning and design work, specific studies, construction supervision and institutional support.Consultants would be hired in accordance with the Guidelines for Selection and Employment of Consultantsby World Bank Borrowers (January 1997; Revised September, 1997; Addendum Effective January 1, 1999).Most consultant selection will be addressed through competition among qualified short-listed finns in whichthe selection will be based on Quality-and-Cost-Based Selection (QCBS) by evaluating the quality of theproposal before comparing the cost of the services to be provided. Short lists for contracts estimated underUS$ 100,000 may be comprised entirely of national consultants if a sufficient number of qualified (at leastthree) are available at competitive costs. However, if foreign firms have expressed interest, they shall not beexcluded from consideration. Contracts less than US$100,000 each for firms and $50,000 each forindividuals may be awarded on a sole source basis subject to adequate justification and prior review by IDA.For training US$ 0.3 million will comprise hiring of individual consultants, support for training programs,seminars, workshops, attachments and fellowships. In addition, US$ 1.92 million will be spent oninstitutional support for KCC's reform program. This will be in the form of seed money for contracting outservices, office and administrative support and equipment procurement.

3. Procurement of works and goods will be carried out in accordance with Guidelines for Procurementunder IBRD Loans and IDA Credits (January 1995; Revised January 1996, August 1996, September 1997,and January 1999). The one major civil works contract (IDA support and KCC's own resources valued atapproximately US$ 17 million equivalent) will be awarded on the basis of ICB. The works under this contractcomprise rehabilitation of the main channel, auxiliary works and priority drainage "black spots". Smaller-value works contracts of individual value less than US$ 300,000 equivalent for an aggregate value of US$1.0million equivalent may be awarded on the basis of NCB and those less than US$ 50,000 equivalent (minorworks) for an aggregate value of US$1.0 million equivalent awarded on the basis of quotations obtained fromat least three qualified domestic contractors, in response to a written invitation. The bidding documents, bidevaluation and award for minor works shall be acceptable to the Association. It has been agreed thatprocedures for NCB to be used by KCC will be consistent with IBRD Guidelines on NCB; and the tenderdocuments used are based on the Standard Bid Documents of IBRD for all ICB, suitably modified. Contractsfor the procurement of goods supported by IDA (individual value US$ 300,000 equivalent and below) for anaggregate value not exceeding US$ 500,000 may be awarded on the basis of NCB, and individual valuecontracts of US$ 50,000 and below for an aggregate value not exceeding US$ 300,000 may be awarded on thebasis of National Shopping using approved procedures.


4. The General Procurement Notice will be published in the Development Business Forum at least 60days prior to the issue of bid documents. Specific Procurement Notices in accordance with the guidelines willbe issued before preparation of shortlists in respect of consulting contracts above US$200,000. TheProcurement Planning Schedules for consultancies, goods and works are included in Section 5 of the ProjectImplementation Plan.

Implementation Arrangements

5. The procurement for the contracts will be undertaken by the Core Team of the Kampala City Councilunder the leadership of the Programme Manager. The procurement staff in the Core Team have undergonetraining and carried out procurement of consultants, works and goods for the ongoing First Urban Project.They will continue with the procurement activities under this proposed project. The Core Team'sprocurement staff include three engineers and two accountants who will be provided with the necessaryadministrative and secretarial support. The procurement staff will report directly to the Programme Manager.Procurement specialists from the Kirklees Metropolitan Council of the U.K., KCC's technical cooperationpartner, will provide the requisite training and advisory services to the procurement team within the KCCCore Team. Also, funds have been made available under this proposed project for additional training inprocurement.

Prior Review Thresholds (Table B)

Prior Review

6. For procurement of works and goods, all contracts valued at US$ 300,000 or more will require priorreview by IDA. However, the first three contracts below US$ 300,000 will also be subject to prior review byIDA. The Bank will review the selection process for the hiring of consultants by the borrower. For thoseconsultancy contracts to be awarded to firms; contracts worth US$ 100,000 and above will be subject to IDAprior review; for individual consultants the prior review threshold will be US$ 50,000. However, the firstthree contracts below US$ 1 00,000 will also be subject to prior review by IDA. The exception to IDA priorreview will not apply to the Terms of Reference of such contracts, regardless of value, to single-source hiring,or assignments of a critical nature as determined by IDA or to amendments of contracts raising the contactvalue above the prior review thresholds. All contracts during the first year of the project, and selectivecontracts thereafter, will be subject to post-review.

Disbursement

Allocation of Credit Proceeds (Table C)

7. The proceeds of the IDA credit would be disbursed against:

(a) 90% of expenditures on civil works contracts;(b) 80% of expenditures for institutional support; and(c) 100% of expenditures for project implementation support, and program and policy studies.

8. As projected by Bank's standard disbursement profiles, disbursement would be completed by fourmonths after project closure. Disbursement would be made against standard IDA documentation.

Use of Statements of Expenditures (SOEs) and Project Monitoring Reports (PMRs)

9. Disbursement would be made on the basis of Statement of Expenditure (SOE) for contracts andpurchase orders with an individual value less than those requiring IDA's prior review. The project is


expected to be compliant with LACI requirements by September 30, 1999 after which disbursements will bemade quarterly on the basis of Project Monitoring Reports (PMRs).

Special Account

10. In order to ensure the timely provision of funds available to finance the costs of the project, it isproposed that the Government establish a Special Account in the amount of US$1.5 million. Funds in thisSpecial Account would be available to finance only eligible expenditures under the Project. Duringnegotiation, agreement would be reached regarding the arrangements for establishing and operating theSpecial Account.

Project Account

11. In order to ensure the timely provision of counterpart funds, it is proposed that the Government/KCCestablish, a Project Account, at a commercial Bank acceptable to IDA, with an initial balance sufficient forthe first quarter by project effectiveness. The Govemment/KCC will replenish the Project Account everyquarter, with sufficient funds to meet the Government's share of expenditures under this project for theensuing 3 months, and the funds would be applied only for this purpose. During negotiations, agreementwould be reached regarding the arrangements for establishing and operating the Project Account.

Overall Procurement Risk Assessment

A. Background

A procurement capacity/risk assessment has been done in the context of the proposed project. Given KCC'sprior track record on IDA procurement under the ongoing First Urban Project, it has been determined thatKCC has adequate and reliable procurement management capacity. Furthermore, under the proposed project,procurement organization is fairly simple given that there are just four major contracts to manage whichinclude one large civil works contract (IDA portion of US$15.3 million), and three large consultancycontracts (IDA portion of US$3.7). Of the total IDA financing of US$22.38 million for the project, contractsworth about US$21.5 million are subject to prior review. In addition, as a part of project preparationactivities, KCC has demonstrated and delivered acceptable quality of outputs by way of the pre-qualificationevaluation report for the civil works contract, draft bid documents and the Letter of Invitation packages forvarious consultancies.

B. Legal Framework

KCC follows the laws and regulations established by the Governnent of Uganda and described in the recentlycompleted Country Procurement Assessment Review (CPAR). The regulations are considered satisfactoryfor procurement methods such as NCB and shopping. Bank procurement guidelines will be followedthroughout for all other procurement methods such as ICB and International Shopping.

C. Procurement Cycle Management

C 1. Procurement PlanningProcurement planning is satisfactory, and KCC has adequate staffing for it. For complex design, technicalassistance has been envisaged for the project.

C2. Procurement CycleThe procurement plan is adequate and the implementation schedule is acceptable.


C3. Bidding DocumentsBid documents will be based on those previously used for the First Urban Project and conform to IDArequirements. They are satisfactory and fully consistent with bank standard bid documents for ICB.

C4. Pre-qualificationPre-qualification for the civil works contract has been carried out to IDA's satisfaction under the project.KCC, with assistance from its technical adviser, the Kirklees Metropolitan Council of the U.K., would be ableto carry out any further prequalifications, if required.

C5. AdvertisementKCC follows all advertising procedures recommended by IDA.

C6. Communications between bidders and the procuring agencyNo major issues were encountered under the previous project. Agency transparency in bidders communicationappears to have been satisfactory.

C7. Receipt of bids and bid openingBank recommended bid opening practices are followed. No transparency issues are expected under theproject.

C8. Bid examination and evaluationKCC will require technical assistance from consultants for the evaluation of larger contracts and will engagethem accordingly.

C9. Contract Award and effectivenessBank recommended practices have been followed throughout in the previous First Urban Project. No majordelays are expected from the implementing agency, though approval by GOU may delay the process forindividual contracts.

C10. Contract AdministrationKCC's capacity to manage and supervise contracts needs strengthening and will be reinforced throughtraining, (a workshop in procurement will be carried out at project inception) and by way of technicalassistance, particularly for construction works supervision and contractual handling. Regular auditing ofadministrative actions will be undertaken at yearly intervals.

D. Organization and Functions

No changes are expected from the previous organization for the First Urban Project. The general assessmentis satisfactory, but will be further strengthened through technical assistance.

E. Support and Control Systems

Refer to Chapter 8 of the Project Implementation Plan on financial management (see Annex 8 to this PAD onDocuments in the Project File).

F. Record Keeping

Record keeping was satisfactory under the First Urban Project and is expected to remain the same.


G. Staffing

KCC has established a Core Team from its own staff who will carry out, under contractual terms, themanagement and administration of the project. Given the small number of contracts under the project, aprocurement management team will be used for the length of the project. This team will be assisted forcomplex tasks such as planning, contract management and supervision tasks by external consultants. Bidevaluations will also be carried out by the KCC Core Team staff assisted by external consultants. KCC staffwill participate in a procurement workshop on Bank procurement procedures at project inception.

H. Risk Assessment

Average, given previous experience. Bank prior review procedures cover most of the procurement actionsunder the project.

Frequency of procurement supervision missions proposed

One every 3 months (includes special procurement supervision for post-review/audits).


Table A: Project Costs by Procurement Arrangements(in US$ million equivalent)

Procurement Method"'Expenditure Category ICN NCB Othei N.B.F Total Cost

1. Civil Works 17.0 17.0(15.30) (15.3)

2. Goods(a) Office furniture, computers 0.09 0.09

(0.072) (0.072)(b) Vehicles 0.23 0.23

(0.184) (0.184)3. Services

(a) Services(i) Contracted out services and 3.7 3.7

studies(3.7) (3.7)

(ii) Contracted out Institutional 1.00 2.3 3.3Support (0.8) (1.84) (2.64)

(b) Office & Administrative 0.3 (0.3)Support (0.24) (0.24)

(c) Training 0.3 0.3(0.24) (0.24)

Total 17.0 1.32 6.6 24.92(15.3) (1.056) (6.02) (22.376)

Figures in parenthesis are the amounts to be financed by the IDA Credit. All costs include contingencies.2/ Includes minor works, goods, consulting services, services of contracted staff of the project management

office, training, technical assistance services, and operating costs related to (i) managing the project, and(ii) allocating project funds to local government units, i.e., KCC's five Divisions.


Table Al: Consultant Selection Arrangements(US$ million equivalent)

.___ ____ Selection MethodConsultantServices

Expenditure QCBS QBS SFB LCS CQ Other N.B.F. TotalCategory Cost"

A. Firms 3.7 0.0 0.0 0.0 0.0 1.0 0.0 4.7

(3.7) (0.0) (0.0) (0.0) (0.0) (0.8) (0.0) (4.5)B. Individuals 0.0 0.0 0.0 0.0 0.0 1.0 0.0 1.0.

______________ (0.0) (0.0) (0.0) (0.0) (0.0) (0.8) (0.0) (0.8)Total 3.7 0.0 0.0 0.0 0.0 2.0 0.0 5.7l______________ (3.7) (0.0) (0.0) (0.0) (0.0) (1.6) (0.0) (5.3)

Including contingencies

Note: QCBS = Quality- and Cost-Based SelectionQBS = Qualit-based SelectionSFB = Selection under a Fixed BudgetLCS = Least-Cost SelectionCQ = Selection Based on Consultants' QualificationsOther = Selection of individual consultants (per Section V of Consultants Guidelines), CommercialPractices, etc.N.B.F. = Not Bank-financedFigures in parenthesis are the amounts to be financed by the IDA Credit.


Table B: Thresholds for Procurement Methods and Prior Review

Expenditure Contract Value Procurement Contracts Subject toCategory Threshold Method Prior Review

(US$) (US$)

1. Works< 300,000 NCB > 300,000> 300,000 ICB > 300,000< 50,000 "National Shopping"

2. Goods < 300,000 NCB > 300,000> 300,000 ICB > 300,000< 50,000 National Shopping

3. ServicesQCBS > 100,000 (finns)

2 50,000 (individuals)Single Source All

Total value of contracts subject to prior review: US$21.5 million


Table C: Allocation of Credit Proceeds

Expenditure Category Amount in US$ Financingmillion Percentage

Civil Works 14.30 90%

Goods(a) Office Equipment, Vehicles, Computers and 0.26 80%

Software

Services(a) Contracted Out Services and Studies 3.70 100%(b) Contracted Out Institutional Support 2.64 80%(c) Office & Administrative Support 0.24 80%(d) Training 0.24 80%

Unallocated 1.00

Total 22.38


Annex 7: Project Processing Schedule


Project Schedule Planned Actual

Time taken to prepare the project (months) 1 year 1 yearFirst Bank mission (identification) 02/27/98 02/27/98Appraisal mission departure 03/22/99Negotiations 3/29/99Planned Date of Effectiveness 7/1/99

Prepared by:

Kampala City Council

Preparation assistance:

Engineering Design, Design Review, Environmental Impact Assessment, Social Impact Assessment andProject Implementation Plan prepared by consultants under KCC's supervision financed under the FirstUrban Project (Cr. 2206-UG).

Bank staff who worked on the project included:

Name SpecialtyGautam Sengupta Task Team Leader XPeter Templer Civil Engineer/ Engineering designHanim Magdon-Ismail Municipal Engineer/ Procurement, Program Management, PIP

! Joseph Mubiru Kizito Financial Management Specialist] Compliance with LACIEphrem Asebe Economist/ Economic AnalysisAberra Zerabruk Lawyer/ Legal Agreements lSudeshna RoyChoudhury Operations Analyst/ PCD, PAD, PIP, Internal Bank ProcessingPerla San Juan Task Team Assistant I


Annex 8: Documents in the Project File*


A. Project Implementation Plan

B. Bank Staff Assessments

Economic Analysis

C. Other

1) Civil Works -Draft Bid Document2) Engineering Design Report3) Strategic Framework for Reform (SFR)4) Environmental hnpact Assessment5) Social Impact Assessment

*Including electronic files


Annex 9: Statement of Loans and Credits


Difference between

expected and actual

Original Amount in US$ Millions disbursements a/

Project ID FY Borrower Purpose IBRD IDA Cancel. Undisb. Orig Frm Rev'd

Number of Closed Projects: 54

UG-PE-2941 1999 GOVT. OF UGANDA ICB-PAMSU 0.00 12.37 0.00 12.78 0.00 0.00

UG-PE-2972 1998 GOV EDUC SECTOR ADJ CRED 0.00 80.00 0.00 83.18 0.00 0.00

UG-PE-40551 1998 GOVERNMENT OF UGANDA NUTRITCHILD DEV 0.00 34.00 0.00 34.79 1.15 0.00

UG-PE.49543 1998 REPUBLIC OF UGANDA ROAD SECTIINST.SUPP 0.00 30.00 0.00 29.84 10.17 0.00

UG-PE-57007 1998 GOVERNMENT OF UGANDA EL NINO EMERG RD REP 0.00 27.60 0.00 28.40 8.18 0.00

UG-PE-2987 1997 GOVT. OF UGANDA SAC III 0.00 125.00 0.00 81.88 81.17 0.00

UG-PE-46836 1997 GOVT. OF UGANDA LAKE VICTORIA ENV. 0.00 12.10 0.00 10.12 1.97 0.00

UG-PE-297S 1996 GOVERNMENT ENVIRONMENT MANAGEMT 0.00 11.80 0.00 6.90 4.58 0.00

UG-PE-35634 1996 GOU PRIV. SECTOR COMPETI 0.00 12.30 0.00 8.02 3.31 0.00

UG-PE-2971 1995 GOVERNMENT DISTRICT H-EALTH 0.00 45.00 0.00 27.73 5.25 0.00

UG-PE-2976 1995 GOVERNMENT INST. CAPACITY BLDG 0.00 36.40 0.00 18.10 10.61 0.00

UG-PE-2923 1994 GOVT. TRANSP. REHAB. 0.00 75.00 0.00 42.29 33.97 0.00

UG-PE-2957 1994 GOVERNMENT SMALLTOWNSWATER 0.00 42.30 0.00 25.21 16.75 0.00

UG-PE-2963 1994 GOVERNMENT SEXUAL.TRANS.IN 0.00 50.00 0.00 24.35 12.74 0.00

UG-PE-2977 1994 GOU COTTON SECTOR DEVELO 0.00 14.00 0.00 4.86 3.08 0.3B

UG-PE-2938 1993 GOVERNMENT AGRIC. RES&TRG. 0.00 25.04 0.00 3.72 -1.09 0.00

UG-PE-2953 1993 GOVERNMENT PRIMARY EDUC. & TEAC 0.00 52.60 0.00 26.54 13.54 0.00

UG-PE-2975 1993 GOVERNMENT ECON & FINANCIAL MAN 0.00 29.00 0.00 0.02 -3.63 0.00

UG-PE-2968 1992 GOVERNMENT ENTERPRISE DEVELOPMENT 0.00 65.60 23.75 6.35 26.07 -0.23

UG-PE-2929 1991 GOVERNMENT POWER WII 0.00 125.00 0.00 26.65 29.63 28.79

UG-PE-2933 1991 GOVERNMENT URBAN I 0.00 28.70 0.00 4.29 3.38 0.00

Total: o.oo 933.81 23.75 506.00 260.81 26.94

Active Projects Closed Projects TotalTotal Disbursed (IBRD and IDA): 411.58 1,738.56 2,150.14

of which has been repaid: 0.00 295.37 295.37Total now held by IBRD and IDA: 910.06 1,362.63 2,272.69

Amount sold: 0.00 25.82 25.82of which repaid: 0.00 25.82 25.82

Total Undisbursed: 506.00 4.40 510.40

Project Appraisal Document Page 54Country: Uganda Project Ttle: Nakivubo Channel Rehabilitation Project

UGANDASTATENT OF IFC's

Held and Disbursed Portfolio3 1-Dec-1998

In Millions US Dollars

Committed DisbursedIFC IFC

FY Approval Company _ Loan Equity Quasi Partic Loan Equity Quasi Partic1983 Uganda Sugar 6.00 0.00 0.00 0.00 6.00 0.00 0.00 0.001984/92 DFCU 0.00 0.00 0.98 000 0.00 0.00 0.98 0.001992 AEF Clovergem 0.84 0.00 0.00 0.00 0.84 0.00 0.00 0.001993 AEFNile Roses 0.16 0.00 0.00 0-00 0.16 0.00 0.00 0.001993 AEFRwenzori 0.58 0.00 0.19 0.00 0.58 0.00 0.19 0.001993 Jubilee 0.00 0.00 0.10 0.00 0.00 0.00 0.10 0.00

1994 AEF Polypack 0.50 0.00 0.00 0.00 0.50 0.00 0.00 0.00j1994 AEF SkyNblue 0.51 0.00 0.00 0.00 0.51 0.00 0.00 0.00

1994 Celtel 2.15 0.80 0.64 0.00 2.15 0.80 0.64 0.001995 AEF Rainbow 0.79 0.00 0.00 0.00 0.79 0.00 0.00 0.001995/96 UgandaLeasing 1.73 0.00 0.33 0.00 1.13 0.00 0.33 0.001996 AEF Agro Mgmt 0.58 0.00 0.40 0.00 0.53 0.00 0.40 0.001996 EAGW 6.50 0.00 0.00 0.00 0.00 0.00 0.00 0.001996 KaseseCobalt 16.00 0.00 3.60 0.00 11.17 0.00 3.20 0.001997 AEFConradPlaza 1.50 0.00 0.00 0.00 1.50 0.00 0.00 0.001997 AEF Metro Hotel 0.42 0.00 0.00 0.00 0.00 0.00 0.00 0.001997 AEF Kiiva Indust 0.25 0.00 0.00 0.00 0.25 0.00 0.00 0.001998 AEF Exec. hivmnt 1.00 0.00 0.00 0.00 1.00 0.00 0.00 0.001998 AEF Mosa Court 0.80 0.00 0.00 0.00 0.80 0.00 0.00 0.001998 AEF Skay Electro 0.22 0.00 0.00 0.00 0.00 0.00 0.00 0.001998 AEF WhiteNile 0.30 0.00 0.00 0.00 0.00 0.00 0.00 0.001998 Tilda Rice 2.40 0.00 0.00 0.00 0.00 0.00 0.00 0.00

11998 AEF KampalaFlwr 0.50 0.00 0,00 0.00 0.00 0.00 0.00 0.00

Total Portfolio 43.73 0.80 6.24 0.00 27.91 0.80 5.84 0.00

1 Approvals Pending Commitment

FY Approval Company Loan Equity Quasi Partic1998 AEF RAM OIL 1.00 0.00 0°00 0.001996 KASESE COBALT 0.00 0.00 0 00 5.00

Total Pending Commitment: 1.00 000 0°00° 5.00

Project Appraisal Document Page 55Country: Uganda - Project Title: Nakivubo Channel Rehabilitation Project

Annex 10: Country at a Glance



Sub- 1/13/99POVERTY and SOCIAL Saharan Low-

Uganda Africa income Development diamond*1997Population, mid-year (millions) 20.3 614 2,048 Life expectancyGNP per capita (Atlas method, US$) 330 500 350GNP (Atlas method, US$ billions) 6.7 309 722

Average annual growth, 1991-97

Population (96) 3.1 2.7 2.1Labor force (°X) 2.7 2.6 2.3 GNP Gross

per primaryMost recent estimate (latest year available, 1991.97) capita enrollment

Poverty (% of population below national poverty line) 55Urban population (% of total population) 13 32 28Life expectancy at birth (years) 42 52 59Infant mortality (per 1,000 live births) 99 90 78Child malnutrition (% of children under 5) 26 .. 61 Access to safe waterAccess to safe water (76 of population) 34 44 71Illiteracy (% of population age 15+) 38 43 47Gross primary enrollment (% of school-age population) 73 74 92 _ Uganda

Mate 79 81 100 Low-income groupFemale 67 67 82

KEY ECONOMIC RATIOS and LONG-TERM TRENDS

1976 1986 1996 1997Economic ratios*

GDP (US$ billions) .. 3.9 6.1 6.6Gross domestic investment/GDP 6.3 8.4 16.0 15.3Exportsofgoodsandservices/GDP 11.4 12.8 11.8 12.6 TradeGross domestic savings/GDP 8.1 6.0 4.7 7.5Gross national savingslGDP 7.9 8.2 11.1 12.3

Current account balance/GDP .. 0.0 -8.2 -7.9 DometXInterest payments/GDP .. 0.6 0.6 0.6 omesticInvestmentTotal debtVGDP .. 36.0 60.1 56.3 Savings IvsmnTotal debt service/exports 6.1 44.1 20.0 21.0Present value of debt/GDP .. .. 32.3 ..

Present value of debt/exports .. .. 264.5Indebtedness

1976-86 1987-97 1996 1997 1998-02(average annual growth)GDP 1.9 7.0 9.3 5.4 7.0 -UgandaGNP per capita -0.2 3.7 6.6 3.0 4.1 Low-income groupExports of goods and services .. 11.8 27.2 29.5 9.0

STRUCTURE of the ECONOMY1976 1986 1996 1997 Growth rates of output and investment (%)

(% of GDP)Agriculture 73.3 56.6 45.5 43.8 69

Industry 7.5 10.2 16.0 17.3 40

Manufacturing 6.1 6.4 7.8 8.2 20

Services 19.2 33.2 38.5 38.9 o

Private consumption .. 85.0 85.1 82.6 -201 92 93 94 95 96 97

General government consumption .. 9.0 10.2 9.9 3GD1 - DPImportsof goods and services 9.6 15.2 23. 20.3

1976-86 1987-97 1996 1997 Growth rates of exports and imports (%)(average annual growth)Agriculture .. 4.1 4.4 1.3 soIndustry .. 11.0 18.1 14.5

Manufacturing .. 12.2 19.7 13.5Services .. 7.9 8.6 5.9 20

Private consumption .. 6.3 8.3 2.3 o _0General government consumption .. 6.1 8.4 7.0 94 95 96 97

Gross domestic investment .. 7.0 10.0 -2.6 29

Imports of goods and services .. 6.3 13.0 2.0 Exports -- *ImportsGross national-product 1.8 7.1 9.8 6.0

Note: 1997 data are preliminary estimates.This table was produced from the Development Economics central database.tThe diamonds show four key indicators in the country (in bold) compared with its income-group average. If data are missing, the diamond will

be incomplete.


Uganda

PRICES and GOVERNMENT FINANCE

Domestic prices 1976 1986 1996 1997 Inflation (%)

(% change) s0 -Consumer prices . 148.1 6.9 5.5 4 °z3 .Implicit GDP deflator .. 137.3 5.7 6.6 30 -

20Government finance Ia(% of GDP, includes current grants) 0 ICurrent revenue .. 6.7 10.1 10.5 92 93 94 9s 96 97

Current budget balance .. -1.6 1.2 0.9 -GDP deflator -. =CPIOverall surplus/deficit .. -4.4 -5.9 -6.0

TRADE

(UJS$ millions) 1976 1986 1996 1997 Export and import levels (USS millions)

Total exports (fob) .. 379 590 671 1,500Coffee .. 360 404 366Cotton .. .. 13 26Manufactures .. ... .

Total imports (civ .. 380 1,218 1,246Food .. . .5 00

Fuel and energy 61 90 92Capital goods .

Export price index (1995=100) .. 49 75 67 91 92 93 94 95 9s 97

Import price index (1995=100) .. 82 107 107 CEports *ImportsTerms of trade (1995=100) .. 60 71 63

BALANCE of PAYMENTS1976 1986 1996 1997 Currentaccountbalanceto GDP ratio (%)

(USs millions)Exports of goods and services 333 389 726 825 0Imports of goods and services 285 448 1,601 1,651Resource balance 48 -57 -875 -826

Net income -7 -44 -46 -17Net current transfers 2 101 421 322

Current account balance 43 0 -500 -521 -10

Financing items (net) -41 39 573 653Changes in net reserves -2 -39 -73 -132 -15

Memo:Reserves including gold (US$ millions) .. 86 480 622Conversion rate (DEC, local/US$) -- 10.9 1,012.8 1,058.0

EXTERNAL DEBT and RESOURCE FLOWS1976 1986 1996 1997

(US$ millions) Composition of total debt, 1997 (US$ millions)Total debt outstanding and disbursed 244 1,414 3,674 3,708

IBRD 3 43 0 0 G: 112IDA 42 370 1,849 1,954 F: 76

Total debt service 20 172 150 182 E:727IBRD 1 5 0 0IDA 0 4 21 22

Composit'ion of net resource flows'0m. B: 1,954Official grants 5 82 338 D: 445 B:s S Official creditors 25 121 175 207Private creditors 5 3 7 -Foreign direct investment ..Portfolio equity .. c:

World Bank programCommitments 0 0 42 125 A - IBRD E - BilateralDisbursements 3 62 124 216 B - IDA D - Other mutilateral F - PrivatePrincipal repayments 1 2 8 9 c - IMF G - Short-termNet flows 2 60 116 207Interest payments 1 6 13 13Net transfers 2 54 103 194

Note: This table was produced from the Development Economics central database. 1/13/99

CONSULTANCY Annex 11: PROCUREMENTSTRATEGYAND IMPLEMENTATION SCHEDULES Page 58

SERVICESUganda: Nakivubo Channel Rehabilitation Project

TERMS OF _REFERENCE SHORT LIST REQUEST FOR PROPOSA BID EVALUATION TECHNICAL (1) AND FIANCIAL (F)

ALLOCATED BID BID CONTRACT CONTRACTPROCUREMEN LUMP SUM or AMOUNT PROCURING PLANVS. ADVERTISEMEN SUBMITTED APPROVED SUBMIT/ PREPARE APPROVED INVITATION OPENING REQUEST APPROVAL REQUEST APPROVAL AMOUNT SIGNING DELIVERY

ESCRIPTIO T METHOD TIME-EASDE (USSM) UNIT ACTUAL T AND SPN DATE DATE APPROVE DATE DATE DATE DATE DATE if) DATE (T) DATE (F) DATE (F) (US$M) DATE LATEST DATE

CSC OCBS Time 1.200 KCC Plan 26-Apr-99 7-Apr-99 26-Apr-99 27-Apr-99 26-May-99 21-Jun-99 25-Jun-99 28-Jul-99 30-Jul-99 25-Aug-99 30-Sep-02

based Actual 7-Dec-98 4-Nov-98 9-Nov-98

PlanActual

KDMP QCBS Tihe 1.200 KCC Plan 2-Jun-99 12-May-99 2-Jun-99 4-Jun-99 5-Jul-99 26-Jul-99 30-Jul-S99 1-Sep-99 3-Sep-99 29-Sep-99 30-Sep-01

based Actual 7-Dec-98 4-Nov-98 9-Nov-98

PlanActual

KUTIP QCBS TIme 1.300 KCC Plan 17-May-99 10-Apr-99 15-Apr-99 6-Sep-99 16-Aug-99 6-Sep-99 7-Sep-99 6-Oct-99 28-Oct-99 3-Nov-99 6-Dec-99 8-Dec-99 3-Jan-00| 31-Dec-01based Actual

PlanActual

Program Other Time 0.500 KCC Planr 17-Apr-09 28-Apr-00 28-Apr-00 .- 30-Jan-0 30-Jun-02

ImppItaton based ActualSupport

PlanActual

'Traininge Other Time D.300 KCC Plan . 1-Sep-9901

15-Jun-021

. . . . 15-Oct-999'1

28-Feb-021

i1-Oct-99I 28-Feb-02' 3-Jan-00 30-Jan-02based Actual

PlanActual

'Revenue Other Tkne 0.001 KCC Plan 2 2-Aug999

) 14-Jul-001

Dl' . . . S1-oct-99'l) 15-Aug-Offl 01-Oct-991) 15-Aug-0

1f1

3-Jan-rO 31-Dec-00

enhment based Actual

PlanActual

'Cos Other Tine 05.90 KCC Plan .- 17-Aug-9991

3D-Mar-0111

- - - lBOl.S140 1-5-May-SI41

18-Oct-9991

) 15-May-DI-1

3-Jan-00 31-Dec-C1

based Actual

PlanActual

Office Adm Other Time 0.300 KCC Plan - 17-Apr-00 28-Apr-00 28-Apr-00 - . . . . . . 30-Jun-00 30-Jun-02

& support (support based Actual

staflQ' staff)

Notes:

1. Training Includesa attachments, study tours, on job tralning, workshops etc.2. Ofice administration andsupportstaff includes:- supportstafffor program managementand otheroike andfield expensesof the Core team.

-This sub-componenthasseveral repetitiveactions/steps. Date0

) denotesthe beginning date ofthefirstaction/step. Oate(1

denotesthe enddateofthe lastacdn/step.

WORKS Annex 11: PROCUREMENT STRATEGY AND IMPLEMENTATION SCHEDULES Page 59


SPECS AND QUANTITY BIDDING DOCUMENTS BID EVALUATION REPORT

PROCUREM LUMP SUM ALLOCATED TENDER CONTRACT CONTRACT

ENT or BILL OF AMOUNT PROCURIN PLAN VS. SUBMITTED APPROVED PREPARE APPROVED INVITATION BID OPENING REQUEST APPROVAL AMOUNT SIGNING DELIVERY

DESCRIPTION METHOD QUANTITY (US$M) G UNIT ACTUAL DATE DATE DATE DATE DATE DATE DATE DATE (US$) DATE LATEST DATE

Civil Works ICB BOQ 16.000 KCC Plan 20-Apr-99 26-Apr-99 18-Mar-99 26-Apr-99 3-May-99 2-Jul-99 6-Aug-99 110-Aug-99 30-Aug-99 2-Sep-02

- channel Actual

- aux. W^ks

- brk spotsPlanActual

*Servioes NCBP'NS' BOQ 1.300 KCC Plan 23-Aug-99('3 15-Feb-01(

4 ) 22-Aug-99 15-Feb-014) 6-Sep-99

13 1 28-Mar-010) 29-Nov-99(3 18-May-01

4') 3-Jan-00(3 ) 31-Dec-01'

41

under SFR Actual

PlanActual

PlanActual

PlanActual

PlanActual

PlanActual

PlanActual

PlanActual

PlanActual

PlanActual

PlanActual

-This sub-component has several repetitive actions/steps. Date(3) denotes the beginning date of the first action/step. Date(4) denotes the end date of the last action/step.

Annex 11: PROCUREMENT STRATEGY AND IMPLEMENTATION SCHEDULES Page 60GOODS


LISTS AND BID EVALUATIONSPECIFICATIONS BIDDING DOCUMENTS REPORT

ALLOC-ATED TENDER BID CONTRACT CONTRACT DELIVERYPACKAGE IFB PROCUREMEN AMOUNT PROCURIN PLAN VS. SUBMITTED APPROVED PREPARE APPROVED INVITATION OPENING REQUEST APPROVAL AMOUNT SIGNING LATEST

DESCRIPTION LOTS NOS. T METHOD (USSM) G UNIT ACTUAL DATE DATE DATE DATE DATE DATE DATE DATE (US$M) DATE DATE

Vehicle NCRP/S NCB 0.200 KCC Plan 22-Apr-99 29-Apr-9E 21-Apr-9U 29-Apr-99 5-May-gt 1t-Jun-99 30-Jul-99 6-Aug-99 16-Aug-99 30-NoB9UActual

PlanActual

Motor NCRP/6 NS 0.030 KCC Plan 18-Mar-99 -Apr-99 17-Mar-99 8-Apr-9U 15-Apr-99 14-May-99 18-Jun-99 28-Jun-99 2-Aug-99 U-Nov-99Cycles Actual

PlanActual

Computer NCRPI7a NS 0.035 KCC Plan 15-Mar-99 19-Mar-99 12-Mar-99 19-Mar-U 26-Mar-Ut 16-Apr-99 17-May-99 26-May-9 29-Jul-99 5-Nov-99H & S ware Actual(stage 1)

PlanActual

Computer NCRP/7b NS 0.035 KCC Plan 4-May-99 14-May-Ut 3-May-t9 14-May-99 2-May-99 29-Jun-99 6-Aug-99 16-Aug-99 30-Aug-99 3-Dec-99H & S ware Actual(stage 2)

PlanActual

Office NCRP/8 Nt 0.020 KCC Plan 16-Apr-Ut 22-Apr-99 14-Apr-Ut 22-Apr-Ut 6-May-9t U-Jun-Ut 16-Jul-tN 20-Jul-Ut 16-Aug-96 19-Nut-9UFurnfture Actual

PlanALAual

PlanActual

PlanActual

PlanActual

PlanActual

PlanActual

PlanActual

PlunActual

UGANDA suDAN NETHIOPIA'

NAKIVUBO CHANNEL REHABILITATION PROJECT Jobs

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- RIVERS MAIN ROADS D EMUGANDA

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REPUBLIC OF UGANDA FOR THE NAKIVUBO CHANNEL...

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