OFFICIAL -ow o DCUMENTS The World Bank 1818 H Street N.W. (202) 477-1234 INTERNATIONAL BANK FOR RECONSTRUCTION AN[ DE"ELOF MENT Washington, D.C. 20433 Cable Address: INTBAFRAD INTERNATIONAL DEVELOPMENT ASSOCIATION U.S.A. Cable Address: INDEVAS June 21, 2013 The Honourable Maki Sanley Simelum Minister of Finance and Econom: c lana,gement Por Vila Vanuatu Vanual u: Kner gy Sector Development Project PRIF (rait Noo. TF014801 Grant Agreemont Dear Minister: In response to the requiest for Financial assistance made on behalf of the Republic of Vanuatu (the "Reqipient"), I am ple. sed to inform you that the International Bank for Reconstruction and Development and t ie International Development Association (collectively, the "World Bank"), acting as adminisirator of grant funds provided under the Pacific Region Infrastructure Facility ("PRIF") riuli i-doi tor trust fund, proposes to extend to the Recipient a grant in an amount not to exceed one r iillion five hundred thousand United States Dollars (U.S.$1,500,000) ('4Grart") on the temis and conditions set forth or referred to in this letter agreement ("AgreelMent"), which incluces the attached Annex, to assist in the financing of the project described in the Annex (' Project"). This Grant is finded ot of thc abovementioned trust fund for which the World Bank receives periodic contributions. In accc rdance with Section 3.02 of the Standard Conditions (as defined in the Annex to :his Agrcement), the World Bank's payment obligations in connection with this Agreement are limiled to th.: arnoun: of funds made available to it under the abovementioned trust fund, and the Igecipient's ri, Yht :o wi thdraw the Grant proceeds, is subject to the availability of such funds. The Recipient represent;, b cot firming its agreement below, that it is authorized to enter into this Agreement and to carr!, out the Project in accordance with the terms and conditions set forth or referred to ip th s Agree net tt. P ase confirm the Recipient's agreement to the foregoing by having an auth6riz.d offic al of the Recipient sign and date the enclosed copy of this Agreement, and returning it to tie Worl I Bank. Upon receipt by the World Bank of this countersigned copy, this Agreement shall become effective as of the date oft ie co untersignature. Very truly yours, INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT/ INTERNATIONAL DEVELOPMENT ASSOCIATION By .PDM f4 Franz R. Drees-Gross Country Director Papua New Guinea, Timor-Leste and Pacific Island Countries AGREED: REPUBLIC OF TU By Authorized Re resentat* Name VA~J[ ct J_ Title Date: Enclosures: (1) Standard Conditions for Grants Made by the World Bank Out of Various Funds, dated February 15, 2012 (2) Disbursement Letter of the same date as this Agreement, together with World Bank Disbursement Guidelines for Projects, dated May 1, 2006 2 PRIF Grant No. TF014801 ANNEX Article I Standa d Conditions; Definitions 1.01. Standard Conditions. Th,- Ste ndard Conditions for Grants Made by the World Bank out of Various Funds dated Februiry 15, C012 ("Standard Conditions") constitute an integral part of this Agreement. 1.02. Definitions. Unless tie .ontcxt requires otherwise, the capitalized terms used in this Agreement have the m-anings iscribed to them in the Standard Conditions or in this Agreement. (a) "Co-financing Agreemenis" n eans the ESMAP Grant Agreement and the SCF-SREP Grant Agreement, agreemnts o be entered into in order to assist in financing the Project between tlhe Recipient and thc World Bank acting respectively as administrator of the Energy Sector Management i,ssistance Program ("ESMAP") and as an implementing entity of the S,aling-U p B eneN (able Energy Program in Low Income Countries under the Strategic Climate Fund (SFEP) (b) "DEMMK" means the Recipic nt's Department of Energy, Mines and Mineral Resources, or any successor thereto, ii ch, rge of the implementation of Component I of the Project. (c) "ESMAP Co-financing! A:)reet ient" means the ESMAP Grant Agreement, an agreement to be entered i ito betweer the Recipient and the World Bank, acting as an implementing entity of the Energy Se -tor Management Assistance Program in order to assist in financing the Agreement. (d) "Project agreement" nec ns an agreement of same date herewith between the Project Implementing Entity ai-d 1 he N lorld Bank for the implementation of Component 2 of the Project. (e) "Project Implementing Ertity" or the "URA" means the Recipient's Utilities Regulatory Authority nacted and operate( through the Recipient's Utilities Regulatory Authority Act No. 1] of 007, or any success or thereto, in charge of the implementation of Component 2 of the Project. (f) "SCF-SREP Co-financing Ag -eement" means the SCF-SREP Grant Agreement, an agreement: to be enterd into Ibetween the Recipient and the World Bank, acting as an implementing entity of the S,-aling-Up Renewable Energy Program in Low Income Countries under the Stritegic Climate Fund in order to assist in financing the Project. (g) "Subsidiary A-greeme-it" meE ns an agreement of same date herewith between the Recipient and :he Projcct mpl, menting Entity for the implementation of Component 2 of the Project. (h) "SREP Investment Plai-" mean s an investment plan, including an energy sector overview, a renewable energy te:hnologi -s assessment and a capacity building program, supported by this Grant under th s Agree ment for Component I of the Project which shall support DEMMR in implementing sa d Component I of the Project through the financing of goods, workshops, cor suli ant E ervices and incremental operating costs. 3 Article II Project Execution 2.01. Project Objectives and Description. The objective of the Project is to provide technical assistance to DEMMR and the Project Implementing Entity in the development and execution of their work programs. The Project consists of the following Components: Component 1: Policy Support for DEMMR Support for planning and the implementation of policy, legislative and regulatory reforms and appropriate institutional arrangements, consisting of advisory assistance and capacity-building for DEMMR in the following areas: (i) Plans, policy, legislation, regulations and institutional arrangements (consultant and advisory services, workshops and communication); (ii) Capacity building for DEMMR to support the development of policy, legislative and regulatory arrangements, and monitoring and compliance framework for renewable energy and energy efficiency investments; and (iii) Preparation of the SREP Investment Plan, including an energy sector overview and a renewable energy technologies assessment. Component 2: Regulatory Support for URA Provide technical assistance and advisory services in the energy and water sectors for the regulation, legal aspects, sector and market economic analysis and on-the-job training, mentoring, and formal training (in country and overseas, including through training/internship arrangements) for the Project Implementing Entity. 2.02. Project Execution Generally. The Recipient declares its commitment to the objectives of the Project. To this end, the Recipient shall: (i) carry out Component 1 of the Project through the DEMMR as described in the Co-financing Agreements, and; (ii) cause Component 2 of the Project to be carried out by the Project Implementing Entity in accordance with the provisions of: (a) Article II of the Standard Conditions; (b) 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 ("Anti-Corruption Guidelines"); (c) this Article II; (d) the Co-Financing Agreements; (e) the Project Agreement and (g) the Subsidiary Agreement. 2.03 Institutional and Other Arrangements. (a) The Recipient shall cause a Project support team to be maintained within the Project Implementing Entity through the period of the Project's implementation, such support team to be responsible for achieving the objectives of Component 2 of the Project, and endowed with powers, staffing, terms of reference, experience and qualifications acceptable to the World Bank. 2.04. Donor Visibility and Visit. (a) The Recipient shall take or cause to be taken all such measures as the World Bank may reasonably request to identify publicly the Donor's support for the Project. (b) For the purposes of Section 2.09 of the Standard Conditions, the Recipient shall, upon the World Bank's request, enable the representatives of the Donors to visit any part of the Recipient's territory for purposes related to the Project. 4 2.05. Project Monitoring, R. poling and Evaluation. (a) The Recipient shall monitor and eva uate the progress of the Prcojec: and prepare Project Reports in accordance with the provisions of Section 2.06 of the Standai d Cond tions and on the basis of the indicators agreed with the World Bank. Each Project Report shal I cover the period of one calendar semester, and shall be furrished to the World Bank not later t ian one month after the end of the period covered by such report. (b) The Recipient shill rrepare the Completion Report in accordance with the provisions of Section 2.06 oft&e S:and, rd Conditions. The Completion Report shall be fumished to the World Bank hot later tha:) si:c (6) months after the Closing Date. 2.06. Financial Matiagemetit (a) The Recipient shall ensure that a financial management system is maintained in accordance with the provisions of Section 2.07 of the Standard Conditions. (b) The Recipient !hall ensLire that interim unaudited financial reports for the Project are prepared and fu1mished to the World Bank as part of the Project Report not later than one (1) month after the end of each calendar semester, covering the semester, in form and substance satisfactory to the World Bank. (c) The Recipient shall hai e its Financial Statements audited in accordance with the provisions of Section 2.07 (b) of the Standard Conditions. Each such audit of the Financial Stalements shall c ver the peiiod of one fiscal year of the Recipient. The audited Financial Stalements for each stch period shall be furnished to the World Bank not later than six (6) months after the end of such period. 2.07. Procurement (a) Geoera.. All g)ods an I consultants' services required for the Project and to be financed out of the proceeds of the Gra it shall be procured in accordance with the requirements set fbrth or referred to in: (i) Section I of tho "Guidelines: Procurement of Goods, Works and Non- consulting Services under IBR[I Loans and IDA Credits and Grants by World Bank Borrowers" dated January 2011 ("Procuremcnt 3uid -lines"), in the case of goods; (ii) Section; I and IV of the "Guidelines: Selection and Employment of Consultants under IORD Loans ani ID4 Credits and Grants by World Bank Borrowers" dated January 2011 ("Consultant Guidelir es") in the case of consultants' services; and (iii) the pro visi ns )f this Section, as the same shall be elaborated in the procurement plan prepared and updated from time to time by the Recipient for the Project in accordance with paragraph 1.25 of the C:nsultant Guidelines ("Procurement Plan"). (b) Definitions. Tie capilalized terms used in the following paragraphs of this Section to describe part cular pi octrem(:nt methods or methods of review by the World Bank of particular contracts, ref-r to thc corres )onding method described in Sections II and III of the Procurement Guidelines, or Sectiorts II, III, IV and V of the Consultant Guidelines, as the case may be. (c) Paro.cul ar Meth'ods of Pi ocurement of Goods The following methods na) be used for procurement of goods: Shopping. 5 (d) Particular Methods of Procurement of Consultants' Services (i) Except as otherwise provided in item (ii) below, consultants' services shall be procured under contracts awarded on the basis of Quality- and Cost-based Selection. (ii) The following methods, other than Quality- and Cost-based Selection, may be used for the procurement of consultants' services for those assignments which are specified in the Procurement Plan: (A) Quality-based Selection; (B) Least Cost Selection; (C) Selection of Individual Consultants; (D) Selection based on Consultants' Qualifications; and (E) Single Source Selection. (e) Review by the World Bank of Procurement Decisions. The Procurement Plan shall set forth those contracts which shall be subject to the World Bank's Prior Review. All other contracts shall be subject to Post Review by the World Bank. 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) the Standard Conditions; (b) this Section; and (c) such additional instructions as the World Bank may specify by notice to the Recipient (including the "World Bank Disbursement Guidelines for Projects" dated May 2006, as revised from time to time by the World Bank and as made applicable to this Agreement pursuant to such instructions), to finance Eligible Expenditures as set forth in the following table. The table specifies the categories of Eligible Expenditures that may be financed out of the proceeds of the Grant ("Category"), the allocations of the amounts of the Grant to each Category, and the percentage of expenditures to be financed for Eligible Expenditures in each Category: Category Amount of the Percentage of Expenditures to be Grant Allocated Financed (Expressed in USD) (inclusive of Taxes) (1) Goods, Consultant $1,350,000 100% Services, and Training and Workshops (2) Incremental Operating $150,000 100% Costs TOTAL AMOUNT $1,500,000 6 For the purpos.s of thi paragn ph, the terms: (i) "Training and Workshops" means all costs associated with training courses and workshops attended by URA taff andi study tours as approved by the World Bank, including course or conference fees, trevel and accommodation costs, per diems, costs associated with securing the services of trai:ier an. workshop speakers, rental of training and workshop facilities, preparation and production o'training and workshop materials, and other costs directly related to training courses and worksho3 preparation and implementation; and (ii) "Incremental Operating C )sts" means the recurrent operating costs of the Project incurred by the Recipient and the Project Implementing Entity on account of Project im:lementation, monitoring, e-aluatiot, coordination and supervision, as approved by the World Bark based on annual budge:s accel table to the World Bank, which would not have been incurred but for the Prcject, including: A) operation and maintenance of vehicle, repairs, fuel and spare parts; (B) equipment ard compater maintenance, including hardware and software; (C) communication costs and shipment cc its (whenever these costs are not included in the cost of goods); (D) office SLpplies ;nd equipment; (E) rent for office facilities; (F) utilities and insurances; (G) travel and pcr diem costs for technical staff carrying out supervisory, data collection and quality control aclivitiis; (H) advertising for Project related positions; and (I) salaries of local Projecl admini ,tra:ive taff but excluding salaries of the Recipient's civil servants and the Project Implementing I ntily's i egular staff. 3.02. Wihdrawql (onditioins. Notwithstanding the provisions of Section 3.01 of this Agreement, no withdrawal shall bc matde for payments made prior to the date of countersignature of this Agreement by :he Rec pie it, e cept that withdrawals up to an aggregate amount not to exceed $50,000 equivalent may be mde for payments made prior to this date but on or after January 1, 2013, for El gible E:peinditu -es under Category (2). 3.03. Withdrawal Period "'he Clo! ing Date referred to in Section 3.06 (c) of the Standard Corditions is June 30, 2015. Article IV Recipient'i Representative; Addresses 4.01. Recipient's Representditiv,. T le Recipient's Representative referred to in Section 7.02 of 1he Standard Conditions is tFe Minis er of Finance and Economic Management. 4.02. Recipient's Address. The Reci )ient's Address referred to in Section 7.01 of the Standard Coiditions is: Ministry of Finance anI Econo nic Management Port Vila, Vanuatu Telex: Fecsirr ile: 678 23032 67827(,37 4.03. World Bank's Address. The Yorld Bank's Address referred to in Section 7.01 of the Standard Conditions is: International B ank for - Rec nsti uction and Development and International Developnent Ass )ciation 7 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable: Telex: Facsimile: INTBAFRAD INDEVAS 248423 (MCI) or 1-202-477-6391 Washington, D.C. 64145 (MCI) 8