OFFICIAL L1q BANCO MUNDIAL DOCUMENTS BIRD * AID I GRUPO BANCO MUNDIAL December 21, 2015 His Excellency Mr. Josd Ivo Sartori Governor State of Rio Grande Do Sul Palacio Piratini Praga Marechal Deodoro s/n Porto Alegre - RS Brazil His Excellency Mr. Cristiano Tatsch Secretirio de Estado de Planejamento, Mobilidade e Desenvolvimento Regional Borges de Medeiros, 1.501, 90 andar. Porto Alegre - RS Brazil Re: IBRD Loan 8155-BR (Brazil SWAp to Strengthen Public Investment Project) Additional Instructions: First Amendment of Disbursement Letter Excellency, I refer to the Loan Agreement between the International Bank for Reconstruction and Development ("World Bank") and the State of Rio Grande do Sul ("Borrower") for the above-referenced project, dated September 11, 2012. The Loan Agreement provides that the World Bank may issue additional instructions regarding the withdrawal of the proceeds of Loan IBRD 8155-BR. This letter ("Disbursement Letter"), as revised from time to time, constitutes the additional instructions. This is the first amendment of the Disbursement Letter dated September 11, 2012 for the above referenced project. This letter restates Section I adding Direct Payment as Disbursement Method, Section II (iii) and (iv) with the new "SIDC" terms for the use of Electronic Delivery of Applications, Section III updating Reporting Requirements for the Project and IV with updated disbursement instructions for withdrawals under Category 2 in accordance with the Amendment and Reinstatement of the Loan Agreement dated December 21, 2015. All other provisions and attachments of the Disbursement Letter dated September 11, 2012 shall remain in force and effect. 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 Loan 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 Disbursement Letter, the capitalized terms used have the meanings ascribed to them in the Disbursement Guidelines. I. Disbursement Arrang-ements (i) Disbursement Methods (section 2). The following Disbursement Methods may be used under the Loan: * Advance, Reimbursement and Direct Payment for Category (1) * Advance and Reimbursement (for retroactive expenditures only) for Category (2) (ii) Disbursement Deadline Date (subsection 3.7). The Disbursement Deadline Date is four months after the Closing Date specified in the Loan Agreement. Any changes to this date will be notified by the World Bank. (iii) Disbursement Conditions (subsection 3.8). Please refer to the Disbursement Conditions in the Loan Agreement. II. Withdrawal of Loan 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 for withdrawal: Banco Mundial Setor Comercial Norte, Quadra 02, Lote A Edificio Corporate Financial Center 70 Andar 70712-900 Brasilia, D.F. Brazil Attention: Ms. Martin Raiser, Country Director-Brazil-Country Management Unit (ii) Applications (subsections 3.2 - 3.3). Please provide completed and signed Applications for withdrawal together with supporting documents required, to the address indicated below: Banco Mundial Sector Comercial Norte, Quadra 02, Lote A Edificio Corporate Financial Center 70 Andar 70712-900 Brasilia, D.F. Brazil Attention: Loan Department Page 2 of 14 (iii) Electronic Delivery (subsection 3.4). The Bank may permit the Borrower to electronically deliver to the Bank Applications (with supporting documents) through the Bank's Client Connection, web-based portal. The option to deliver Applications to the Bank by electronic means may be effected if: (a) the Borrower 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 Bank for the purpose of delivering such Applications by electronic means; and (b) all such officials designated by the Borrower have registered as users of Client Connection. If the Bank agrees, the Bank will provide the Borrower 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 Borrower may continue to exercise the option of preparing and delivering Applications in paper form. The Bank reserves the right and may, in its sole discretion, temporarily or permanently disallow the electronic delivery of Applications by the Borrower. (iv) Terms and Conditions of Use of Tokens to Process Applications. By designating officials to use SIDC and by choosing to deliver the Applications electronically, the Borrower 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 ofElectronic 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 ofApplications (subsection 3.5). The Minimum Value of an Application for Reimbursement is United States Dollars (US$) 3,000,000 equivalent. (vi) Advances (sections 5 and 6)for Category (1) -DA-A * Type of Designated Account (subsection 5.3): Segregated * Currency of Designated Account (subsection 5.4): United States Dollars * Financial Institution at which the Designated Account Will Be Opened (subsection 5.5): Banrisul * Ceiling (subsection 6.1): US$ 10,000,000 (vii) Advances (sections 5 and 6)for Category (2) -DA-B * Type of Designated Account (subsection 5.3): Segregated * Currency of Designated Account (subsection 5.4): United States Dollars Page 3 of 14 * Financial Institution at which the Designated Account Will Be Opened (subsection 5.5): Banrisul * Ceiling (subsection 6.1): Variable subject to the limits set out in Section IV.(iv) of this letter III. Reporting on Use of Loan Proceeds (i) Supporting Documentation (section 4). Supporting documentation should be provided with each Application for withdrawal as set out below: * For requests for Reimbursement (retroactive expenditures only) and for reporting Eligible Expenditures paid from the Designated Account under Category (2): 0 Customized SOE in the form attached (Attachment 4) which reflects the Eligible Expenditure Program (EEP) Spending Report prepared in accordance with provisions established in the Project Operational Manual and the additional instructions provided in this Disbursement Letter; and " List of payments against contracts that are subject to the World Bank's prior review, in the form attached (Attachment 5). * For requests for Reimbursement and for reporting eligible expenditures paid from the Designated Account under Category (1): o Statement of Expenditures in the form attached (Attachment 7) evidencing eligible expenditures for Goods, Consultants' Services, Non- Consulting Services and Training. o List of payments against contracts that are subject to the World Bank's prior review, in the form attached (Attachment 5). o Designated Account Bank Statement(s) and Reconciliation applicable only when reporting eligible expenditures paid from the Designated Accounts. * For requests for Direct Payments: o Records evidencing eligible expenditures (e.g., copies of receipts, supplier invoices). (ii) Frequency of Reporting Eligible Expenditures Paid from the Designated Accounts (subsection 6.3): Annually Page 4 of 14 IV. Other Disbursement Instructions (i) Each EEP Spending Report, submitted as supporting documentation for Applications for withdrawal claimed under Category (2) will need to have been reviewed and certified by the World Bank as acceptable in format and content in accordance with Schedule 2, Section I, B. and Schedule 2, Section II, A of the Loan Agreement and the Project Operational Manual. (ii) Each EEP Spending Report will require the following information: (a) Calculation and demonstration of EEP expenditures eligible for World Bank financing, including the presentation of actual EEP expenditures, to prove that the actual EEP expenditures during that period, were sufficient to justify the previous Advance against estimated EEP expenditures. (b) Confirmation that at least 70 percent of the amounts budgeted, in the preceding Bank's fiscal year (July to June) for each EEP Line, have been spent for the second to seventh Application for withdrawal. If the 70 percent rule is not met for an EEP Line, then the planned disbursement amount in that period will be reduced by 12.5 percent (i.e. one of eight EEPs). The unwithdrawn amount will be added to the next planned disbursement amount. (c) Compliance with each relevant Disbursement-Linked Indicator (DLI) for the second to seventh Application for withdrawal. (iii) In the case that the EEP Spending Report indicates partial compliance with the requirements listed above, then the following will apply: (a) The 70 percent rule is the first disbursement requirement to be verified. The planned disbursement amount from the Loan for the given disbursement will be reduced, as per the percentage indicated above for each EEP Line that does not meet the rule 70 percent rule. (b) Compliance with DLIs is then verified. The amount to be disbursed is calculated according to the following formulae: x/y multiplied by the amount eligible to be withdrawn (after the application of the 70 percent rule), where x is the number of attained DLIs and y is the total number of DLIs. The Bank will request the Borrower to prepare a time-bound action plan to achieve the failed DLI or DLIs in a manner satisfactory to the Bank; and when satisfied that the failed DLI or DLIs have been complied with and/or such action plan has been implemented, authorize that the unwithdrawn amount by which the corresponding disbursement had been reduced, to be advanced in the immediately subsequent Application for withdrawal. Page 5 of 14 (c) Advance amounts not documented will be deemed available to cover the next period's EEP expenditures and will be deducted from the calculation of the amount to be disbursed (after the application of (a) and (b) immediately above). (iv) Application for Withdrawal Schedule for Category (2) Each Application for withdrawal shall be presented using the following schedule: (a) the first(*) withdrawal on or about the Effective Date as an Advance, in respect of payments to be made for Eligible Expenditures Programs in the period from the Signing Date to June 2013, up to a planned disbursement amount not exceeding US$ 31,500,000. (b) the second(*) withdrawal on or about September 2013 as an Advance, in respect of payments to be made for Eligible Expenditures Programs in the period from July 2013 to June 2014, up to a planned disbursement amount not exceeding US$ 29,046,791 (not including amounts rolled over). This withdrawal will also document actual EEP expenditures for the period from the Signing Date to June 2013. (c) the third(*) withdrawal on or about September 2014 as an Advance, in respect of payments to be made for Eligible Expenditures Programs in the period from July 2014 to June 2015, up to a planned disbursement amount not exceeding US$ 89,604,540 (not including amounts rolled over). This withdrawal will also document actual EEP expenditures for the period from July 2013 to June 2014. (d) the fourth withdrawal on or about September 2015 as an Advance, in respect of payments to be made for Eligible Expenditures Programs in the period from July 2015 to June 2016, up to a planned disbursement amount not exceeding US$ 100,000,000 (not including amounts rolled over). This withdrawal will also document actual EEP expenditures for the period from July 2014 to June 2015. (e) the fifth withdrawal on or about September 2016 as an Advance, in respect of payments to be made for Eligible Expenditures Programs in the period from July 2016 to June 2017, up to a planned disbursement amount not exceeding US$ 85,000,000 (not including amounts rolled over). This withdrawal will also document actual EEP expenditures for the period from July 2015 to June 2016. (f) the sixth withdrawal on or about September 2017 as an Advance, in respect of payments to be made for Eligible Expenditures Programs in the period from July 2017 to June 2018, up to a planned disbursement amount not exceeding US$ 63,000,000 (not including amounts rolled over). This withdrawal will also document actual EEP expenditures for the period from July 2016 to June 2017. (g) the seventh eighth withdrawal on or about September 2018 as an Advance, in respect of payments to be made for Eligible Expenditures Programs in the period from July 2018 to February 2019, up to a planned disbursement amount not Page 6 of 14 exceeding US$ 25,598,669 (not including amounts rolled over). This withdrawal will also document actual EEP expenditures for the period from January 2017 to June 2018. (h) the eight withdrawal on or about April 2019 to document actual EEP expenditures for the period from July 2018 to February 2019. (*) The withdrawal period occurred before the first amendment and reflect the actual disbursements for the period. 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 Loan, and retrieve related policy, financial, and procurement information. All Borrower 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 . If you have any queries in relation to the above, please contact Tatiana de Abreu, Finance Officer at tdeabreu@worldbank.org using the above Project name and Loan number as a reference in the subject line. Yours sincerely, Tatiana de Abreu Finance Officer WFALN - Loan Operations Page 7 of 14 Attachments 1. World Bank Disbursement Guidelines for Projects, dated May 1, 2006 - Not included as there is no change from previous Disbursement Letter 2. Format of Authorized Signature Letter 3. Terms and Conditions of Use ofSecure Identification Devices in connection with Use ofElectronic Means to Process Applications and Supporting Documentation, dated January 20, 2010 4. Customized Statement of Expenditures (SOE) for Category (2) - EEP Spending Report - Not included as there is no change from previous Disbursement Letter 5. Form of Payments Against Contracts Subject to the World Bank's Prior Review - Not included as there is no change from previous Disbursement Letter 6. Form of Summary Sheet - Not applicable as only Statement of Expenditures form will be used 7. Form of Statements of Expenditures - Not included as there is no change from previous Disbursement Letter Page 8 of 14 Attachment 2 Form of Authorized Signatory Letter [Letterhead] [Street address] [City] [Country] Banco Mundial Setor Comercial Norte, Quadra 02, Lote A Edificio Corporate Financial Center 7o Andar 70712-900 Brasilia, DF Brazil Attention: [Country Director] Re: IBRD Loan 8155-BR (Brazil SWAP to Strengthen Public Investment Project) I refer to the Loan Agreement ("Agreement") between the International Bank for Reconstruction and Development (the "Bank") and the State of Rio Grande do Sul (the "Borrower"), dated December 15, 2011, providing the above Loan. For the purposes of Section 2.03 of the General Conditions as defined in the Agreement, any [one] of the persons whose authenticated specimen signatures appear below is authorized on behalf of the Borrower to sign applications for withdrawal [and applications for a special commitment] under this Loan. For the purpose of delivering Applications to the Bank, 2[each] of the persons whose authenticated specimen signatures appears below is authorized on behalf of the Borrower, acting 3[individually] 4[jointly], to deliver Applications, and evidence in support thereof on the terms and conditions specified by the Bank. 5[This confirms that the Borrower is authorizing such persons to accept Secure Identification Credentials (SIDC) and to deliver the Applications and supporting I Instruction to the Borrower: 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 Bank. 2 Instruction to the Borrower: 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 Bank. 3 Instruction to the Borrower: 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 Bank 4 Instruction to the Borrower: 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 Bank. Page 9 of 14 documents to the Bank by electronic means. In full recognition that the 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 Credentials in connection with Use of Electronic Means to Process Applications and Supporting Documentation ("Terms and Conditions of Use of SIDC"), the Borrower represents and warrants to the Bank that it will cause such persons to abide by those terms and conditions.] This Authorization replaces and supersedes any Authorization currently in the Bank records with respect to this Agreement. [Name], [position] Specimen Signature: [Name], [position] Specimen Signature: [Name], [position] Specimen Signature: Yours truly, / signed/ [Borrower's representative] ' Instruction to the Borrower: Add this paragraph if the Borrower wishes to authorize the listed persons to accept Secure Identification Credentials 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 Bank. Page 10 of 14 Attachment 3 Termos e condições de uso de dispositivos seguros de identificação em conexão com o uso de meios eletrônicos para processar pedidos de saque e documentação de apoio 10 de março de 2013 O Banco Mundial6 fornecerá credenciais de identificação seguras (SIDC-sigla em inglês) para permitir que o Mutuário7 entregue pedidos de saque e pedidos de compromissos especiais nos termos do(s) Contrato(s) de Empréstimo, bem como documentação de apoio (tais pedidos e documentação de apoio conjuntamente denominados nestes Termos e Condições de Uso como Pedidos de Saque) ao Banco Mundial por meio eletrônico, nos termos e condições de uso especificados neste documento. O SIDC pode ser: a) baseado em hardware (Token Físico) ou baseado em software (Token Virtual). O Banco Mundial reserva-se o direito de determinar o tipo de SIDC mais apropriado. A. Identificação de Usuários. 1. Será pedido ao Mutuário que identifique em uma Carta de Assinatura Autorizada (ASL- sigla em inglês), devidamente entregue ao Banco Mundial e por ele recebida, cada pessoa que estará autorizada a entregar Pedidos de Saque. O Banco Mundial fornecerá o SIDC a cada pessoa identificada na ASL (Signatário), conforme disposto abaixo. O Mutuário deverá também notificar imediatamente o Banco Mundial se um Signatário não estiver mais autorizado pelo Mutuário a atuar como Signatário. 2. Cada Signatário deverá cadastrar-se como usuário no website do Banco Mundial Client Connection (CC) (https://clientconnection.worldbank.org ) antes da entrega de seu SIDC. Para cadastrar-se na CC o Signatário deverá criar uma senha na CC (Senha CC). O Signatário não revelará sua Senha da CC a ninguém nem a armazenará ou a registrará por escrito ou de qualquer outra forma. Ao cadastrar-se como usuário da CC, o Signatário receberá um nome de conta de identificação exclusivo. B. Inicialização do SIDC. 1. O Signatário, antes de começar a inicialização do SIDC, deverá confirmar que leu, compreendeu e acordou estar obrigado por estes Termos e Condições de Uso. 6 O "Banco Mundial" inclui o BIRD e a AID. 7O "mutuário" inclui o mutuário de um empréstimo do BIRD, crédito da AID ou adiantamento do Mecanismo de Preparação de Projetos e o beneficiário de um doação. Page 11 of 14 2. Caso se use um Token Físico, imediatamente após o recebimento do Token Físico o Signatário acessará a CC utilizando seu nome de conta e Senha da CC, registrará seu Token Físico, bem como criará um número de identificação pessoal (PIN) a ser usado juntamente com o seu Token Físico, após o que o Token Físico estará inicializado para ser usado pelo Signatário exclusivamente para entregar Pedidos de Saque. Caso se use um Token Virtual, o Signatário acessará a CC utilizando seu nome de conta e Senha da CC e criará um número de identificação pessoal (PIN) a ser usado juntamente com o seu Token Virtual, após o que o Token Virtual estará inicializado para ser usado pelo Signatário exclusivamente para entregar Pedidos de Saque. Após a inicialização do SIDC, o Signatário será um "Usuário do SIDC". O Banco Mundial manterá em seu banco de dados uma conta de usuário (Conta) para cada Usuário do SIDC a fim de administrar o SIDC do Usuário de SIDC. Nem o Mutuário nem o Usuário do SIDC terão qualquer acesso à Conta. 3. Antes da primeira utilização do SIDC pelo Usuário do SIDC, o Mutuário deverá assegurar-se de que o Usuário do SIDC tenha recebido os materiais de treinamento fornecidos pelo Banco Mundial acerca do uso do SIDC. C. Uso do SIDC. 1. O uso do SIDC é estritamente limitado à entrega de Pedidos de Saque pelo Usuário do SIDC na forma prescrita pelo Banco Mundial no(s) Contrato(s) de Empréstimo e nestes Termos e Condições. É vedado qualquer outro uso do SIDC. 2. O Banco Mundial não assume qualquer responsabilidade pelo uso inadequado do SIDC pelo Usuário do SIDC, outros representantes do Mutuário ou terceiros. 3. O Mutuário é responsável por assegurar e declara e garante para o Banco Mundial (o Banco Mundial confia inteiramente em tal declaração e garantia na entrega de um SIDC a cada usuário do SIDC) que todo usuário do SIDC compreende estes Termos e Condições de Uso e agirá em conformidade com os mesmos, incluindo o seguinte, embora não de forma exclusiva: 4. Segurança 3.1. O Usuário do SIDC não revelará seu PIN a ninguém nem o armazenará ou o registrará por escrito ou de qualquer outra forma. 3.2. O Usuário do SIDC não permitirá que nenhuma outra pessoa utilize um SIDC para entregar uma Pedido de Saque ao Banco Mundial. 3.3. O Usuário do SIDC sempre efetuará o logout da CC quando não estiver utilizando o sistema. Se o logout não for efetuado adequadamente, poderá ser criada uma rota desprotegida para o sistema. Page 12 of 14 3.4. Se o Usuário do SIDC acreditar que um terceiro tenha tomado conhecimento de seu PIN ou caso tenha perdido seu Token Físico, deverá notificar imediatamente a clientconnection@worldbank.org. 3.5. O Mutuário notificará imediatamente o Banco Mundial pelo e-mail clientconnection@worldbank.org a respeito de qualquer perda, roubo ou comprometimento do SIDC e tomará outras medidas razoáveis para assegurar que tal SIDC seja desativado imediatamente. 5. Reserva de direito de desativar o SIDC 5.1. O Mutuário reservar-se-á o direito de revogar, por qualquer motivo, a autorização de um Usuário do SIDC para usar o SIDC. 5.2. O Banco Mundial reserva-se o direito de, a seu critério exclusivo, desativar temporária ou permanentemente um SIDC, desativar uma Conta de Usuário de SIDC ou ambos. 6. Cuidado dos Tokens Físicos 6.1. Os Tokens Físicos continuarão a ser propriedade do Banco Mundial. 6.2. O Banco Mundial manualmente entregará um Token Físico a cada Signatário designado a recebê-lo de uma forma a ser determinada e que seja satisfatória para o Banco Mundial. 6.3. Os Tokens Físicos contêm instrumentação delicada e sofisticada e, portanto, devem ser manuseados com o devido cuidado e não devem ser imersos em líquidos, expostos a temperaturas extremas, comprimidos ou curvados. Além disso, os Tokens Físicos devem ser mantidos a uma distância superior a cinco (5) centímetros de dispositivos que produzam radiação eletromagnética (REM), como telefones celulares, PDAs ativados por telefone, smartphones e outros dispositivos semelhantes. Os Tokens Físicos devem ser transportados e armazenados separadamente de qualquer dispositivo REM. À curta distância (menos de 5 cm), esses dispositivos podem liberar altos níveis de REM capazes de interferir na operação apropriada de equipamentos eletrônicos, inclusive do Token Físico. 6.4. Sem desrespeitar estes Termos e Condições de Uso, outras instruções técnicas acerca do uso e cuidado adequados de Tokens Físicos estão disponíveis em http://www.rsa.com. 7. Substituição Page 13 of 14 7.1. Os Tokens Físicos perdidos, danificados, comprometidos (nos termos do item 4.5, acima) ou destruídos serão substituídos às custas do Mutuário. 7.2. O Banco Mundial reserva-se o direito de, a seu critério exclusivo, não substituir qualquer Token Físico no caso de uso inadequado ou de não reativar a Conta do Usuário do SIDC. Page 14 of 14