OFFICIAL DOCUMENTS THE WORLD BANK IBRD * IDA I WORLD BANKROUP H. E. Said Ali Said Chayhane Minister of Finance and Budget Ministry of Finance and Budget Moroni Union of Comoros Re: Union of Comoros: Advance Agreement for the Preparation of the Proposed Solar Energy Development Project Project Preparation Advance No. V2170 Excellency: In response to the request for financial assistance made on behalf of Union of Comoros ("Recipient"), I am pleased to inform you that the International Development Association ("World Bank") proposes to extend to the Recipient an advance out of the World Bank's Project Preparation Facility in an amount not to exceed two million Dollars ($ 2,000,000) ("Advance") on the terms and conditions set forth or referred to in this letter agreement ("Agreement"), which includes the attached Annex, to assist in financing the activities described in the Annex ("Activities"). The objective of the Activities is to facilitate the preparation of a proposed project designed to add photovoltaic and energy storage facilities to the Comorian power generation mix ("Project"), for the carrying out of which the Recipient has requested the World Bank's financial assistance. The Recipient represents, by confirming its agreement below, that: (a) it understands that the provision of the Advance does not constitute or imply any commitment on the part of IBRD or IDA to assist in financing the Project; and (b) it is authorized to enter into this Agreement and to carry out the Activities, repay the Advance and perform its other obligations under this Agreement, all in accordance with the provisions of this Agreement. Please confirm the Recipient's agreement to the foregoing by having an authorized official of the Recipient sign and date the enclosed copy of this Agreement, and returning it to the World Bank. Upon receipt by the World Bank of this countersigned copy, this Agreement shall become effective as of the date of the countersignature; provided, however, that the offer of this 1818 H Street NW * Washington, DC 20433 USA -2- Agreement shall be deemed withdrawn if the World Bank has not received this countersigned copy within 90 days after the date of signature of this Agreement by the World Bank, unless the World Bank has established a later date for such purpose. Very truly yours, INTERNATIONAL DEVELOPMENT ASSOCIATION By Country Director for Comoros Africa Region AGREED: UNION OF COMORO By Authorized Re esentative Title: 4 u , Date: 112 AQUI 201 Enclosures: (1) "Standard Conditions for Advances Made by the World Bank under its Project Preparation Facility", dated July 31, 2010 (2) Disbursement Letter for the Advance of the same date as this Agreement, together with "World Bank Disbursement Guidelines for Projects", dated May 1, 2006 (3) "Guidelines on Preventing and Combating Fraud and Corruption in Projects Financed by IBRD Loans and IDA Credits and Grants", dated October 15, 2006 and revised in January 2011 and as of July 1, 2016 -3- PPA No. V2170 ANNEX Article I Standard Conditions; Definitions 1.01. Standard Conditions. The "Standard Conditions for Advances Made by the World Bank under its Project Preparation Facility", dated July 31, 2010 ("Standard Conditions"), constitute an integral part of this Agreement. 1.02. Definitions. Unless the context requires otherwise, the capitalized terms used in this Agreement have the meanings ascribed to them in the Standard Conditions or in this Agreement, and the following additional terms shall have the following meanings: (a) "Bank's Safeguards Policies and Procedures" means the operational policies and procedures of the Bank (as the same may be amended from time to time by the Bank) set forth in the Bank's Operational Manual and identified as Environmental Assessment (OP/BP 4.01), Natural Habitats (OP/BP 4.04), Forests (OP/BP 4.36), Pest Management (OP/BP 4.09), Indigenous Peoples (OP/BP 4.10), Physical Cultural Resources (OP/BP 4.11), Involuntary Resettlement (OP/BP 4.12), Forestry (OP/BP 4.36) and Safety of Dams (OP/BP 4.37), as said manual is published under www.worldbank.ori. (b) "Implementation Unit" means the unit established pursuant to the provisions of the IDA-financed Regional Communications Infrastructure Program (RCIP-4), dated September 24, 2013 (Grant No. H878-KM). (c) "IT" means international technology. (d) "MA-MWE" means the state-owned public utility entity responsible for providing electricity and water in Grand Comore and Moh6li, two islands within the Recipient's territory. (e) "Operating Costs" means the incremental expenses incurred on account of the Activities' implementation, management and monitoring, consisting of the cost of operation and maintenance of offices, vehicles and office equipment, water and electricity utilities charges, telephone charges, bank charges, travel and per diem, and salaries of contractual staff, but excluding the salaries of officials and public servants of the Recipient's civil service. (f) "PIU" means the implementation unit to be established under the Advance for the purpose of the proposed Project. (g) "Training" means the reasonable costs associated with training and workshops participation under the Activities, consisting of travel and subsistence costs for training participants, costs (other than consulting services) associated with securing the services of trainers and presenters, rental of training facilities, translation and interpretation services, preparation and reproduction of training materials. -4- Article II Execution of the Activities 2.01. Description of the Activities. The Activities for which the Advance is provided consist of the following parts: (a) Preparing the first phase of the owner's engineer contract to conduct pre-feasibility studies for all three islands within the Recipient's territory, launch and supervise competitive tendering and selection process. (b) Financing the cost of the PIU's staff, including: (i) a procurement specialist; (ii) a financial management specialist; and (iii) an accounting assistant. (c) Financing the cost of the first-year contract of an international fiduciary agent. (d) Financing the cost of the first two years contract of an international deputy coordinator and technical advisor to the managing director of MA-MWE. (e) Preparing the Project safeguards documents, including: (i) the environmental and social impact analysis; and (ii) the resettlement action plan. (f) Carrying out initial training of MA-MWE's agents. (g) Acquiring vehicles for the new MA-MWE's team in charge of renewable energies. (h) Setting up the offices of MA-MWE, including the acquisition of IT equipment and office furniture and equipment, to host the new team in charge of renewable energies. 2.02. Execution of the Activities Generally. The Recipient declares its commitment to the objectives of the Activities. To this end, the Recipient shall carry out the Activities through the Implementation Unit in accordance with the provisions of: (a) Article II of the Standard Conditions; (b) this Article II; and (c) the "Guidelines on Preventing and Combating Fraud and Corruption in Projects Financed by IBRD Loans and IDA Credits and Grants", dated October 15, 2006 and revised in January 2011 and as of July 1, 2016. 2.03. Institutional and Other Arrangements. Without limitation upon the provisions of Section 2.01 above: (a) The Recipient shall, throughout the Refinancing Date, maintain the Implementation Unit with structure, functions and responsibilities acceptable to the World Bank and with competent staff in adequate numbers, with qualifications and experience satisfactory with the World Bank to be responsible for the oveall implementation of the Activities, including financial management and procurement. (b) The Recipient shall ensure that the terms of reference for any technical assistance provided under the Project, for the preparation of the safeguards documents or the carrying out of any studies, shall be satisfactory to the Bank, and to that end, such terms of reference shall require that the advice conveyed through such technical assistance be consistent with the requirements of the Bank's Safeguards Policies and Procedures. -5- 2.04. Monitoring, Reporting and Evaluation ofthe Activities. The Recipient shall monitor and evaluate the progress of the Activities in accordance with the provisions of Section 2.08 of the Standard Conditions. 2.05. Financial Management. (a) The Recipient shall ensure that a financial management system is maintained in accordance with the provisions of Section 2.09 of the Standard Conditions. (b) The Recipient shall ensure that interim un-audited financial reports for the Activities are prepared and furnished to the World Bank not later than forty-five (45) days after the end of each calendar quarter, covering the quarter, in form and substance satisfactory to the World Bank. (c) The Recipient shall have its Financial Statements audited in accordance with the provisions of Sections 2.09 (b) of the Standard Conditions. (i) If, on or before the Refinancing Date, a Refinancing Agreement has been executed by all of its parties, the Recipient shall have the Financial Statements included in the first audit of financial statements required under the Refinancing Agreement. (ii) If, by the Refinancing Date, no Refinancing Agreement has been executed by all of its parties, such audit of the Financial Statements shall cover the period of the Advance, commencing with the fiscal year in which the first withdrawal under the Advance was made. The audited Financial Statements for such period shall be furnished to the World Bank not later than six (6) months after the end of the Recipient's fiscal year in which the Refinancing Date occurs. (iii) Notwithstanding the provisions of paragraphs (i) and (ii) of this Section, the World Bank may request an audit of the Financial Statements prior to the Refinancing Date, covering such period as is indicated in its request. The audited Financial Statements for such period shall be furnished to the World Bank not later than six (6) months after the end of such period. 2.06. Procurement All goods, non-consulting services and consulting services required for the Activities and to be financed out of the proceeds of the Advance shall be procured in accordance with the requirements set forth or referred to in the "World Bank Procurement Regulations for IPF Borrowers" dated July 2016, revised November 2017 ("Procurement Regulations") and the provisions of the Recipient's procurement plan for the Activities dated June 28, 2018 ("Procurement Plan") provided for under Section IV of the Procurement Regulations, as the same may be updated from time to time in agreement with the World Bank. Article III 3.01. Eligible Expenditures. The Recipient may withdraw the proceeds of the Advance in accordance with the provisions of: (a) Article III of the Standard Conditions; (b) this Section; and (c) such additional instructions as the World Bank may specify by notice to the Recipient (including the "Disbursement Guidelines for Investment Project Financing" dated February 2017, as revised from time to time by the World Bank and as made applicable to this Agreement pursuant to such instructions), to finance Eligible Expenditures as set forth in the following table. The table specifies -6- each category of Eligible Expenditures that may be financed out of the proceeds of the Advance ("Category"), the amount of the Advance allocated to each Category, and the percentage of expenditures to be financed for Eligible Expenditures in each Category: Category Amount of the Advance Percentage of Allocated Expenditures to be (expressed in Dollars) Financed (inclusive of Taxes) (1) Goods, non-consulting 2,000,000 100% services, consulting services, Operating Costs and Training under the Activities TOTAL AMOUNT 2,000,000 3.02. Withdrawal Conditions. Notwithstanding the provisions of Section 3.01 of this Agreement, no withdrawal shall be made for payments made prior to the date of countersignature of this Agreement by the Recipient. 3.03. Refinancing Date. The Refinancing Date is October 30, 2019. Article IV Terms of the Advance 4.01. Service Charge. The Recipient shall pay a service charge on the Withdrawn Advance Balance at the rate of three-fourths of one percent (3/4 of 1%) per annum. The service charge shall accrue from the respective dates on which amounts of the Advance are withdrawn and shall be paid in arrears in accordance with the provisions of Section 4.02 of this Agreement. Service charges shall be computed on the basis of a 360-day year of twelve 30-day months. 4.02. Repayment. The Withdrawn Advance Balance shall be repaid by the Recipient to the World Bank (together with any service charges accrued thereon) in accordance with the provisions of Article IV of the Standard Conditions and the following provisions: (a) Refinancing under the Refinancing Agreement: If, on or before the Refinancing Date, a Refinancing Agreement has been executed by all of its parties, then the full amount of the Withdrawn Advance Balance shall be repaid to the World Bank (together with any service charges accrued on the Advance to the date of repayment) as soon as the Refinancing Agreement becomes effective, by means of a withdrawal by the World Bank of an amount of the Refinancing Proceeds equivalent to the Withdrawn Advance Balance plus such service charges, in accordance with the provisions of the Refinancing Agreement. (b) Repayment in the absence of a Refinancing Agreement: If, on or before the Refinancing Date, no Refinancing Agreement has been executed by all of its parties, or if, by such date or at any time thereafter, it has been so executed but terminates without becoming effective, then: -7- (i) if the amount of the Withdrawn Advance Balance does not exceed $50,000, it shall be repaid by the Recipient to the World Bank (together with service charges accrued on the Withdrawn Advance Balance to the date of repayment) on such date as the World Bank shall specify in a notice to the Recipient, which shall in no event be earlier than 60 days following the date of dispatch of such notice; and (ii) if the amount of the Withdrawn Advance Balance exceeds $50,000, it (together with service charges accrued on the Withdrawn Advance Balance to the Notice Date) (the "Aggregate Balance") shall be paid by the Recipient to the World Bank in ten approximately equal semiannual installments, in the amounts and on the dates ("Payment Dates") which the World Bank shall specify in a notice to the Recipient. In no event shall the first Payment Date be set earlier than 60 days following the date ("Notice Date") of dispatch of such notice. The Recipient shall pay a service charge on the Aggregate Balance at the rate of three-fourths of one percent (3/4 of 1%) per annum, payable in arrears on each Payment Date. The service charge shall be computed on the basis of a 360-day year of twelve 30-day months. Article V Recipient's Representative; Addresses 5.01. Recipient's Representative. The Recipient's Representative referred to in Section 9.02 of the Standard Conditions is its minister in charge of finance. 5.02. Recipient's Address. The Recipient's Address referred to in Section 9.01 of the Standard Conditions is: Minister of Finance and Budget B. P. 324 Moroni Comoros Facsimile: (269) 764-41-40 5.03. World Bank's Address. The World Bank's Address referred to in Section 9.01 of the Standard Conditions is: International Development Association 1818 H Street, N.W. Washington, D.C. 20433 United States of America Telex: Facsimile: 248423 (MCI) or (1)-202-477-6391 64145 (MCI)