Session 5 Elements of Uganda Model Management Contract for Water

Session Overview 1.The Model Management Contract & Purpose 2.Management Contract Elements 3.Operator’s Rights & Obligations 4.Water Board’s Rights & Obligations 5.Contract Termination & Dispute Resolution 6.Annex & Schedules WSSB Capacity Enhancement Workshop 2

1.1Uganda Management Contract Contract between Water Board and Private Sector to transfer Board’s responsibility for care and management of water and sanitation system to private sector company WSSB Capacity Enhancement Workshop 3

1.2Purpose of Contract Defines: ▫ Work to Be Done and Term ▫ Amount to Be Paid for the Work ▫ Performance Standards ▫ Adjustments for Changes ▫ Allocation of Risk ▫ Insurance and Bond Requirements ▫ Termination for Cause WSSB Capacity Enhancement Workshop 4

2.1-Management Contract Elements Definition of Terms Used and Abbreviations Recitations (who has authority and laws) ▫ Local Governments Act—Requires transfer of water and sanitation responsibilities from central to local government ▫ Water Act—Requires the Minister of Water and Environment (MWE) to enter into performance contract with local Water Board ▫ Performance Contract – Board must subcontract services to private sector WSSB Capacity Enhancement Workshop 5

2.2Structure of Water Sector & Contracts WSSB Capacity Enhancement Workshop 6 MWE Water Board Customers Private Sector Performance Contract Management Contract Customer Contract

2.3Management Contract Elements Commencement and duration of the contract ▫ Term of contract (dates of starting & finishing) Notices under the contract ▫ Sets forth Town Clerk’s role to communicate with private sector ▫ Sets forth a designated contact person for private sector WSSB Capacity Enhancement Workshop 7

2.4Management Contract Elements Assignment of the Contract—Private sector cannot further subcontract or assign contract without prior approval of Water Board Appointment and Responsibility of Operator – Operator is sole provider of services WSSB Capacity Enhancement Workshop 8

3.1Operator’s Rights and Obligations Properly operate and maintain water assets (pumps, pipes, meters, borehole…) Respond to direction from Water Board Jointly (with Town Clerk) establish and administer operating escrow account Maintain and update list of assets Comply with all permits and community service obligations WSSB Capacity Enhancement Workshop 9

3.2Operator’s Rights and Obligations Pay all utility expenses, taxes, and fees associated with operating water assets Undertake “minor” repairs to existing assets within existing management fee Undertake “major” repairs to existing assets Definition of “major” as agreed to in Third Schedule of contract WSSB Capacity Enhancement Workshop 10

3.3-Major Repairs Procedure Notify Water Board in writing of need for “major” repair Submit a plan to Water Board on repair details, including costs Board reviews and, upon approval, directs Operator to perform repair Board pays approved costs in addition to the management fee WSSB Capacity Enhancement Workshop 11

3.4Operator’s Rights and Obligations Collect all tariffs and fees associated with operating water assets in accordance with the Board’s Business Plan Receive negotiated monthly management fee, as a % of collected user fees Operator must keep and maintain detailed operating and financial records Operator must allow the Board to inspect land and all assets owned by the Board WSSB Capacity Enhancement Workshop 12

3.5Operator’s Rights and Obligations Operator reviews approved Business Plan and updates annually ▫ Changes to performance indicators ▫ Forecast of revenues and costs ▫ Adjustment (if any) of tariffs ▫ Adjustment of management fee WSSB Capacity Enhancement Workshop 13

3.6Operator’s Rights and Obligations Operator submits the following reports to the Board: ▫ Monthly  Report on operations ▫ Quarterly  Unaudited financial reports showing quarterly data and year-to-date Operator attends Board meetings as required by the Board WSSB Capacity Enhancement Workshop 14

3.7Operator’s Rights and Obligations Indemnification—Board indemnifies Operator from claims, demands, lawsuits… which occur as a result of Board actions WSSB Capacity Enhancement Workshop 15

4.1Board’s Duties, Rights and Obligations Set water tariffs and fees To pay the Operator’s management fee To audit the Operator’s financial accounts Not to interfere with the Operator’s operations, unless a breach of contract occurred WSSB Capacity Enhancement Workshop 16

5.1Management Contract Termination Expiration of contract Upon termination of Performance Contract (between MWE & Board) by MWE Breach by either party ▫ Failure to perform ▫ Inability to perform Compensation for Termination WSSB Capacity Enhancement Workshop 17

5.2Dispute Resolution Disputes between PO & WA to be resolved in 7 days or; Referred to the Director DWD for resolution through mediation in 30 days failure of which; The matter is referred for Arbitration under Arbitration and Conciliation Act of Uganda. WSSB Capacity Enhancement Workshop 18

6.1-Annex 1 & 2 Annex 1 ▫ Special conditions of contract  Dates and duration of contract  Any additional services provided by Operator  Operator financing arrangements for spare parts  Design Build & Operate conditions WSSB Capacity Enhancement Workshop 19

6.2Schedules 1 – Management Fee; Reimbursable Expenses & Business Plan 2 – Performance Indicators 3 – Major Repairs and Extensions 4 – List of Assets Managed and Controlled by Operator WSSB Capacity Enhancement Workshop 20

Questions? Comments ? WSSB Capacity Enhancement Workshop 21