OFFICIAL The World Bank 26'" Floor Telephone: (632) 4652500 INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT 5 Avenu L IT Facsimile: (632) 4652505 INTERNATIONAL DEVELOPMENT ASSOCIATION Bonifacio lobal City, Taguig City Philippines July 28, 2014 Honorable Cesar Purisima Secretary Department of Finance Bangko Sentral Complex Roxas Blvd., Manila Dear Secretary Purisima: PHILIPPINES: Implementation of the Extractive Industries Transparency Initiative Project (EITI Grant No. TFOI 7249) Additional Instructions: Disbursement I refer to the Letter Agreement ("Agreement") between the International Bank for Reconstruction and Development/International Development Association ("World Bank"), acting as administrator of grant funds provided by Australia, Belgium, Canada, Denmark, the European Commission, Finland, France, Germany, Japan, the Netherlands, Norway, Spain, Switzerland, the United Kingdom and the United States of America ("Donors") under the Multi- Donor Trust Fund for the Extractive Industries Technical Advisory Facility, and the Republic of Philippines ("Recipient") for the above-referenced project, dated July 28, 2014. The Agreement provides that the World Bank may issue additional instructions regarding the withdrawal of the proceeds of Grant No. TFO 17249 ("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 Disbursement 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 * Direct Payment * Advance Secretary Cesar Purisima -2- July 28, 2014 (ii) Disbursement Deadline Date (subsection 3.7). The Disbursement Deadline Date is 4 months after the Closing Date specified in the Grant Agreement. Any changes to this date will be notified by the World Bank. (iii) Disbursement Conditions (subsection 3.8). Please refer to the Withdrawal Condition(s) in the Grant Agreement. II. Withdrawal of Grant Proceeds (i) Authorized Signatures (subsection 3.1). A letter in the Form attached (Attachment 2) should be furnished 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 26th Floor, One Global Place 5th Avenue corner 25th Street Bonifacio Global City Taguig City 1634, Philippines Attention: Country Director (ii) Applications (subsections 3.2 - 3.3). Please provide completed and signed applications for withdrawal, together with supporting documents, to the address indicated below: The World Bank 26th Floor, One Global Place 5th Avenue corner 25th Street Bonifacio Global City Taguig City 1634, Philippines Attention: Loan Department (iii) Electronic Delivery (subsection 3.4). The World Bank may permit the 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 credentials ("SIDC") 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 Client Connection. If the World Bank agrees, the World Bank will provide the Recipient with SIDC for the designated officials. Following which, the designated officials may deliver Applications electronically by completing Form 2380, which is accessible through Client Connection (https://clientconnection.worldbank.org). The Recipient may continue to exercise the option of preparing and delivering Applications in paper form. The World Bank reserves the right and may, in its sole discretion, temporarily or permanently disallow the electronic delivery of Applications by the Recipient. Secretary Cesar Purisirma -3- July 28, 2014 (iv) Terms and Conditions of Use of SIDC to Process Applications. By designating officials to use SIDC and by choosing to deliver the Applications electronically, the Recipient 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 ("Terms and Conditions of Use of SIDC") provided in Attachment 3; and (b) to cause such official to abide by those terms and conditions. (v) Minimum Value ofApplications (subsection 3.5). The Minimum Value of Applications is USD 40,000. (vi) Advances (sections 5 and 6). * Type of Designated Account (subsection 5.3): Segregated * Currency of Designated Account (subsection 5.4): USD * Financial Institution at which the Designated Account Will Be Opened (subsection 5.5): Land Bank of the Philippines * Ceiling (subsection 6.1): forecast for 2 quarters as provided in the Interim Financial Report III. 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: " Interim Financial Report in the form attached (Attachment 4); and o Records evidencing eligible expenditures (e.g., copies of receipts, supplier invoices) for payments against contracts that are subject to the World Bank's prior review, in the form attached (Attachment 5). * For reporting eligible expenditures paid from the Designated Account: o Interim Financial Report in the form attached (Attachment 4); o Records evidencing eligible expenditures (e.g., copies of receipts, supplier invoices) for payments against contracts that are subject to the World Bank's prior review, in the form attached (Attachment 5); and o A reconciliation of the Designated Account, in the form attached (Attachment 6), with a copy of the bank statement. Secretary Cesar Purisina -4- July 28, 2014 For requests for Direct Payment: records evidencing eligible expenditures, e.g., copies of receipts, supplier invoices (ii) Frequency of Reporting Eligible Expenditures Paid from the Designated Account (subsection 6.3): the period set out in the Grant Agreement for provision of Interim Financial Reports IV. 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,z. Print copies are available upon request. If you have not already done so, the World Bank recommends that you register as a user of the Client Connection website (https://clientconnection.vorldbank.org). From this website you will be able to download Applications, monitor the near real-time status of the Grant, and retrieve related policy, financial, and procurement information. All Recipient officials authorized to sign and deliver 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 contact the World Bank by email at clientconnection@worldbank.org. If you have any queries in relation to the above, please contact a Finance Officer at CTRLD-TF@worldbank.org using the above reference. Sincerely, Motoo Konishi Country Director, Philippines East Asia and Pacific Region Enclosures: World Bank Disbursement Guidelines for Projects, dated May 1, 2006 Form for Authorized Signatures Terms and Conditions of Use ofSecure identification Credentials in connection with Use of Electronic Means to Process Applications and Supporting Documentation, dated March 1, 2013 Form of Interim Financial Report Form of Payments against Contracts Subject to the World Bank's Prior Review Designated Account Reconciliation Statement Atfachment 3 Terms and Conditions of Use of Secure Identification Credentials in connection with Use of Electronic Means to Process Applications and Supporting Documentation March 1, 2013 The World Bank (Bank)' will provide secure identification credentials (SIDC) to permit the Borrower2 to deliver applications for withdrawal and applications for special commitments under the Agreement(s) and supporting documentation (such applications and supporting documentation together referred to in these Terms and Conditions of Use as Applications) to the Bank electronically, on the terms and conditions of use specified herein. SIDC can be either: (a) hardware-based (Physical Token), or (b) software-based (Soft Token). The Bank reserves the right to determine which type of SIDC is most appropriate. A. Identification of Users. 1. The Borrower will be required to identify in a completed Authorized Signatory Letter (ASL) duly delivered to and received by the Bank each person who will be authorized to deliver Applications. The Bank will provide SIDC 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) web ite (https://clientconnection.worldbank.org) prior to receipt of his/her SIDC. Reg stration on CC will require that the Signatory establish a CC password (CC Password). Tie Signatory shall not reveal his/her CC Password to anyone or store or record th CC Password in written or other form. Upon registration as a CC user, the Signatory will be assigned a unique identifying account name. B. Initialization of SIDC. 1. Prior to initialization of SIDC by a Signatory, the Signatory will acknowledge having read, understood and agreed to be bound by these Terms and Conditions of Use. "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. 2. Where a Physical Token is to be used, promptly upon receipt of the Physical Ioken, the Signatory will access CC using his/her account name and CC Password and register his/her Physical Token and set a personal identification number (PIN) to be us-d in connection with the use of his/her Physical Token, after which the Physical T ken will be initialized for use by the Signatory exclusively for purposes of delivering App ications. Where a Soft Token is to be used, the Signatory will access CC using his/her ccount name and CC Password and set a personal identification number (PIN) to be used in connection with the use of his/her Soft Token, after which the Soft Token will be initialized for use by the Signatory exclusively for purposes of delivering Applications. Upon initialization of the SIDC, the Signatory will be a "SIDC User". The Bank will maintain in its database a user account (Account) for each SIDC User for purposes of managing the SIDC of the SIDC User. Neither the Borrower nor the SIDC U er will have any access to the Account. 3. Prior to first use of the SIDC by the SIDC User, the Borrower shall ensure that the SIDC User has received training materials provided by the Bank in use of the SIDC. C. Use of SIDC. 1. Use of the SIDC is strictly limited to use in the delivery of Applications by th' SIDC User in the manner prescribed by the Bank in the Agreement(s) and these Ters and Conditions. Any other use of the SIDC is prohibited. 2. The Bank assumes no responsibility or liability whatsoever for any misuse of the SIDC by the SIDC User, other representatives of the Borrower, or third parties. 3. The Borrower undertakes to ensure, and represents and warrants to the Bank (such representation and warranty being expressly relied upon by the Bank in granting SIDC) that each SIDC User understands and will abide by, these Terms and Conditions of Use, including without limitation the following: 4. Security 4.1. The SIDC User shall not reveal his/her PIN to anyone or store or record the PIN in written or other form. 4.2. The SIDC User shall not allow anyone else to utilize his/her SIDC to deliver an Application to the Bank. 4.3. The SIDC User shall always logout from CC when not using the systen . Failure to logout properly can create a route into the system that is unprotected. 4.4. If the SIDC User believes a third party has learned his/her PIN or has lot his/her Physical Token he/she shall immediately notify clientconnection@worldbank.prg. 4.5. The Borrower shall immediately notify the Bank at clientconnection(a,worldbank.org of any lost, stolen or compromised SIDC, ard take other reasonable steps to ensure such SIDC are disabled immediately. 5. Reservation of Right to Disable SIDC 5.1. The Borrower shall reserve the right to revoke the authorization of a SIDC User to use a SIDC for any reason. 5.2. The Bank reserves the right, in its sole discretion, to temporarily or permanently disable a SIDC, de-activate a SIDC User's Account or both. 6. Care of Physical Tokens 6.1. Physical Tokens will remain the property of the Bank. 6.2. The Bank will physically deliver a Physical Token to each Signatory designated to receive one in a manner to be determined by and satisfactory to the Bank. 6.3. Physical Tokens contain delicate and sophisticated instrumentation and therefore should be handled with due care, and should not be immersed in liquids, expo$ed to extreme temperatures, crushed or bent. Also, Physical 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. Physic 1 Tokens should be carried and stored separate from any EMR device. At close range ( ess than 5 cm), these devices can output high levels of EMR that can interfere with the p oper operation of electronic equipment, including the Physical Token. 6.4. Without derogating from these Terms and Conditions of Use, other tec nical instructions on the proper use and care of Physical Tokens are available at http://www.rsa.com. 7. Replacement 7.1. Lost, damaged, compromised (in terms of 4.5, above) or destroyed Phy ical Tokens will be replaced at the expense of the Borrower. 7.2. The Bank reserves the right, in its sole discretion, not to replace any Physical Token in the case of misuse, or not to reactivate a SIDC User's Account. DEPARTMENT OF FINANCE Implementation of the Extractive Industries Transparency Initiative Project World Bank - TF No. 017249 Statement of Sources and Uses of Funds For the period ending (In US DOLLAR) This Period Cumulative To Date Forecast for next 2 reporting periods Cash Receipt Grant Total Cash Available 0.00 0.0 Less: Expenditures (Category 1) 1 Goods 2 Consultants' Services 3 Training and Workshop 4 Operational Cost Total Expenditures 0.00 0.0) Net Receipt 0.00 0.0) NET CASH AVAILABLE 0.00 0.0) Cash Balance at the Beginning 0.00 Net Change in Cash 0.00 0.00 Add (Deduct) Adjustment Bank Charges Interest Earned TOTAL CASH AT THE END (b) I 0.00 0.0_ (a) Cash at end should tally with cash balance in the balance sheet. Please provide explanation for any discrepancy. DEPARTMENT OF FINANCE Implementation of the Extractive Industries Transparency Initiative Project World Bank - TF No. 017249 Statement of Sources and Uses of Funds For the period ending (In Philippine Peso) This Period Cumulative To Date Forecast for next 2 Cash_ Receipt reporting periods Cash Receipt Grant Total Cash Available 0.00 0.00 Less: Expenditures (Category 1) 1 Goods 2 Consultants' Services 3 Training and Workshop 4 Operational Cost Total Expenditures 0.00 0.00 Net Receipt before Foreign Exchange Difference 0.00 0.00 Add (Deduct): Gain (Loss) on FOREX NET CASH AVAILABLE 0.00 0.00 Cash Balance at the Beginning 0.00 Net Change in Cash 0.00 0.00 Add (Deduct) Adjustment Bank Charges Interest Earned TOTAL CASH AT THE END (b) 0.00 0.00 (a) Cash at end should tally with cash balance in the balance sheet. Please provide explanation for any discrepancy. DEPARTMENT OF FINANCE Implementation of the Extractive Industries Transparency Initiative Project DESIGNATED ACCOUNT RECONCILIATION STATEMENT AS OF in US Dollars Project Name: Implementation of the Extractive Industries Transparency Initiative Project Grant No. : TF 017249 Deposit Bank: Land Bank of the Philippines Account No.: PART I 1. Cumulative advances to end of current reporting period xxxx 2. Less: Cumulative expenditures to end of last reporting period xxx 3. Outstanding Advance to be accounted (line 1 minus line 2) xxxx PART II 4. Opening DA Balance at Beginning of Reporting Period (as of_) xXXX 5. Add: Advances from World Bank during reporting period xxxx 6. Total Advanceto be accounted for (Add line 4 and 5) xxx 7. Closing DA Balance at end of current reporting period (As of J xxxx 8. Add/subtract: Expenditures for current reporting period xxxx 9. Total Advance Accounted for (Add line 7 and 8) xxx 10. Difference (if any) (Line 6 minus 9) xxx Explanation of any discrepancy between total appearing in Lines 6 and line 9 above a. Interest earned credited to the account xxx b. Bank balance of Peso checking account xxx xxx Part III 11. Total forecasted amount to be paid by WorldBank xxxx 12. Less: Closing DA balance (after adjustements) xxx 13. Direct Payments xxx 14. Add lines 12 and 13 xxx 15. Cash requirement for the next two reporting periods (line 11 minus 14) xxxx DEPARTMENT OF FINANCE Implementation of the Extractive Industries Transparency Initiative Project BANK RECONCILIATION STATEMENT AS OF (PESO CHECKING ACCOUNT # XXX-XXXXX-XX) PARTICULARS Per Books Per Bank Unadjusted Balance, Add: items requiring adjustments Total Deduct: items requiring adjustments Adjusted Balance, CERTIFIED CORRECT: DEPARTMENT OF FINANCE Implementation of the Extractive Industries Transparency Initiative Project BANK RECONCILIATION STATEMENT AS OF (DOLLAR SAVINGS ACCOUNT # XXX-XXXXX-XX) PARTICULARS Per Books Per Bank Unadjusted Balance, Add: items requiring adjustments Total Deduct: items requiring adjustments Adjusted Balance, CERTIFIED CORRECT: Attachment 5 Payments Made during Reporting Period Against Contracts Subject to the Bank's Prior Review Qate of .,W]'s Shire of ...s Non 'Amoant Paid-to -.A..t Id to Contract Contract Contract Obictlon SuPpllV0jkr Sep 1 dllng Number'- Suip Date Amount to Contact PMitd eiod - Atachment 6 DESIGNATED ACCOUNT RECONCILIATION STATEMENT LOAN/CREDIT/PPF/COFINANCIER NUMBER ACCOUNT NUMBER WITH (BANK) 1. TOTAL ADVANCED BY WORLD BANK (OR COFINANCIER) $ 2 LESS: TOTAL AMOUNT RECOVERED BY WORLD BANK - S 3. EQUALS PRESENT OUTSTANDING AMOUNT ADVANCED TO THE SPECIAL ACCOUNT (NUMBER I LESS NUMBER 2) $ 4. BALANCE OF SPECIAL ACCOUNT PER ATTACHED BANK STATEMENT AS OF DATE $ 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: