The Wol Ban The World Bank 1818 H Street N.W. (202) 473-1000 INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Washington, D.C. 20433 Cable Address: INTBAFRAD INTERNATIONAL DEVELOPMENT WORLD BANK U.S.A. Cable Address: INDEVAS Honorable Udoma Udo Udoma Minister of Budget and National Planning Federal Ministry of Budget and National Planning Finance Building Central Business Area Abuja, Nigeria Honorable Minister, Re: EU TF Grant Number TF072113 (State Employment and Expenditure for Results Project - Additional Financing) Additional Instructions: Disbursement I refer to the Grant Agreement ("Agreement") between the Federal Republic of Nigeria ("Recipient") and the International Bank for Reconstruction and Development ("World Bank") acting as administrator of a European Union trust fund, for the purpose of providing additional financing for the Original Project, of even date herewith. The Agreement provides that the World Bank may issue additional instructions regarding the withdrawal of the proceeds of Grant Number TF072113 ("Financing"). 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 Financing 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 * Advances * Special Commitment (ii) Disbursement Deadline Date (subsection 3.7). The Disbursement Deadline Date is four (4) months after the Closing Date specified in the Financing Agreement. Any changes to this date will be notified by the World Bank. -2- (iii) Disbursement Conditions (subsection 3.8). Please refer to the Disbursement 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, Nigeria Country Office, 102, Yakubu Gowon Crescent, Asokoro, Abuja, Federal Republic of Nigeria Attention: Mr. Rachid Benmessaoud, Country Director for Nigeria (ii) Applications (subsections 3.2 - 3.3). Please provide completed and signed (a) applications for withdrawal, together with supporting documents, and (b) applications for special commitments, together with a copy of the commercial bank letter of credit, to the address indicated below: The World Bank, Loan Department 13th Floor Delta Center Menengai Road Upper Hill P.O. Box 30557-00100 Nairobi Kenya Tel +254 20 2936 000 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. -3- (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 Secure Identification Credentials") provided in Attachment 3; and (b) to cause such official to abide by those terms and conditions. (v) Minimum Value of Applications (subsection 3.5). The Minimum Value of Applications is USD 200,000 (vi) Advances (sections 5 and 6) * Type of Designated Accounts (subsection 5.3). Designated Account A: Pooled The Designated Account will be managed by the Federal Project Financial Management Directorate (FPFMD) within the Office of the Accountant General of the Federation (OAGF) for the National Project Coordination Unit (NPCU) at the National Planning Commission (NPC). Designated Accounts B, C, D, and E: Pooled The Designated Account B will be managed by the Delta State (Project Project Finance Management Unit (Delta State PFMU); Designated Account C will be managed by the Edo State Project Finance Management Unit (Edo State PFMU); Designated Account D will be managed by the Rivers State Project Finance Management Unit (PFMU). (Rivers State PFMU); and Designated Account E will be managed by the Bayelsa State Project Finance Management Unit (Bayelsa State PFMU). * Currency of Designated Accounts (subsection 5.4). USD * Financial Institution at which the Designated Account Will Be Opened (subsection 5.5): Central Bank of Nigeria, Nigeria for the NPCU, and for the States the existing DAs used by the respective States. * Ceiling (subsection 6.1).: A flexible ceiling will be determined for this operation for each Designated account based on a quarterly review of expenditure forecasts. Initial ceiling will be the expenditure forecast for the first 6 months after project effectiveness, as indicated in the approved Annual Work Plan and Budget, as reduced by amounts expected to be disbursed using the Direct Payment and Special Commitment methods. Subsequent ceilings will be equivalent to funding forecasts for next 2 calendar quarters, as included in the approved Annual Work Plan and Budget or approved Interim Financial Reports, as reduced by amounts expected to be disbursed using the Direct Payment and Special Commitment methods. -4- 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: o Records evidencing eligible expenditures (e.g., copies of receipts, supplier invoices, documentary evidence of delivery and acceptance of contracted goods or service): (i) goods and works valued at USD 300,000 or more; (ii) consulting firms valued at USD 100,000 or more; and (iii) individual consultants valued at USD 50,000 or more; o Statement of Expenditure in the form attached (Attachment 4) for all other expenditures/ contracts; and o List of 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 Records evidencing eligible expenditures (e.g., copies of receipts, supplier invoices, documentary evidence of delivery and acceptance of contracted goods or service) (i) goods and works valued at USD 300,000 or more; (ii) consulting firms valued at USD 100,000 or more, and (iii) individual consultants valued at USD 50,000 or more; o Statement of Expenditure in the form attached (Attachment 4) for all other expenditures/ contracts; and o List of payments against contracts that are subject to the World Bank's prior review, in the form attached (Attachment 5). * For requests for Direct Payment and Special Commitments: records evidencing eligible expenditures, e.g., copies of receipts, supplier invoices and documentary evidence of delivery and acceptance of contracted goods or service. (ii) Frequency of Reporting Eligible Expenditures Paid from the Designated Account (subsection 6.3): Monthly. (iii) Other Supporting Documentation Instructions * For disbursement of Grants to a Beneficiary, the Statement of Expenditures (Attachment 6) should include information on the identity of the Beneficiary, the reference number and date of the Sub-project Grant agreement, a brief description of the productive expenditures the Grant was applied to, the amount of Beneficiary contribution for the CDD component, and the amount of matching contribution from the World Bank. -5- * Copies of the bank statement of all the Designated Accounts and project bank account and a reconciliation statement for these Accounts should be submitted with each Application of replenishment. IV. Withdrawal Conditions and Other Disbursement Instructions * Payment for all incurred eligible expenditures under the project will be financed from the IDA credit (64%) and EU Grant (36%). Information to be provided in the schedule shall include PV no; Date; Description of Expenditure; Total Amount; and EU's share of expenditure. This schedule shall be prepared by the Project Accountant, checked by the Project Internal Auditor and approved for transfer by the PM/PC; * Taxes' are 100% included under the pooled designated accounts for IDA and EU; or * Notwithstanding the provisions of Part A of this Section no withdrawal shall be made: (a) for payments made prior to the date of this Agreement.; or (b) under any Category to be made with respect to any Participating State unless the World Bank has received: (i) evidence satisfactory to the World Bank that the Recipient has concluded a Subsidiary Agreement with the concerned Participating State on terms and conditions satisfactory to the World Bank; (ii) an opinion pursuant to Section 8.02(b) of the General Conditions that the respective Subsidiary Agreement has been duly authorized or ratified by the Recipient and concerned Participating State and is legally binding upon the Recipient and the Participating State in accordance with its terms; and (iii) evidence satisfactory to the World Bank that the concerned Participating State has established an SPCU with composition, mandate, staffing, capacity and resources satisfactory to the World Bank. 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 http://www.worldbank.org and its secure website "Client Connection" at http://clientconnection.worldbank.org. Print copies are available upon request. From the Client Connection website, you will be able to download Applications, monitor the near real-time status of the Financing, and retrieve related policy, financial, and procurement information. -6- If you have any queries in relation to the above, please contact us at service account email address 'LOA-afr@worldbank.org' using the above reference. Yours sincerely, Rachid Benmessaoud Country Director for Nigeria Africa Region Attachments 1. World Bank Disbursement Guidelines for Projects, dated May 1, 2006 2. Form for Authorized Signatures v3. Terms and Conditions of Use of Secure Identification Devices in connection with Use of Electronic Means to Process Applications and Supporting Documentation, dated January 20, 2010 /4. Form of "Statements of Expenditures" (SOEs) 5. Form of Summary Sheet for Payments Against Contracts Subject to the World Bank's Prior Review 6. Form of Transfers of Grants to a Beneficiary -7- Attachment 2 [Letterhead] Federal Ministry of Budget and National Planning Finance Building Central Business Area Abuja Nigeria [DATE] The World Bank, Nigeria Country Office, 102, Yakubu Gowon Crescent, Asokoro, Abuja, Federal Republic of Nigeria. Attention: Country Director for Nigeria Dear [Country Director]: Re: EU TF Grant Number TF072113 (State Employment and Expenditure for Results Project - Additional Financing) I refer to the Grant Agreement ("Agreement") between the Federal Republic of Nigeria ("Recipient") and the International Bank of Reconstruction and Development ("World Bank") acting as administrator of a European Union trust fund, for the purpose of providing additional financing for the Original Project, dated . 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, 2[each] of the persons whose authenticated specimen signatures appears below is authorized on behalf of the Recipient, acting 3[individually] 4[jointly], to deliver Applications, and evidence in support thereof on the terms and conditions specified by the World Bank. I Instruction to the Recipient when sending this letter to the World Bank: 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 World Bank 2 Instruction to the Recipient: Stipulate if more than one person needs to jointly sign Applications, if so, please indicate the actual number. Please delete this footnote in final letter that is sent to the World Bank. Instruction to the Recipient: 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 World Bank. 4 Instruction to the Recipient: Use this bracket only 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 World Bank. -8- 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, including without limitation, the representations and warranties contained in the Terms and Conditions of Use of Secure Identification Devices in connection with Use of Electronic Means to Process Applications 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 and Conditions of Use of Tokens and will cause such persons to abide by those terms and conditions.] This Authorization replaces and supersedes any Authorization currently in the World Bank records with respect to this Agreement. [Name], [position] Specimen Signature: [Name], [position] Specimen Signature: [Name], [position] Specimen Signature: Yours truly, / signed / [Position] ' 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 paragraph. Please delete this footnote in final letter that is sent to the World Bank. -9- Attachment 3 Terms and Conditions of Use of Secure Identification Devices in connection with Use of Electronic Means to Process Applications and Supporting Documentation January 20, 2010 The World Bank (Bank)' will provide secure identification devices (Tokens) to permit the Borrower' 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. 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 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.org ) prior to delivery of Tokens. Registration on CC will require that the Signatory establish a CC password (CC Password). 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 assigned 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 manner 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 of Use, the Signatory will access CC using his/her account name and CC Password and register his/her Token and set a personal identification number (PIN) to be used in connection with the use of his/her 6 "Bank" includes IBRD and IDA. ' "Borrower" includes the borrower of an IBRD loan, IDA credit, or Project Preparation Facility advance and the recipient of a grant. - 10- Token, after which the Token will be initialized for use by the Signatory exclusively for purposes of delivering Applications. Upon initialization of the Token, the Signatory will be a "Token User". The Bank will maintain in its database a user account (Account) for each Token User for purposes of managing the Token of the Token User. Neither the Borrower nor 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 the Bank. C. Management of Tokens 1 . 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 any misuse of the Token by the Token User, other representatives of the Borrower, or third parties. 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 using the system. Failure to logout properly can create a route into the system that is unprotected. 4.4. If the Token User believes a third party has learned his/her PIN or has lost his/her Token he/she shall immediately notify clientconnection(worldbank.org. 4.5. The Borrower shall immediately notify the Bank at clientconnection(diworldbank.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 instrumentation and therefore should be handled with due care, and should not be immersed in liquids, exposed to extreme temperatures, crushed or bent. Also, Tokens should be kept more than five (5) cm - 11 - 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 separate from any EMR device. At close range (less than 5 cm), these devices can output high levels 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 5.1. 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 authorization 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. - 12 - Attachment 4 UNAUDITED INTERIM FINANCIAL REPORTS (IFRS) (As separately attached) - 13 - Attachment 5 SUMMARY SHEET (As separately attached) - 14 - Attachment 6 STATEMENT OF EXPENDITURE FOR GRANTS TO BENEFICIARIES (As separately attached) Assuming taxes may NOT be financed under the TF - see also footnote 3 above.