OFFICIAL DOCUMENTS THE WORLD BANK IBRD * IDA I WOR. BMNKROUP Dated: 2 f.c,2017 Hon Momodu L. Kargbo Minister of Finance and Economic Development Ministry of Finance and Economic Development Freetwon Sierra Leone Re: Sierra Leone: Advance Agreement for Preparation of Proposed Extractive Industries Technical Assistance Project 2 Project Preparation Advance No.V0670 Honorable Minister: In response to the request for financial assistance made on behalf of the Republic of Sierra Leone ("Recipient"), I am pleased to inform you that the International Development Association ("World Bank") proposes to extend to the Recipient an advance out of the World Bank's Project Preparation Facility in an amount not to exceed two million United States Dollars (US$2,000,000) ("Advance") on the terms and conditions set forth or referred to in this letter agreement ("Agreement"), which includes the attached Annex, to assist in financing the activities described in the Annex ("Activities"). The objective of the Activities is to facilitate the preparation of a proposed project designed to strengthen the capacity and governance systems of key institutions to manage the extractives sector and to build the country's geological infrastructure ("Project"), for the carrying out of which the Recipient has requested the World Bank's financial assistance. The Recipient represents, by confirming its agreement below, that: (a) it understands that the provision of the Advance does not constitute or imply any commitment on the part of IBRD or IDA to assist in financing the Project; and (b) it is authorized to enter into this Agreement and to carry out the Activities, repay the Advance and perform its other obligations under this Agreement, all in accordance with the provisions of this Agreement. Please confirm the Recipient's agreement to the foregoing by having an authorized official of the Recipient sign and date the enclosed copy of this Agreement, and returning it to the World Bank. Upon receipt by the World Bank of this countersigned copy, this Agreement shall become effective as of the date of the countersignature; provided, however, that the offer of this Agreement shall be deemed withdrawn if the World Bank has not received this countersigned copy within 90 days after the date of signature of this Agreement by the World Bank, unless the World Bank has established a later date for such purpose. 1 Ht Nt DC 1818 H Street NW - Washington, DC 20433 USA -2- March 1, 2017 Very truly yours, INTERNATIONAL DEVELOPMENT ASSOCIATION By___ Henry G.R. Kerali Country Director, Sierra Leone AGREED: REPUBLIC OF SIERRA LEONE By__ Authorized Representative Name fAtt- -4 ) Title t- I ' Date: 1 (_ 7 _ _ , __ Enclosures: (1) "Standard Conditions for Advances Made by the World Bank under its Project Preparation Facility", dated July 31, 2010; and (2) Disbursement Letter for the Advance of the same date as this Agreement, together with "World Bank Disbursement Guidelines for Projects", dated May 1, 2006. -3- March 1, 2017 PPA No.V0670 ANNEX Article I Standard Conditions; Definitions 1.01. Standard Conditions. The "Standard Conditions for Advances Made by the World Bank under its Project Preparation Facility" dated July 31, 2010 ("Standard Conditions"), constitute an integral part of this Agreement. 1.02. Definitions. Unless the context requires otherwise, the capitalized terms used in this Agreement have the meanings ascribed to them in the Standard Conditions or in this Agreement. The following terms have the meaning ascribed to them as follows: (a) "MMMR" means Recipient's Ministry of Mines and Mineral Resources responsible for overall coordination and implementation of the Project, or any successor thereto. (b) "Incremental Operating Costs" means the reasonable costs approved by the World Bank for the incremental expenses incurred on account of implementation of the Activities, consisting of: vehicle operation and maintenance, communication and insurance costs, banking charges, rental expenses, office (and office equipment) maintenance, utilities, document duplication/printing, consumables, travel cost and per diem for Project staff for travel linked to the implementation of the Activities, and salaries of Project staff (but excluding regular salaries of officials of the Recipient's civil service). (c) "Procurement Plan" means the Recipient's procurement plan for the Project, dated January 13, 2017 and referred to in paragraph 2.06 of the Annex to the Grant Agreement. (d) "PIU" means the Project Implementation Unit under the Ministry of Mines and Mineral Resources, responsible for the day-to-day administration, financial management, procurement, safeguards management, and monitoring and evaluation of the Project. (e) "Training and Workshops" means the reasonable costs approved by the World Bank for the training and workshops related to the implementation of the Activities including tuition, travel and subsistence costs for training and workshop participants, costs associated with securing the services of trainers and workshop speakers, rental of training and workshop facilities, preparation and reproduction of training and workshop materials, and other costs directly related to training course and workshop preparation and implementation (but excluding goods and consulting services). -4- March 1, 2017 Article II Execution of the Activities 2.01. Description of the Activities. The Activities for which the Advance is provided consist of the following parts: (a) Providing technical support and equipment for setting up a policy unit in the MMMR; (b) Installation of 315 KVA transformer for Geological Survey Department (GSD) Laboratory; (c) Providing capacity building support to National Revenue Authority (NRA) and Environment Protection Agency (EPA); (d) Providing technical assistance to literature review of maps, images and reports; (e) Assisting in the integration of geophysical and geochemical data; (f) Assisting in the preparation for airborne geophysical survey; (g) Organizing a field reconnaissance campaign for geodata integration and procurement of equipment for geodata processing; (h) Conducting baseline studies for community livelihoods; (i) Preparation of Project Implementation Manual (PIM) and Terms of References (TORs); (j) Preparation of technical specifications for livelihoods sub-projects; (k) Conducting district sensitization workshops on Artisanal and Small-scale Mining (ASM), and Mineral Policy; (1) Organizing stakeholders workshop on petroleum law; (m) Organizing Project launching workshop; and (n) Providing capacity building training and technical support to MMMR and PIU for Project implementation, and procurement and installation of Accounting software. 2.02. Execution of the Activities Generally. The Recipient declares its commitment to the objectives of the Activities. To this end, the Recipient shall carry out the Activities through the Ministry of Mines and Mineral Resources (MMMR) in accordance with the provisions of: (a) Article II of the Standard Conditions; (b) this Article II; and (c) 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 and as of July 1, 2016. 2.03. Institutional and Other Arrangements. (a) Ministry of Mines and Mineral Resources (MMMR) The Ministry of Mines and Mineral Resources shall be responsible for overall coordination and implementation of the Project. (b) Project Implementation Unit (PIU) The Recipient shall maintain throughout the Project implementation, Project Implementation Unit within MMMR, with terms of reference, staffing and other resources satisfactory to the Bank. The PIU shall be responsible for the day-to-day administration, financial management, procurement, safeguards management, and monitoring and evaluation of the Project. -5- March 1, 2017 2.04. Monitoring, Reporting and Evaluation of the Activities. The Recipient shall monitor and evaluate the progress of the Activities in accordance with the provisions of Section 2.08 of the Standard Conditions. 2.05. Financial Management (a) The Recipient shall ensure that a financial management system is maintained in accordance with the provisions of Section 2.09 of the Standard Conditions. (b) The Recipient shall ensure that interim un-audited financial reports for the Activities are prepared and furnished to the World Bank not later than 45 days after the end of each calendar quarter, covering the quarter, in form and substance satisfactory to the World Bank. (c) The Recipient shall have its Financial Statements audited in accordance with the provisions of Sections 2.09 (b) of the Standard Conditions: (i) If, on or before the Refinancing Date, a Refinancing Agreement has been executed by all of its parties, the Recipient shall have the Financial Statements included in the first audit of financial statements required under the Refinancing Agreement. (ii) If, by the Refinancing Date, no Refinancing Agreement has been executed by all of its parties, such audit of the Financial Statements shall cover the period of the Advance, commencing with the fiscal year in which the first withdrawal under the Advance was made. The audited Financial Statements for such period shall be furnished to the World Bank not later than six months after the end of the Recipient's fiscal year in which the Refinancing Date occurs. (iii) Notwithstanding the provisions of paragraphs (i) and (ii) of this Section, the World Bank may request an audit of the Financial Statements prior to the Refinancing Date, covering such period as is indicated in its request. The audited Financial Statements for such period shall be furnished to the World Bank not later than six months after the end of such period. 2.06. Procurement All goods, works, non-consulting services and consulting services required for the Activities and to be financed out of the proceeds of the Advance shall be procured in accordance with the requirements set forth or referred to in the "World Bank Procurement Regulations for Borrowers under Investment Project Financing" dated July 1, 2016 ("Procurement Regulations") and the provisions of the Recipient's procurement plan for the Activities dated January 13, 2017 (Procurement Plan") provided for under Section IV of the Procurement Regulations, as the same may be updated from time to time in agreement with the World Bank. Article III Withdrawal of the Advance 3.01. Eligible Expenditures. The Recipient may withdraw the proceeds of the Advance in accordance with the provisions of: (a) Article III of 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 each category of Eligible Expenditures that may be financed out of the proceeds of the Advance -6- March 1, 2017 ("Category"), the amount of the Advance allocated to each Category, and the percentage of expenditures to be financed for Eligible Expenditures in each Category: Category Amount of the Advance Percentage of Allocated Expenditures to be (expressed in Dollars) Financed (inclusive of Taxes) Goods, works, non- 2,000,000 100% consulting services, consulting services, Training and Workshops, and Incremental Operating Costs TOTAL AMOUNT 2,000,000 3.02. Withdrawal Conditions. Notwithstanding the provisions of Section 3.01 of this Agreement, no withdrawal shall be made for payments made prior to the date of countersignature of this Agreement by the Recipient, except that withdrawals up to an aggregate amount not to exceed $150,000 (one hundred and fifty thousand) equivalent may be made for payments made prior to this date but on or after January 01, 2017, for Eligible Expenditures. 3.03. Refinancing Date. The Refinancing Date is June 30, 2018. Article IV Terms of the Advance 4.01. Service Charge. The Recipient shall pay a service charge on the Withdrawn Advance Balance at the rate of three-fourths of one percent (3/4 of 1%) per annum. The service charge shall accrue from the respective dates on which amounts of the Advance are withdrawn and shall be paid in arrears in accordance with the provisions of Section 4.02 of this Agreement. Service charges shall be computed on the basis of a 360-day year of twelve 30-day months. 4.02. Repayment The Withdrawn Advance Balance shall be repaid by the Recipient to the World Bank (together with any service charges accrued thereon) in accordance with the provisions of Article IV of the Standard Conditions and the following provisions: (a) Refinancing under the Refinancing Agreement: If, on or before the Refinancing Date, a Refinancing Agreement has been executed by all of its parties, then the full amount of the Withdrawn Advance Balance shall be repaid to the World Bank (together with any service charges accrued on the Advance to the date of repayment) as soon as the Refinancing Agreement becomes effective, by means of a withdrawal by the World Bank of an amount of the Refinancing Proceeds equivalent to the Withdrawn Advance Balance plus such service charges, in accordance with the provisions of the Refinancing Agreement. -7- March 1, 2017 (b) Repayment in the absence of a Refinancing Agreement: If, on or before the Refinancing Date, no Refinancing Agreement has been executed by all of its parties, or if, by such date or at any time thereafter, it has been so executed but terminates without becoming effective, then: (i) if the amount of the Withdrawn Advance Balance does not exceed $50,000, it shall be repaid by the Recipient to the World Bank (together with service charges accrued on the Withdrawn Advance Balance to the date of repayment) on such date as the World Bank shall specify in a notice to the Recipient, which shall in no event be earlier than 60 days following the date of dispatch of such notice; and (ii) if the amount of the Withdrawn Advance Balance exceeds $50,000, it (together with service charges accrued on the Withdrawn Advance Balance to the Notice Date) (the "Aggregate Balance") shall be paid by the Recipient to the World Bank in ten approximately equal semiannual installments, in the amounts and on the dates ("Payment Dates") which the World Bank shall specify in a notice to the Recipient. In no event shall the first Payment Date be set earlier than 60 days following the date ("Notice Date") of dispatch of such notice. The Recipient shall pay a service charge on the Aggregate Balance at the rate of three-fourths of one percent (3/4 of 1%) per annum, payable in arrears on each Payment Date. The service charge shall be computed on the basis of a 360-day year of twelve 30-day months. Article V Recipient's Representative; Addresses 5.01. Recipient's Representative. The Recipient's Representative referred to in Section 9.02 of the Standard Conditions is its minister responsible for finance. 5.02. Recipient's Address. The Recipient's Address referred to in Section 9.01 of the Standard Conditions is: Ministry of Finance and Economic Development Treasury Building George Street Freetown, Sierra Leone Facsimile: 232 22 229 060 5.03. World Bank's Address. The World Bank's Address referred to in Section 9.01 of the Standard Conditions is: International Development Association 1818 H Street, N.W. Washington, D.C. 20433 United States of America Telex: Facsimile: 248423 (MCI) or (1)-202-477-6391 64145 (MCI)