THE WORLD BANK IBRD* IDA I WORLDBANKGROUP O FFIC IAL 13 August, 2019 H.E. Maria Fernanda SuArez Minister Ministry of Mines and Energy Calle 43 No. 57-31 CAN - Bogota D.C Republic of Colombia Re: Republic of Colombia: EGPS Grant No. TF0A9854 Subnational Strengthening and Mainstreaming of Transparency in the Extractives Sector Implementation of the Extractive Industries Transparency Letter Agreement Dear Excellency: In response to the request for financial assistance made on behalf of the Ministry of Mines and Energy ("Recipient"), I am pleased to inform you that the International Bank for Reconstruction and Development ("World Bank"), acting as administrator of grant funds provided by various Donors ("Donors" under the Extractives Global Programmatic Support Multi-Donor Trust Fund, proposes to extend to the Recipient for the benefit of the Republic of Colombia ("Member Country"), a grant in an amount not to exceed four hundred thousand United States Dollars (USD 400,000) ("Grant") on the terms and conditions set forth or referred to in this letter agreement ("Agreement"), which includes the attached Annex, to assist in the financing of the project described in the Annex ("Project"). This Grant is funded out of the abovementioned trust fund for which the Bank receives periodic contributions from the Donors. In accordance with Section 3.02 of the Standard Conditions (as defined in the Annex to this Agreement), the Bank's payment obligations in connection with this Agreement are limited to the amount of funds made available to it by the Donors under the abovementioned trust fund, and the Recipient's right to withdraw the Grant proceeds is subject to the availability of such funds. The Recipient represents, by confirming its agreement below, that it is authorized to enter into this Agreement and to carry out the Project in accordance with the terms and conditions set forth or referred to in this Agreement. Carrera 7 No. 71-21 torre A Piso 16, Bogoti D.C - Colombia Tel +57 (1) 326 3600 Ms. Maria Fernanda SuArez -2- 13 August, 2019 Please confirm the Recipient's agreement to the foregoing by having an authorized official of the Recipient sign and date this Agreement and returning one duly executed copy to the Bank. Very truly yours, INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By Ulrich Zachau Director Colombia and Venezuela AGREED: MINISTRY OF MINES AND ENERGY By I,%. Authorized Representative NamellfYO 00 bo( Title K4-\ Date Y) Enclosures: (1) "International Bank for Reconstruction and Development and International Development Association Standard Conditions for Grant Financing Made by the Bank out of Trust Funds" dated February 25, 2019 (2) Disbursement and Financial Information Letter of the same date as this Agreement, together with the "Disbursement Guidelines for Investment Project Financing", dated February 2017 Ms. Maria Fernanda SuArez -3- 13 August, 2019 EGPS Grant No. TF0A9854 ANNEX Article I Standard Conditions; Definitions 1.01. Standard Conditions. The Standard Conditions (as defined in Section 1.02 below) 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 Section: (a) "Anti-Corruption Guidelines" means, for purposes of paragraph 2 of the Appendix to the Standard Conditions, 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. (b) "CTN" means "Comitd Tripartito Nacional" the Member Country's tripartite committee comprising representatives from the Member Country, mining and oil companies and civil society, established pursuant to Resolution CI-CG-P-01-FO1, issued by the same representatives and dated February 6, 2014, or any successor thereto. (c) "EITI" means Extractive Industries Transparency Initiative. (d) "Environmental and Social Commitment Plan" or the acronym "ESCP" means the Recipient's environmental and social commitment plan, acceptable to the Bank, dated April 30, 2019, which sets out a summary of the material measures and actions to address the potential environmental and social risks and impacts of the Project, including the timing of the actions and measures, institutional, staffing, training, monitoring and reporting arrangements, and any instruments to be prepared thereunder; as the ESCP may be revised from time to time, with prior written agreement of the Bank. (e) "Environmental and Social Standards" means, collectively: (i) "Environmental and Social Standard 1: Assessment and Management of Environmental and Social Risks and Impacts"; (ii) "Environmental and Social Standard 2: Labor and Working Conditions"; (iii) "Environmental and Social Standard 3: Resource Efficiency and Pollution Prevention and Management"; (iv) "Environmental and Social Standard 4: Community Health and Safety"; (v) "Environmental and Social Standard 5: Land Acquisition, Restrictions on Land Use and Involuntary Resettlement"; (vi) "Environmental and Social Standard 6: Biodiversity Conservation and Sustainable Management of Living Natural Resources"; (vii) "Environmental and Social Standard 7: Indigenous Peoples/Sub-Saharan Historically Underserved Traditional Local Communities"; (viii) "Environmental and Social Standard 8: Cultural Heritage"; (ix) "Environmental and Social Standard 9: Financial Intermediaries"; (x) "Environmental and Social Standard 10: Stakeholder Engagement and Information Disclosure"; effective on October 1, 2018, as published by the Bank at http://www.worldbank.org/en/projects-operations/environmental-and-social-framework. Ms. Maria Fernanda Sudrez -4- 13 August, 2019 (f) "National EITI Secretariat" means the Member Country's Secretariat established by the National Multistakeholder Group through Article 9 of MSG Regulations dated February 6th, 2014, housed in the Ministry of Mines and Energy, which administers the implementation of EITI in the Member Country. (g) "Operating Costs" means the reasonable costs, as shall have been approved by the World Bank, for the incremental expenses (which would not exist absent the Project) incurred on account of Project implementation, consisting of vehicle operation and maintenance, communication and insurance costs, office and office equipment rental and maintenance, utilities, document duplication/printing, office supplies, travel costs and per diem for Project staff for travel linked to the implementation of the Project, and fees of contractual staff for the Project (but excluding consulting services and salaries of officials of the Recipient's or Member Country's civil service). (h) "Procurement Regulations" means, for purposes of paragraph 20 of the Appendix to the Standard Conditions, the "World Bank Procurement Regulations for IPF Borrowers", dated July 2016, revised November 2017 and August 2018. (i) "Standard Conditions" means the "International Bank for Reconstruction and Development and International Development Association Standard Conditions for Grant Financing Made by the Bank out of Trust Funds", dated February 25, 2019. (j) "Training and Workshops" " means the reasonable costs, as shall have been approved by the World Bank, for training and workshops conducted under the Project, including tuition, travel and subsistence costs for training and workshop participants, costs associated with securing the services of trainers and workshop speakers, rental of training and workshop facilities, preparation and reproduction of training and workshop materials, and other costs directly related to training course and workshop preparation and implementation (but excluding goods and consultants' services). Article II Project Execution 2.01. Project Objectives and Description. The objective of the Project is to support enhanced transparency and accountability in Colombia's extractives sector governance, by deepening the implementation of EITI into regions/municipalities. The Project consists of the following parts: 1. Identification of four selected regions/ municipalities, stakeholder training, and capacity building. 1.1. Carry out a study to identify and select four regions/municipalities in which to implement EITI at the subnational level. The study would: (i) perform a local stakeholder mapping, and make an assessment of the materiality factors across the extractive industries value chain, and the social dynamics in each of the selected regions/ municipalities (including with regard to stakeholder interests and power of influence); (ii) collect and assess information on citizens' concerns through a field trip in order to refine the aforementioned assessment; (iii) within the first six months of the Project, make a determination as to whether the scope of the work would be at the regional level ("departmental", in coordination with departmental Ms. Maria Fernanda SuArez -5- 13 August, 2019 governments, and municipalities within the department) or if it should be implemented directly by the municipalities; and (iv) subsequently and accordingly, identify four selected regions/ municipalities where the implementation of EITI locally would have the maximum developmental impact. 1.2. Build capacity through the delivery of training to stakeholders from the regional/municipal governments, and civil society from the four selected regions/municipalities in order to: (i) enhance their knowledge of the extractive sector governance, functioning of extractive industries, and associated regulatory challenges; (ii) facilitate the identification of their information needs and existing information gaps, with regard to transparent data disclosure pertaining to the extractives sector; and (iii) facilitate their development of a local municipal engagement strategy for locally communicating information on the sector that is produced from EITI reports. 1.3. Build capacity in extractive industries, regional/municipal governments, national institutions, and civil society in the four selected regions/ municipalities, through, inter alia, workshops and training sessions, in order to, where possible, facilitate the creation of local level multi-stakeholder groups to implement EITI in each of the selected regions/ municipalities. 1.4. Build capacity in each subnational level multi-stakeholder group, upon their establishment, through, inter alia, the delivery of at least 4 workshops, to facilitate their steering of the EITI process locally, and to facilitate their supervision of the creation of subnational EITI reports. 2. Supporting sub-national EITI reporting. 2.1. Provide Financial and technical assistance to the implementation of EITI in each of the four selected regions/ municipalities, through the Ministry of Mines and Energy (, to carry out the following: 2.1.1. Preparation of a EITI report template and in the production of a subnational EITI report in each selected region/ municipality that will be included in the Member Country's national EITI Report, and which will contain information on: 2.1.1.1.data-providing agencies, the data capture process, and data quality assurance mechanisms; 2.1.1.2. information on how revenues are generated through different channels in the extractive sector at the municipal level; and 2.1.1.3.data on how the royalties received by the municipalities have been spent or invested; and 2.1.2. Creation of subnational annual EITI workplans at the regional/municipal level, where possible. 2.2. Provide technical assistance and capacity building in extractives industries, regional/municipal government, national institutions, and civil society in the four selected regions/municipalities, by, inter alia, assisting in the preparation of a manual and the dissemination of lessons learned from the elaboration and Ms. Maria Fernanda Sudrez -6- 13 August, 2019 dissemination of EITI regional reports and a model reporting template, to support the enhanced use of the Member Country's direct online EITI data reporting platform and facilitate sub-national EITI reporting. 3. Supporting increased demand for transparency. To increase transparency, the following activities will be carried out: 3.1. Dissemination of the four sub-national EITI reports, reporting templates, and model reporting template along with lessons learnt, through at least 10 workshops in 10 regions/municipalities, including the four selected regions/municipalities; 3.2. Capacity building of local stakeholders, especially civil society, in the ten regions/municipalities, through at least 20 workshops to facilitate their understanding of the operations of the extractives sector, its challenges, and the value added of the sub-national EITI reports; 3.3. Support the mainstreaming of transparency and accountability of public institutions governing the extractives sector through a national conference to raise awareness on the benefits of increased transparency and accountability in public institutions, by, inter alia: 3.3.1. holding information and coordination meetings with the heads of transparency offices in relevant public agencies, 3.3.2. holding formative discussions with public officials on methods to mainstream a culture of transparency and accountability in their own agencies, 3.3.3. facilitating increased awareness of the benefits of public sector transparency by showcasing Colombian EITI as an example. 4. Project management and operational support. Provide support to the National EITI Secretariat in project management and operational support and the decentralized implementation of EITI at the sub-national level in the four selected municipalities/regions, including the procurement of personnel, purchase of office equipment, and holding of meetings and conferences, as agreed in the procurement plan. 2.02. Project Execution Generally. The Recipient declares its commitment to the objective of the Project. To this end, the Recipient shall carry out the Project under the coordination of CTN, in accordance with the provisions of: (a) Article II of the Standard Conditions; (b) the Anti- Corruption Guidelines; and (c) this Article II. 2.03. Institutional and Other Arrangements. For purposes of providing general Project oversight and coordination, the Recipient shall ensure, throughout the implementation of the Project, that the National EITI Secretariat is operated and maintained with functions, responsibilities and composition acceptable to the World Bank. 2.04. Environmental and Social Standards. 1. The Recipient shall ensure that the Project is carried out in accordance with the Environmental and Social Standards, in a manner acceptable to the Bank. 2. Without limitation upon paragraph 1 above, the Recipient shall ensure that the Project is implemented in accordance with the Environmental and Social Commitment Plan ("ESCP"), in a manner acceptable to the Bank. To this end, the Recipient shall ensure that: Ms. Maria Fernanda SuArez -7- 13 August, 2019 (a) the measures and actions specified in the ESCP are implemented with due diligence and efficiency, and as further specified in the ESCP; (b) sufficient funds are available to cover the costs of implementing the ESCP; (c) policies, procedures and qualified staff are maintained to enable it to implement the ESCP, as further specified in the ESCP; and (d) the ESCP or any provision thereof, is not amended, revised or waived, except as the Bank shall otherwise agree in writing and the Recipient has, thereafter, disclosed the revised ESCP. In case of any inconsistencies between the ESCP and the provisions of this Agreement, the provisions of this Agreement shall prevail. 3. The Recipient shall: (a) take all measures necessary on its part to collect, compile, and furnish to the Bank through regular reports, with the frequency specified in the ESCP, and promptly in a separate report or reports, if so requested by the Bank, information on the status of compliance with the ESCP, all such reports in form and substance acceptable to the Bank, setting out, inter alia: (i) the status of implementation of the ESCP; (ii) conditions, if any, which interfere or threaten to interfere with the implementation of the ESCP; and (iii) corrective and preventive measures taken or required to be taken to address such conditions; and (b) promptly notify the Bank of any incident or accident related to or having an impact on the Project which has, or is likely to have, a significant adverse effect on the environment, the affected communities, the public or workers in accordance with the ESCP, the instruments referenced therein and the Environmental and Social Standards. 4. The Recipient shall maintain and publicize the availability of a grievance mechanism, in form and substance satisfactory to the Bank, to hear and determine fairly and in good faith all complaints raised in relation to the Project, and take all measures necessary to implement the determinations made by such mechanism in a manner satisfactory to the Bank. 2.05. Project Monitoring, Reporting and Evaluation. The Recipient shall ensure that each Project Report is furnished to the Bank not later than one month after each calendar semester, covering the calendar semester. Article III Withdrawal of Grant Proceeds 3.01. Eligible Expenditures. The Recipient may withdraw the proceeds of the Grant in accordance with the provisions of: (a) Article III of the Standard Conditions; and (b) this Section; to finance 100 % of Eligible Expenditures goods, non-consulting services and consultants' services (including audits), Training and Workshops, and Operating Costs, all inclusive of Taxes. 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 this Agreement. Ms. Maria Fernanda SuArez -8- 13 August, 2019 3.03. Withdrawal Period. The Closing Date is May 31, 2021. Article IV Recipient's Representative; Addresses 4.01. Recipient's Representative. The Recipient's Representative referred to in Section 7.02 of the Standard Conditions is the Ministry of Mines and Energy. 4.02. Recipient's Address. For purposes of Section 7.01 of the Standard Conditions: (a) the Recipient's Address is: Minister of Mines and Energy Calle 43 No. 57-31 CAN - BogotA D.C Republic of Colombia Facsimile: (571) 2200 300 4.03. Bank's Address. For purposes of Section 7.01 of the Standard Conditions: (a) the Bank's address is: International Bank for Reconstruction and Development 1818 H Street, N.W. Washington, D.C. 20433 United States of America; and (b) the Bank's Electronic Address is: Telex: Facsimile: 248423 (MCI) or 1-202-477-6391 64145 (MCI)]