THE WORLD BANK BRD .OA I WORLDBANKGROUP OFFICIAL Mr. Chen Shixin DOCUM ENTS August 24, 2018 Director-General International Economic and Financial Cooperation Department Ministry of Finance Beijing, China Re: IBRD Loan 8865-CN (China: Hezhou Urban Water Infrastructure and Environment Improvement Project) Additional Instructions: Disbursement and Financial Information Letter (DFIL). Dear Mr. Chen: I refer to the Loan Agreement between the People's Republic of China (the "Borrower") and the International Bank for Reconstruction and Development (the "Bank") for the above-referenced project, dated August 24, 2018. The General Conditions, as defined in the Loan Agreement, provide that the Bank may issue additional instructions regarding the withdrawal of the proceeds of Loan 8865-CN ("Loan"), and specify certain financial management reporting and audit requirements. This letter ("Disbursement and Financial Information Letter" or "DFIL"), as revised from time to time, constitutes such additional instructions. The Disbursement Guidelines for Investment Project Financing dated February 2017, (-Disbursement Guidelines") are available in the Bank's public website at https://www.worldbank.org and its secure website "Client Connection" at https://clientconnection.worldbank.org. The Disbursement Guidelines are an integral part of this Disbursement and Financial Reporting Letter, and the manner in which the provisions in the guidelines apply to the Loan is specified below. I. Disbursement Arrangements, Withdrawal and Reporting of Loan Proceeds. (i) Disbursement Arrangements: * Instructions (Schedule 1). The table provides the disbursement methods, information on registration of authorized signatures", processing of withdrawal applications (including minimum value of applications and processing of advances), instructions on supporting documentation, and frequency of reporting on the Designated Account'. * Minimum Value of Applications (subsection 3.5). The Minimum Value of Applications for Reimbursement, Direct Payment and Special Commitment is USD3,000,000. * Disbursement Deadline Date, DDD (subsection 3.7). The DDD is four (4) months after the Closing Date. Any changes to this date will be notified by the Bank. (ii) Electronic Delivery. Refer to section 10.01 (c) of the General Conditions: * The Bank may permit the Borrower to electronically deliver applications (with supporting documents) through the Bank's web-based portal (https://clientconnection.worldbank.org) "Client Connection". This option may be effected if: (a) the Borrower has designated in writing, its officials who are authorized to sign and deliver Applications and to receive Secure Identification Credentials (**SIDC") from the Bank for the purpose of delivering such Applications by electronic means; and I THE WORLD BANK IBRD* IDA I WORLDBANKOROUP (b) all such officials designated by the Borrower have registered as users of "Client Connection". The designated officials may deliver Applications electronically by completing the Form 2380, which is accessible through "Client Connection". The Borrower may continue to exercise the option of preparing and delivering Applications in paper form. The Bank reserves the right and may, in its sole discretion, temporarily or permanently disallow the electronic delivery of Applications by the Borrower. By designating officials to use SIDC and by choosing to deliver the Applications electronically, the Borrower confirms through the authorized signatory letter its agreement to: (a) abide by the Terms and Conditions of Use of Secure Identification Credentials in connection with Use of Electronic Means to Process Applications and Supporting Documentation, available in the Bank's public website at https://worldbank.org and "Client Connection"; and (b) to cause such official to abide by those terms and conditions. II. Financial Reports and Audits. (i) Financial Reports. The Borrower shall cause the Project Implementing Entity prepare and furnish to the Bank not later than sixty (60) days after the end of each calendar semester, interim unaudited financial reports (IFR) for the Project covering the semester. (ii) Audits. Each audit of the Financial Statements shall cover the period of one fiscal year of the Borrower, commencing with the fiscal year in which the first withdrawal was made. The audited Financial Statements for each such period shall be furnished to the Bank not later than six (6) months after the end of such period. III. Other Important Information For additional information on disbursement arrangements, please refer to the Loan Handbook available on the Bank's public website and "Client Connection". The Bank recommends that you register as a user of "Client Connection". From this website you will be able to prepare and deliver Applications, monitor the near real-time status of the Loan, and retrieve related policy, financial, and procurement information. For more information about the website and registration arrangements, please contact the Bank by email at clientconnection(aworldbank.org. If you have any queries in relation to the above, please contact Zhuo Yu, Finance Officer at zyu@worldbank.org, with copy WFACS BEIING@worldbank.org using the above reference. Yours sincerely, ft4ofmnan Country Director, China East Asia and Pacific Region Attachments 1. Form of Authorized Signatory Letter 2. Statement of Expenditure (SOE) 3. Designated Account Reconciliation Statement 2 Schedule I Disbursement Arrangements Basic Information Country P.R.China Loan umberBorrower Ministry of Finance Loan Number Name of the Project Hezhou Urban Water Infrastructure and Environment Improvement Project Disbursement Methods, and Supporting Documentation Disbursement Methods Methods Available Supporting Documentation Section 2 (**) Subsections 4.3 and 4.4 (**) Direct Payment Yes Copy of Records Reimbursement Yes Statement of Expenditure (Attachment 2) Designated Account: Yes Statement of Expenditure (Attachment 2) Designated Account reconciliation statement (Attachment 4) with applicable bank statement for Designated Account Special Commitments Yes Copy of Letter of Credit Designated Account (Section 5 and 6 **) Type Segregated Ceiling Fixed A commercial bank or financial institution acceptable to USD Financial Institution - Name the Bank Currency Frequency of Reporting, Subsection Monthly Amount 15,000,000 6.3 (**) I I I Authorized Signatures (Subsection 3.1 and 3.2 **) The form for Authorized Signatories Letter is provided in Attachment 1 of this letter Withdrawal and Documentation Applications (Subsection 3.3 and 3.4 **) The World Bank Office Level 16, China World Tower 2 No. 1 Jianguomenwai Avenue Beijing, China Attention: Disbursement Team Additional Information The Designated Account for this project will be established and managed by Guangxi Autonomous Regional Finance Department(GRFD), as either: (i) a new segregated bank account; or (ii) a new segregated ledger account that monitors receipts and uses of the Loan proceeds, under an existing bank account for multiple Bank-financed projects managed by GRFD. The Borrower will inform the Bank of the preferred option for this Loan. Other ** Sections and subsections indicated relate to the Disbursement Guidelines for Investment Project Financing dated February 2017 3 Attachment I - Form of Authorized Signatory Letter [Letterhead] Ministry of Finance [Street address] [City] [Country] [DATE] The World Bank Office Level 16, China World Tower 2 No. 1 Jianguomenwai Avenue Beijing, China Attention: Mr. Bert Hofman, Country Director, China Re: Loan No. 8865-CN (Hezhou Urban Water Infrastructure and Environment Improvement Project) I refer to the Loan Agreement ("Agreement") between the International Bank for Reconstruction and Development (the "Bank") and the People's Republic of China (the "Borrower"), dated providing the above Loan. For the purposes of Section 2.02 of the General Conditions as defined in the Agreement, any '[one] of the persons whose authenticated specimen signatures appear below is authorized on behalf of the Borrower to sign applications for withdrawal [and applications for a special commitment] under this Loan. For the purpose of delivering Applications to the Bank, 2[each] of the persons whose authenticated specimen signatures appears below is authorized on behalf of the Borrower, acting "[individually] 4[jointly], to deliver Applications, and evidence in support thereof on the terms and conditions specified by the Bank. 5 [This confirms that the Borrower is authorizing such persons to accept Secure Identification Credentials (SIDC) and to deliver the Applications and supporting documents to 1 Instruction to the Borrower: Stipulate if more than one person needs to sign Applications, and how many or which positions, and if any thresholds apply. Please delete this footnote in final letter that is sent to the Bank. 2 Instruction to the Borrower: Stipulate if more than one person needs tojointly sign Applications, ifso, please indicate the actual number. Please delete this footnote in final letter that is sent to the Bank. Instruction to the Borrower: Use this bracket if any one of the authorized persons may sign; if this is not applicable, please delete. Please delete this footnote in final letter that is sent to the Bank. I Instruction to the Borrower: Use this bracket Qly if several individuals must jointly sign each Application; if this is not applicable, please delete. Please delete this footnote in final letter that is sent to the Bank. Instruction to the Borrower: Add this paragraph if the Borrower wishes to authorize the listed persons to accept Secure Identification Credentials and to deliver Applications by electronic means; if this is not applicable, please delete the paragraph. Please delete this footnote in final letter that is sent to the Bank. 4 the Bank by electronic means. In full recognition that the Bank shall rely upon such representations and warranties, including without limitation, the representations and warranties contained in the Terms and Conditions of Use of Secure Identification Credentials in connection with Use of Electronic Means to Process Applications and Supporting Documentation ("Terms and Conditions of Use of SIDC"), the Borrower represents and warrants to the Bank that it will cause such persons to abide by those terms and conditions.] This Authorization replaces and supersedes any Authorization currently in the Bank records with respect to this Agreement. [Name], [position] Specimen Signature: [Name], [position] Specimen Signature: [Name], [position] Specimen Signature: Yours truly, / signed / [Position] 5 Attachment 2 - Statement of Expenditures IBRD-International Bank for Reconstruction and Development Statement of Expenditures Financier Loan/Credit/Grant# Payment made during the period from to Application# Category# The following expenditures have been incurred during the retroactive financing period (please tick) Yes No Page# The following expenditures have been incurred before the closing date of the loan/credit/grant (please tick) Yes No ONLY for the Designated Account 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Contract# Total amount Date of Amount Prior (Client of Invoice %Withdrawal Withdrawn Item Supplier's Brief Description of the Review Connection# Cont curenand Invoice Date of covered by Financed Eliibl Exchange from the amount (original+ Amount from the . No. Name expenditure Contract? for Prior amendment) number payment Application by the rate Designated Designated (Yes or No) Review (net of Bank Account Account contracts) retention) (Colll/12) Total (insert Supporting documents for this SOE are retained at location) A separate form should be used for each category 6 Attachment 3 DESIGNATED ACCOUNT RECONCILIATION STATEMENT LOAN/CREDIT/GRANT/PPF/COFINANCIER NUMBER ACCOUNT NUMBER WITH (BANK) I. TOTAL ADVANCED BY WORLD BANK (OR COFINANCIER) $ 2 LESS: TOTAL AMOUNT RECOVERED BY WORLD BANK - $ 3. EQUALS PRESENT OUTSTANDING AMOUNT ADVANCED TO THE SPECIAL ACCOUNT (NUMBER I LESS NUMBER 2) = S 4. BALANCE OF SPECIAL ACCOUNT PER ATTACHED BANK STATEMENT AS OF DATE $ PLUS: Balance of operating accounts +USD equivalent 5. PLUS: TOTAL AMOUNT CLAIMED IN THIS APPLICATION NO. + $ * 6. PLUS: TOTAL AMOUNT WITHDRAWN AND NOT YET CLAIMED REASON: + $ * 7. PLUS: AMOUNTS CLAIMED IN PREVIOUS APPLICATIONS NOT YET CREDITED AT DATE OF BANK STATEMENTS APPLICATION NO. AMOUNT * SUBTOTAL OF PREVIOUS APPLICATIONS NOT YET CREDITED + $ 8. MINUS: INTEREST EARNED - $ * 9. TOTAL ADVANCE ACCOUNTED FOR (NO. 4 THROUGH NO. 9) $ 10. EXPLANATION OF ANY DIFFERENCE BETWEEN THE TOTALS APPEARING ON LINES 3 AND 9: 11. DATE: SIGNATURE: TITLE: 7