The World Bank 19, Street 15 Teke: (0700) 27 6002 INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Wazir Akbar Khan WBGN: 5232 + Extension INTERNATIONAL DEVELOPMENT ASSOCIATION Kabul, Afghanistan WBGN Fax: 5232+350 CONFORMED COPY March 16, 2011 His Excellency Hazrat Omar Zakhilwal Minister of Finance Ministry of Finance Islamic Republic of Afghanistan Kabul Excellency: Re: Grant No. TF099074 (On-Farm Water Management Project) Additional Instructions: Disbursem&nt I refer to the Letter Agreement ("Agreement") between the Islamic Republic of Afghanistan (the "Recipient") and the International Development Association ("World Bank"), acting as administrator of the Afghanistan Reconstruction Trust Fund, for the above-referenced project, dated March 16, 2011. The Agreement provides that the World Bank may issue additional instructions regarding the withdrawal of the proceeds of Grant TF099074 ("Grant"). This letter ("Disbursement Letter"), as revised from time to time, constitutes the additional instructions. The attached World Bank Disbursement Guidelines for Projects dated May 1, 2006, ("Disbursement Guidelines") (Attachment 1), are an integral part of the Disbursemert Letter. The manner in which the provisions in the Disbursement Guidelines apply to the Grant is specified below. Sections and subsections in parentheses below refer to the relevant sections and subsections in the Disbursement Guidelines and, unless otherwise defined in this letter, the capitalized terms used have the meanings ascribed to them in the Disbursement Guidelines. I. Disbursement Arrangements (i) Disbursement Methods (section 2). The following Disbursement Methods may be used under the Grant: * Reimbursement * Advance * Direct Payment * Special Commitment (ii) Disbursement Deadline Date (subsection 3.7). The Disbursement Deadline Date is 6 months after the Closing Date specified in the Grant Agreement. Any changes to this date will be notified by the World Bank. (i) Disbursement Conditions (subsection 3.8). Please refer to the Distursement Condition(s) in the Grant Agreement. II. Withdrawal of Grant Proceeds (i) Authorized Signatures (subsection 3.1). Applications for this Grant will be signed by the official(s) authorized to sign Applications as indicated in your letter dated March 2 2009. Whenever changes are necessary, a etter in the Form attached (Attachment 2) should be furnisIted to the World Bank at the address indicated below, providing the name(s) and specimen signature(s) of the official(s) authorized to sign Applications: The World Bank Country Office Kabul, Afghanistan Attention: Loan Department (ii) Applications (subsections 3.2 - 3.3). Please provide completed and s,gned (a) applications for withdrawal, together with supporting documents, and (b) applications fot special commitments, together with a copy of the commercial bank letter of credit, to the address indicated below: The World Bank Country Office Kabul, Afghanistan Attention: Loan Department (iii) Electronic Delivery (subsection 3.4) The World Bank may permit te Recipient to electronically deliver to the World Bank Applications (with supporting documents) through the World Bank's Client Connection, web-based portal. The option to deliver Applications to the World Bank by electronic means may be effected if: (a) the Recipient has designated in writing, pursuant to the terms of subparagraph (i) of this Section, its officials who are authorized to sign and deliver Applications and to receive secure identification devices ("Tokens") from the World Bank for the purpose of delivering such Applications by electronic means; and (b) all such officials designated by the Recipient have registered as users of 6lient Connection. If the World Bank agrees, the World Bank will provide the Recipient with Tokens for the csignated officials. Following which, the designated officials may deliver Applications electronically by completing Form 2380, which is accessible through Client Connection (https:/!clientconnection.worldbank.ora). The Recipient may continue to exercise the option of preparing and delivering Applications in paper form. ThIe World Bank reserves the right and may, in its sole discretion, temporarily or permanently disallow the electronic delivery of Applications by the Recipient. (iv) Terms and Conditions of Use of Tokens to Process Applications. By designating officials to accept Tokens and by choosing to deliver the Applications electronically, the Recipient confirms through the authorized signatory letter its agreement to: (a) abide by the Term: and Conditions of Use of Secure Identification Devices in connection with Use of Electronic Means to trocess Applications and Supporting Documentation ("Terms and Conditions of Use of Tokens") provided in Attachment 3; and (b) to deliver the Terms and Conditions of Use of Tokens to each such official and to cause such official to abide by those terms and conditions. (v) Minimum Value of Applications (subsection 3.5). The Minimum Value of Applications for reimbursement, direct payment and special commitment is USD 900,000. (vi) Advances (sections 5 and 6). * Type of DesignatedAccount (subsection 5.3): Segregated. Of e segregated designated account will be established and managed by the Special Disbursement Unit in the Treasury Department of the Ministry of Finance for the benefits of the project. * Currency ofDesignated Account (subsection 5.4): USD. * Financial Institution at which the Designated Account Will Je Opened (subsection 5.5): Da Afghanistan Bank. * Ceiling (subsection 6.1): USD 4,500,000. 1II. Reporting on Use of Grant Proceeds (i) Supporting Documentation (section 4). Supporting documentation should be provided with each application for withdrawal as set out below: * For requests for Reimbursement and for reporting eligible exenditures paid from the Designated Account; o Summary Sheet in the form attached (Attachment 4) with records evidencing eligible expenditures (e.g., copies of receipts, supplier invoices) for payments against contracts for goods, works and consulting services valued at USD 25,000 or more per contract; and o Statement of Expenditure in the form attached (Attachment 5) for all other contracts or expenditures. * For requests for Direct Payment: Records evidencing eligible expenditures, e.g., copies of receipts, supplier invoices, consultant firm invoices, copy of bank guarantee (where required under the contract), individual consultant fee statement; For goods pdrehases, documents evidencing receipt of goods, etc. (ii) Frequency of Reporting Eligible Expenditures Paid from the Desigqated Account (subsection 63) Monthly or as and when needed. (iii) Other Supporting Documentation Instructions: Copy of bank statenent of the designated account and Designated Account Reconciliation Statement (Attachment 6) should be attached to the Application for Withdrawal for replenishment of the designated account. IV. Other Disbursement Instructions: Further advances from the designated account to other accounts of the Project are allowed, as long as such advances are accounted for within reasonable period of time or not to exceed 90 days. V. Other Important Information For additional information on disbursement arrangements, please refer to the Disbursement Handbook available on the World Bank's public website at https://www.worldbank.org and its secure website "Client Connection" at https://clientconnection.worldbank.or , Print copies are available upon request. If you have not already done so, the World Bank recommends thpt you register as a user of the Client Connection website (https://clientconnection.worldbank.or ). From this website you will be able to download Applications, monitor the near real-time status of the Grant, and retrieve frelated policy, financial, and procurement information. All Recipient officials authorized to sign and Jeliver Applications by electronic means are required to register with Client Connection before electronic delivery can be effected. For more information about the website and registration arrangements, please cen the World Bank by email at . c If you have any queries in relation to the above, please contact Chau-Ching Shen, Senior Finance Officer at loa-sar(alworldbank.ore. using the above reference. Yours sincerely, By/s/ Nicholas Krafft Nicholas Krafft Authorized Representative International Development Association Attachments 1. World Bank Disbursement Guidelinesfor Projects, dated May 1, 2006 2. Form for Authorized Signatures 3. Terms and Conditions of Use ofSecure Identification Devices in conhection with Use of Electronic Means to Process Applications and Supporting Docwnentation, dated January 20, 2010 4. Form of Summary Sheet 5. Form of Statement of Expenditure 6. Designated Reconciliation Statement Cc with copies: Ministry of Agriculture, Irrigation and Livestock Jamal Mina, District # 3, Kabul University Area Kabul, Islamic Republic of Afghanistan On-Farm Water Management Project Attn. Eng. Habib Khan, Project Director Karta-e- 4, Opposite Ghazi High School, Street 1, HoIuse: 5 Kabul, Afghanistan Attachment 2 Form of Authorized Signatory Letter [Letterhead] Ministry of Finance Kabul, Islamic Republic of Afghanistani [DATE] The World Bank Country Office Kabul, Afghanistan Attention: [Country Director] Dear [Country Director]: Re: Grant No. - (On-Farm Water Management Project) I refer to the Grant Agreement ("Agreement") between the Islam Ic Republic of Afghanistan (the "Recipient") and the International Development Association ("World Bank"), acting as administrator of the Afghanistan Reconstruction Trust Fund, dated , providing th above Grant. For the purposes of Section 3.04 (b) of the Standard Conditions, as defined in the Agreement, any ['one] of the persons whose authenticated specimen signatures appear below is authorized on behalf of the Recipient to sign applications for withdrawal and applications for a special commitment under this Grant. For the purpose of delivering Applications to the World Bank, f[each] of the persons whose authenticated specimen signatures appears below is authorized on behalf of the Recipient, acting 3t individually] '[jointly], to deliver Applications, and evidence in support thereof on the terms and conditions specified by the World Bank. 5[This confirms that the Recipient is authorizing such persons to accept Tokens and to deliver the Applications and supporting documents to the World Bank by electronic means, In full recognition that the World Bank shall rely upon such representations and warranties, inclding without limitation, the representations and warranties contained in the Terms and Conditions Lf Use of Secure Identification Devices in connection with Use ofElectronic Means to Process Applicatons and Supporting Documentation ("Terms and Conditions of Use of Tokens"), the Recipient represents and warrants to the World Bank that it will deliver to each such person a copy of the Terms 4nd Conditions of Use of Tokens and will cause such persons to abide by those terms and conditions.] Instruction to the Recipient when sending this letter to the World Bank: Stipulate if moe than one person needs to sign Applications, and how many or which positions, and if any thresholds apply. Please de e this footnote in final letter that is sent to the World Bank. Instruction to the Recipient: Stipulate if more than one person needs to jointly sign Ap lications, if so, please indicate the actual number. Please delete this footnote in final letter that is sent to the World Bank. 3Instruction to the Recipient: Use this bracket if any one of the authorized persons may ign; if this is not applicable, please delete. Please delete thisfbotnote in final letter that is sent to the World Bank. 4 Instruction to the Recipient: Use this bracket only if several individuals must jointly si each Application; if this is not applicable, please delete. Please delete this footnote in final letter that is sent to the Wor Bank Instruction to the Recipient: Add this paragraph if the Recipient wishes to authorize the listed persons to accept Tokens and to deliver Applications by electronic means; if this is not applicable, please delete the para aph, Please delete this footnote in final letter that is sent to the World Bank This Authorization replaces and supersedes any Authorization currently in the World Bank records with respect to this Agreement. [Name], [position] Specimen Signature: jName], [position] Specimen Signature: [Name], [position] Specimen Signature: Yours truly, /signed/ [Positionj Attachment 3 Terms and Conditions of Use of Secure Identification Devices in connection with Use of Electronic Meins to Process Applications and Supporting Documentation January 20, 2010 The World Bank (Bank)' will provide secure identification devices (Tokens) to permit the Borrower2 to deliver applications for withdrawal and applications for special commitnents under the Agreement(s) and supporting documentation (such applications and supporting documentat on together referred to in these Terms and Conditions of Use as Applications) to the Bank electronicallyi on the terms and conditions of use specified herein. A. Identification of Users. 1. The Borrower will be required to identify in a completed Authorzed Signatory Letter (ASL) duly delivered to and received by the Bank each person who will be authorized to deliver Applications. The Bank will provide Tokens to each person identified in the ASL (Signatory), as provided below. The Borrower shall also immediately notify the Bank if a Signatory is no longer authorized by the Borrower to act as a Signatory. 2. Each Signatory must register as a user on the Bank's Client Connection (CC) website (https://clientconnection.worldbank.or ) prior to delivery of Tokens. Registration on CC will require that the Signatory establish a CC password (CC Passworl). The Signatory shall not reveal his/her CC Password to anyone or store or record the CC Password in written or other form. Upon registration as a CC user, the Signatory will be assi ned a unique identifying account name. B. Distribution, Initialization and Return of Tokens. 1. The Bank will physically deliver a Token to each Signatory in a marner to be determined by and satisfactory to the Bank. 2. At the time of delivery of a Token to a Signatory, the Signatory will receive a copy of these Terms and Conditions of Use for purposes of initializing the Token. 3. The Bank will verify that the Token, Temporary Password and Terms and Conditions of Use have been duly delivered to and received by the CC User. 4. Promptly upon receipt of the Token and Terms and Conditions qf Use, the Signatory will access CC using his/her account name and CC Password and register h s/her Token and set a personal identification number (PIN) to be used in connection with the use of his/her Token, after which "Bank" includes IBRD and IDA. 2 "Borrower" includes the borrower of an IBRD loan, IDA credit, or Project Preparation Facility advance and the recipient of a grant. the Token will be initialized for use by the Signatory exclusively for purposes of delivering Applications. Upon initialization of the Token, the Signatory wi 1 be a "Token User". The Bank will maintain in its database a user account (Account) for each T ken User for purposes of managing the Token of the Token User. Neither the Borrower npr the Token User will have any access to the Account. 5. Prior to first use of the Token by the Token User for delivering Applications, the Borrower shall ensure that the Token User has received training materials provided by the Bank in use of the Token. 6. Tokens shall be promptly returned to the Bank upon request of tje Bank. C. Management of Tokens. Tokens will remain the property of the Bank. 2. Use of the Token is strictly limited to use in the delivery of Applications by the Token User in the manner prescribed by the Bank in the Agreement(s) and these Terms and Conditions. Any other use of the Token is prohibited. 3. The Bank assumes no responsibility or liability whatsoever for aby misuse of the Token by the Token User, other representatives of the Borrower, or third partis. 4. The Borrower undertakes to ensure, and represents and warrants;to the Bank (such representation and warranty being expressly relied upon by the Bank in delivery of a Token to each Token User) that each Token User is provided, understands and will abide by, these Terms and Conditions of Use, including without limitation the following; Security 4.1. The Token User shall not reveal his/her PIN to anyone or store or record the PIN in written or other form. 4.2. The Token User shall not allow anyone else to utilize a Token to deliver an Application to the Bank. 4.3. The Token User shall always logout from CC when not psing the system. Failure to logout properly can create a route into the system that is unproterted. 4.4. If the Token User believes a third party has learned his/4er PIN or has lost his/her Token he/she shall immediately notify clientconnection&worldbank.orf. 4.5. The Borrower shall immediately notify the Bank at clienconnectionf0Bworldbank.org of any lost, stolen or compromised Tokens, and take other reasonable steps to ensure such Tokens are disabled immediately. Care of Tokens 4.6. Tokens contain delicate and sophisticated instrumentatioi and therefore should be handled with due care, and should not be immersed in liquids, e posed to extreme temperatures, crushed or bent. Also, Tokens should be kept more than five (5) cm from devices that generate electromagnetic radiation (EMR), such as mobile phones, phone- enabled PDAs, smart phones and other similar devices. Tokens should be carried and stored sqparate from any EMR device. At close range (less than 5 cm), these devices can output high leiels of EMR that can interfere with the proper operation of electronic equipment, including the Token. 4.7 Without derogating from these Terms and Conditions of Use, other technical instructions on the proper use and care Tokens are available at http://www.rsa.com. 5. Replacement 5.]. Lost, damaged, compromised (in terms of 4,5, above) or destroyed Tokens will be replaced at the expense of the Borrower. 5.2. The Bank reserves the right, in its sole discretion, not to replace any 'Token in the case of misuse, or not to reactivate a Token User's Account 6. Reservation of Right to disable Token 6.1. The Borrower shall reserve the right to revoke the authoization of a Token User to use a Token for any reason. 6.2. The Bank reserves the right, in its sole discretion, to temporarily or permanently disable a Token, de-activate a Token User's Account or both. For Internal Distribution Only Prepared by Tony Shen (CTRFC) Cleared with and cc: Martin Serrano (LEGES) Johannes Georges Pius Jansen (SASDA) Elliot Wamboka Mghenyi (SASDA)