GRANT NUMBER D692-GN CREDIT NUMBER 6742-GN OFFICIAL DOCUMENTS Financing Agreement (West Africa Regional Energy Trade Development Policy Financing Program - Guinea) between REPUBLIC OF GUINEA and INTERNATIONAL DEVELOPMENT ASSOCIATION GRANT NUMBER D692-GN CREDIT NUMBER 6742-GN FINANCING AGREEMENT AGREEMENT dated as of the Signature Date between the REPUBLIC OF GUINEA ("Recipient") and the INTERNATIONAL DEVELOPMENT ASSOCIATION ("Association") for the purpose of providing financing in support of the Program (as defined in the Appendix to this Agreement) which supports the implementation of key reforms at the national level focusing on regional integration with the objective of increasing regional electricity trade in West Africa to increase energy security, reduce vulnerability to international oil price fluctuations and reduce the fiscal burden of the electricity sector. WHEREAS (A) the Association has decided to provide this financing on the basis, inter alia, of: (i) the actions which the Recipient has already taken under the Program and which are described in Section I of Schedule I to this Agreement; and (ii) the Recipient's maintenance of an adequate macroeconomic policy framework; and (B) by a financing agreement to be entered into between the Association and each of Burkina Faso, the Republic of C6te d'Ivoire. the Republic of Mali, the Republic of Liberia and the Republic of Sierra Leone (along with the Recipient, collectively and indistinctively the "Participating Countries"), the Association will extend to the Participating Countries financial assistance to support them in financing part of the cost of activities related to the Program to support the implementation of policies and reforms that the Economic Community of West African States countries have determined key for cementing the pillars of sustainable electricity trade. NOW THEREFORE the Recipient and the Association therefore hereby agree as follows: ARTICLE I - GENERAL CONDITIONS; DEFINITIONS 1.01. The General Conditions (as defined in the Appendix to this Agreement) apply to and form part of this Agreement. 1.02. Unless the context requires otherwise, the capitalized terms used in this Agreement have the meanings ascribed to them in the General Conditions or in the Appendix to this Agreement. ARTICLE II - FINANCING 2.01. The Association agrees to extend to the Recipient a grant and a credit, which are deemed as Concessional Financing for purposes of the General Conditions (collectively, "Financing"), in the following amounts: -2- (a) an amount equivalent to twenty-one million nine hundred thousand Special Drawing Rights (SDR 21.900,000) ("Grant"); and (b) an amount equivalent to twenty-one million nine hundred thousand Special Drawing Rights (SDR 21,900,000) ("Credit"). 2.02. The Maximum Commitment Charge Rate is one-half of one percent (1/2 of 1%) per annum on the Unwithdrawn Financing Balance. 2.03. The Service Charge is three-fourths of one percent (3/4 of 1 ") per annum on the Withdrawn Credit Balance. 2.04. The Payment Dates are March 15 and September 15 in each year. 2.05. The principal amount of the Credit shall be repaid in accordance with the repayment schedule set forth in Schedule 2 to this Agreement. 2.06. The Payment Currency is the Dollar. 2.07. Without limitation upon the provisions of Section 5.05 of the General Conditions, the Recipient shall promptly furnish to the Association such information relating to the provisions of this Article II as the Association may, from time-to-time, reasonably request. ARTICLE III - PROGRAM 3.01. The Recipient declares its commitment to the Program and its implementation. To this end, and further to Section 5.05 of the General Conditions: (a) the Recipient and the Association shall from time-to-time, at the request of either party, exchange views on the Recipient's macroeconomic policy framework and the progress achieved in carrying out the Program; (b) prior to each such exchange of views. the Recipient shall furnish to the Association for its review and comment a report on the progress achieved in carrying out the Program. in such detail as the Association shall reasonably request, and (c) without limitation upon the provisions of paragraphs (a) and (b) of this Section, the Recipient shall promptly inform the Association of any situation that would have the effect of materially reversing the objectives of the Program or any action taken under the Program including any action specified in Section I of Schedule 1 to this Agreement. -3- ARTICLE IV - REMEDIES OF THE ASSOCIATION 4.01. The Additional Event of Suspension consists of the following, namely, that a situation has arisen which shall make it improbable that the Program, or a significant part of it, will be carried out. ARTICLE V - EFFECTIVENESS; TERMINATION 5.01. The Additional Condition of Effectiveness consists of the following, namely, that the Association is satisfied with the progress achieved by the Recipient in carrying out the Program and with the adequacy of the Recipient's macroeconomic policy framework. 5.02. The Effectiveness Deadline is the date ninety (90) days after the Signature Date. ARTICLE VI- REPRESENTATIVE; ADDRESSES 6.01. The Recipient's Representative is its minister responsible for finance. 6.02. For purposes of Section 11.01 of the General Conditions: (a) the Recipient's address is: Minist&re de I'Economie et des Finances 4&me Av., Rue KA.020 - Boulbinet Kaloum - BP 579 Conakry Republic of Guinea 6.03. For purposes of Section 11.01 of the General Conditions: (a) the Association's address is: International Development Association 1818 H Street, N.W. Washington, D.C. 20433 United States of America; and (b) the Association's Electronic Address is: Telex: Facsimile: 248423 (MCI) (+1) 202-477-6391 -4- AGREED as of the Signature Date. REPUBLIC OF GUINEA By Authorized Repreni iiW e Name: VCa w-.n cAL* Co %LvnjCL Title: ASAnn T 2c C- TC--r4et Date:A ~ ~ ( ~ INTERNATIONAL DEVELOPMENT ASSOCIATION By Authorized Representative Name: Claire Kfouri Title: (Acting) Director, Regional Integration Date: August 6, 2020 -5- SCHEDULE I Program Actions; Availability of Financing Proceeds Section 1. Actions Taken Under the Program The actions taken by the Recipient under the Program include the following: 1. The Recipient has mandated the use of the specific agreed-upon principles based on the ERERA models of contract template/framework for all future sale and purchase of cross-border electricity, as evidenced by the publication in the official gazette (Journal Officiel) of the inter-ministerial order (arrtd interministiriel) AC/2020 1034 dated April 2,2020, issued by the Recipient's Minister of Economy and Finance and Minister of Energy. 2. The Recipient has established: (i) suitable cash waterfall arrangements to prioritize payments for imports and payment penalties for defaults in performing export supply contract obligations; and (ii) a dedicated account to ringfence incoming revenues to guarantee such payments for imports and payments for defaults in performing export supply contract obligations, as evidenced by the publication in the official gazette (Journal Officiel) of the inter-ministerial order (arrtd interministdriel) AC/2020/1035 dated April 2, 2020, issued by the Recipient's Minister of Economy and Finance and Minister of Energy. 3. The Recipient has: (i) formally approved the updated Master Plan for Power Generation, including a least cost generation plan; and (ii) established the methodology and the periodicity for future updates thereof, as evidenced by the publication in the official gazette (Journal Officiel) of the interministerial order (arrlh interministiriel) AC/2020/1036 dated April 2, 2020, issued by the Recipient's Minister of Economy and Finance and Minister of Energy. 4. The Recipient has mandated the use of regional regulations laid down by ERERA covering the interconnected power systems of the WAPP with respect to: (i) the use of the West African Power Pool Operating Manual; and (ii) the adoption of the Transmission Tariff Methodology for the West African Power Pool, as evidenced by the publication in the Official Gazette (Journal Officiel) of the interministerial order (arrgtd interministeriel) AC/2020/1033 dated April 2, 2020, issued by the Recipient's Minister of Economy and Finance and the Minister of Energy. 5. The Recipient has approved the updated Recovery Plan, including the methodology and periodicity of future updates thereof, and established the procedure to notify ERERA on a regular basis of each update thereof, as evidenced by the publication in the official gazette (Journal Officiel) of the interministerial order (arr& interministdriel) AC/2020/1 037 dated April 2, 2020, issued by the Recipient's Minister of Economy and Finance and Minister of Energy. -6- Section II. Availability of Financing Proceeds A. General. The Recipient may withdraw the proceeds of the Financing in accordance with the provisions of this Section and such additional instructions as the Association may specify by notice to the Recipient. B. Allocation of Financing Amounts. The Financing is allocated in a single withdrawal tranche, from which the Recipient may make withdrawals of the Financing proceeds. The allocation of the amounts of the Financing to this end is set out in the table below: Amount of the Credit Amount of the Grant Allocations Allocated Allocated (expressed in SDR) (expressed in SDR) (1) Single 21,900,000 21,900,000 Withdrawal Tranche TOTAL 21,900,000 21.900,000 AMOUNT C. Withdrawal Tranche Release Conditions. 1. 'No withdrawal shall be made of the Single Withdrawal Tranche unless the Association is satisfied: (i) with the Program being carried out by the Recipient; and (ii) with the adequacy of the Recipient's macroeconomic policy framework. D. Deposit of Financing Amounts. 1. Notwithstanding the provisions of Section 2.03 of the General Conditions: (a) the Recipient shall open, prior to furnishing to the Association the first request for withdrawal from the Financing Account, and thereafter maintain the following two dedicated accounts on terms and conditions satisfactory to the Association: (i) a dedicated account in Dollars ("Foreign Currency Dedicated Account"); and (ii) a dedicated account in Guinean Francs ("Local Currency Dedicated Account"); and (b) all withdrawals from the Financing Account shall be deposited by the Association into the Foreign Currency Dedicated Account. Upon each deposit of an amount of the Financing into the Foreign Currency Dedicated Account, the Recipient shall deposit an equivalent amount into the Local Currency Dedicated Account. -7- 2. The Recipient, within thirty (30) days after the withdrawal of the Financing from the Financing Account, shall report to the Association: (i) the exact sum received into the Foreign Currency Dedicated Account; (ii) the details of the account to which the Guinean Francs equivalent of the Financing proceeds will be credited; (iii) the record that an equivalent amount has been accounted for in the Recipient's budget management systems; and (iv) the statement of receipts and disbursement of the Foreign Currency Dedicated Account. E. Audit. Upon the Association's request, the Recipient shall: I. have the Dedicated Accounts audited by independent auditors acceptable to the Association, in accordance with consistently applied auditing standards acceptable to the Association; 2. furnish to the Association as soon as available, but in any case not later than six (6) months after the date of the Association's request for such audit, a certified copy of the report of such audit, of such scope and in such detail as the Association shall reasonably request, and make such report publicly available in a timely fashion and in a manner acceptable to the Association; and 3. furnish to the Association such other information concerning the Dedicated Accounts and their audit as the Association shall reasonably request. F. Closing Date. The Closing Date is June 30, 2021. -8- SCHEDULE 2 Repayment Schedule Principal Amount of the Credit repayable Date Payment Due (expressed as a percentage)* On each March 15 and September 15, commencing on 1.5625% September 15, 2026, to and including March 15, 2058 * The percentages represent the percentage of the principal amount of the Credit to be repaid, except as the Association may otherwise specify pursuant to Section 3.05(b) of the General Conditions. -9- APPENDIX Definitions 1. "Dedicated Accounts" means both the Foreign Currency Dedicated Account and the Local Currency Dedicated Account (as both are hereinafter defined). 2. "ERERA" means the ECOWAS Regional Electricity Regulatory Authority, the regional regulator for cross-border electricity interconnections in West Africa. 3. "Foreign Currency Dedicated Account" means the account referred to in Part D.l(a)(i) of Section II of Schedule I to this Agreement to be opened by the Recipient in its Central Bank (Banque Centrale de la R6publique de Guinde). 4. "General Conditions" means the "International Development Association General Conditions for IDA Financing, Development Policy Financing", dated December 14, 2018. 5. "Local Currency Dedicated Account" means the account referred to in Part D.1(a)(ii) of Section II of Schedule I to this Agreement. 6. "Master Plan for Power Generation" means the Recipient's plan aimed to the 2035 horizon for the development of electricity production at lower cost, promoting the scaling up of renewable energy production and the integration of national and regional energy supply options. 7. "Program" means: the program of objectives, policies, and actions set forth or referred to in the letter dated May 29, 2020, from the Recipient to the Association declaring the Recipient's commitment to the execution of the Program, and requesting assistance from the Association in support of the Program during its execution and comprising actions taken, including those set forth in Section I of Schedule 1 to this Agreement, and actions to be taken consistent with the program's objectives. 8. "Recovery Plan" means the Recipient's Plan de redressement du secteur de 'ilectriciti approved by the Recipient on April 2, 2020, setting forth short-term and medium-term measures to address key challenges of the Guinean energy sector, including costs, revenues, subsidy needs for the sector and policy reform targeting gender gaps in employment. 9. "Signature Date" means the later of the two dates on which the Recipient and the Association signed this Agreement and such definition applies to all references to "the date of the Financing Agreement" in the General Conditions. -10- 10. "Single Withdrawal Tranche" means the amount of the Financing allocated to the category entitled "Single Withdrawal Tranche" in the table set forth in Part B of Section fl of Schedule I to this Agreement. I1. "Transmission Tariff Methodology for the West African Power Pool" means the regional regulation approved by ERERA on August 18, 2015, by its Resolution No. 006/ERERA/15 on "Adoption of the Tariff Methodology for Regional Transmission Cost and Tariff'. 12. "WAPP" means the West African Power Pool, the international organization that associates all public and private power entities in the member states of the Economic Community of the West African States. 13. "West African Power Pool Operating Manual" means the operating manual approved by ERERA on September 29, 2015, by its Decision No. 007/ERERA'l5 on "Adopting the Operating Manual for the West African Power Pool".