OFFICIAL DOCUMENTS CREDIT NUMBER 6411-SL Financing Agreement (Additional Financing for the Energy Sector Utility Reform Project) between REPUBLIC OF SIERRA LEONE and INTERNATIONAL DEVELOPMENT ASSOCIATION CREDIT NUMBER 6411-SL FINANCING AGREEMENT AGREEMENT dated as of the Signature Date between the REPUBLIC OF SIERRA LEONE ("Recipient") and INTERNATIONAL DEVELOPMENT ASSOCIATION ("Association") for the purpose of providing additional financing for activities related to the Original Project (as defined in the Appendix to this Agreement). The Recipient and the Association 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 HI- FINANCING 2.01. The Association agrees to extend to the Recipient a credit, which is deemed as Concessional Financing for purposes of the General Conditions, in an amount equivalent to thirty-six million one hundred thousand Special Drawing Rights (SDR 36,100,000) (variously, "Credit" and "Financing"), to assist in financing the project described in Schedule I to this Agreement ("Project"). 2.02. The Recipient may withdraw the proceeds of the Financing in accordance with Section III of Schedule 2 to this Agreement. 2.03. The Maximum Commitment Charge Rate is one-half of one percent (1/2 of 1%) per annum on the Unwithdrawn Financing Balance. 2.04. The Service Charge is three-fourths of one percent (3/4 of 1%) per annum on the Withdrawn Credit Balance. 2.05. The Payment Dates are February 15 and August 15 in each year. 2.06. The principal amount of the Credit shall be repaid in accordance with the repayment schedule set forth in Schedule 3 to this Agreement. 2.07. The Payment Currency is Dollar. -2- ARTICLE III - PROJECT 3.01. The Recipient declares its commitment to the objective of the Project. To this end, the Recipient shall carry out Part 3 of the Project through the Ministry of Energy and shall cause Parts 1 and 2 of the Project to be carried out by the Electricity Distribution and Supply Authority ("EDSA" or the "Project Implementing Entity"), all in accordance with the provisions of Article V of the General Conditions, Schedule 2 to this Agreement and the Project Agreement. ARTICLE IV - EFFECTIVENESS; TERMINATION 4.01. The Additional Conditions of Effectiveness consist of the following: (a) the Subsidiary Agreement has been duly executed on behalf of the Recipient and the EDSA; and (b) the Project Agreement has been duly executed on behalf of the EDSA and the Association. 4.02. The Effectiveness Deadline is the date ninety (90) days after the Signature Date. 4.03. For purposes of Section 10.05 (b) of the General Conditions, the date on which the obligations of the Recipient under this Agreement (other than those providing for payment obligations) shall terminate is twenty (20) years after the Signature Date. ARTICLE V - REPRESENTATIVE; ADDRESSES 5.01. The Recipient's Representative is its minister responsible for finance. 5.02. For purposes of Section 11.01 of the General Conditions: (a) the Recipient's address is: Ministry of Finance Treasury Building George Street Freetown, Sierra Leone; and (b) the Recipient's Electronic Address is: Facsimile: 232 22 229 060 -3- 5.03. 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 SIERRA LEONE By Authorized Representative CK Name:. O~ Title: .\1 ,L/C Date: _ INTERNATIONAL DEVELOPMENT ASSOCIATION By Authorized Representative Name: WSN ?4 kei.. L1 Title:60 NOtTP-1 -2 gc Date:-1 ITUM6 2-19 -5- SCHEDULE 1 Project Description The objective of the Project is to improve the operational performance of the national electricity distribution utility. The Project, as described below, consists of the Original Activities financed under the Original Agreement and the Additional Activities financed under this Agreement: Part 1: Distribution Utility Capacity Enhancement and Performance Improvement (a) Supporting the establishment of a fully functioning and effective national electricity distribution utility through a performance based contract for utility operation and management. (b) Supporting EDSA and the strengthening of its commercial management, including inter alia through the implementation of a management information system, with integrated enterprise resource planning, commercial management and incident recording and management systems, for improved operational performance and incident management and the provision of consultants with expertise in the area of utility management. Part 2: Improvement of Electricity Supply in Urban Areas Implementing a Network Rehabilitation and Upgrade Investment Plan ("NRUIP") designed to improve the quality and reliability of the national electricity utility's power distribution network, said NRUIP to include: (a) Reinforcement, rehabilitation, and extension of the primary medium voltage ("MV") distribution network, including, inter alia: (i) rehabilitating and operationalizing 33/11 Kilovolt ("kV") substations; (ii) carrying out of repairs and upgrading of underground cables; (iii) upgrading of overhead lines; (iv) designing of new feeders; and (v) carrying out of appropriate tests. (b) Reinforcement, rehabilitation and extension of priority secondary MV and low voltage ("LV") distribution network, including, inter alia, supply and installation of appropriate equipment such as 11kV switchgear; 11 kV/400V transformers; conductors; service cables; poles; line hardware; LV panels and associated protection devices, auto reclosers and load break switches. -6- (c) Construction of four new 33/11kV substations, upgrading of one existing 11kV switching station to a 33/1 1kV substation, construction of 33kV sub- transmission lines to link the proposed substations and rehabilitation and extension of the LV network and customer connections to major unserved residential, commercial and industrial customers and the installation of prepaid meters for existing and new customers. (d) Strengthening the capacity of the project implementing unit within EDSA to manage and monitor the implementation of the Project activities, including financing the preparation of required safeguard instruments and specialized consultants (technical, financial management, procurement, audits etc.) Part 3: Sector Planning Assistance, Project Implementation Support and Monitoring and Evaluation (a) Provision of technical advisory services to the Ministry of Energy for: (i) (A) preparation and/or review of pre-feasibility and feasibility studies focusing on potential investments in power generation, including all types of primary energy sources; and (B) preparation of urgent investments under the NRUIP; and (ii) monitoring and evaluation, in particular: (A) monitoring and assessing the performance of the Contractor under Part I of the Project; and (B) carrying out the impact evaluation of the Project. (b) Strengthening the capacity of the Project Management Unit through the provision of technical advisory services, goods, non-consulting services, Training and Operating costs. (c) Strengthening the capacity of the Ministry of Energy and other ministries and authorities involved in the sector through inter alia training, study tours and provision of consulting services to support: (i) preparation and implementing of relevant strategies; and (ii) preparation of solar PV projects and projects involving electrification through mini-grid solution. -7- SCHEDULE 2 Project Execution Section I. Implementation Arrangements A. Institutional Arrangements 1. Ministry of Energy The Recipient shall designate, at all times during the implementation of the Project, the Ministry of Energy ("MoE") to be responsible for the prompt and efficient implementation of activities under Part 3 of the Project and the overall oversight of the implementation of Parts 1 and 2 of the Project, and shall take all actions including the provision of funding, personnel and other resources necessary to enable the MoE to perform said functions. 2. Project Oversight Committee The Recipient shall maintain, at all times during the implementation of the Project, the Project Oversight Committee ("POC") to be responsible for, inter alia: (a) providing strategic and policy guidance on the implementation of the Project; (b) reviewing progress made towards achieving the Project's objective; and (c) facilitating coordination of Project Activities, and shall take all actions including the provision of funding, personnel and other resources necessary to enable POC to perform said functions. 3. MOE Project Management Unit The Recipient, through the MoE, shall maintain, at all times during the implementation of the Project, a Project Management Unit ("PMU"), to be responsible for the day to day execution, coordination and implementation (including planning, monitoring and evaluation, procurement, financial management, reporting and communication aspects) of activities under Part 3 of the Project. To this end, the Recipient shall take all actions, including the provision of funding, personnel (including a general Project coordinator, planning engineers, monitoring and evaluation officers and a communication specialist) and other resources satisfactory to the Association, to enable the PMU to perform said functions. B. Subsidiary Agreement 1 . To facilitate the carrying out of the Parts 1 and 2 of the Project, the Recipient shall make part of the proceeds of the Financing allocated from time to time to Category 1 of the table set forth in Section III.A of this Schedule available to the Project Implementing Entity under a subsidiary agreement between the Recipient and the -8- Project Implementing Entity, under terms and conditions approved by the Association, which shall include inter alia the following ("Subsidiary Agreement"): (a) the principal amount of the Credit made available under the Subsidiary Agreement ("Subsidiary Financing") shall be denominated in Dollars; (b) the Subsidiary Financing shall be made available on a non-refundable grant basis; (c) the requirement that the Project Implementing Entity shall: (i) maintain, at all times during the implementation of the Project, a project implementation unit to be responsible for the day to day execution, coordination and implementation (including procurement, financial management, environmental and social safeguards, monitoring and evaluation, supervision, reporting and communication aspects) of the activities under Part 1 and 2 of the Project; and (ii) take all actions, including the provision of funding, personnel (including, but not limited to, recruiting an social safeguard officer) and other resources satisfactory to the Association, to enable the PMU to perform said functions; (d) the Recipient shall obtain rights adequate to protect its interests and those of the Association, including the right to suspend or terminate the right of the Project Implementing Entity to use the proceeds of the Subsidiary Financing, or obtain a refund of all or any part of the amount of the Subsidiary Financing then withdrawn, upon the Project Implementing Entity's failure to perform any of its obligations under the Subsidiary Agreement; (e) the requirement that the Project Implementing Entity shall carry out its Parts of the Project with due diligence and efficiency, in conformity with appropriate administrative, financial, engineering, technical, environmental and social safeguard practices (including the Safeguard Instruments), and provide, or cause to be provided, promptly as needed, the facilities, services and other resources required for its Parts of the Project; (f) the obligation of the Project Implementing Entity to comply with the Procurement Regulations, the Anti-Corruption Guidelines, this Agreement and the Project Implementation Manual; (g) the requirement that the Project Implementing Entity complies with record keeping, auditing and reporting requirements of this Agreement with respect to the Project, including the annual auditing of its records and accounts in respect of the Project; -9- (h) the obligation of the Project Implementing Entity to exchange views with the Recipient and the Association with regard to the progress of its Parts of Project and the performance of its obligations under the Subsidiary Agreement; (i) the requirement that the Project Implementing Entity promptly informs the Recipient and the Association of any condition which interferes or threatens to interfere with the progress of its Parts of the Project, or the performance of its obligations under the Subsidiary Agreement; (j) the right for the Recipient and the Association to inspect any activities under Part 1 and 2 of the Project and any relevant records and documents; and (k) the obligation of the Project Implementing Entity to prepare and furnish to the Recipient and the Association all such information as the Recipient or the Association shall reasonably request relating to the foregoing. 2. The Recipient shall exercise its rights under the Subsidiary Agreement in such manner as to protect the interests of the Recipient and the Association and to accomplish the purposes of the Financing. 3. Except as the Association shall otherwise agree, the Recipient shall not assign, amend, abrogate or waive the Subsidiary Agreement or any of its provisions. C. Project Implementation Manual The Recipient shall update and furnish to the Association for review, a Project implementation manual, which shall include provisions and procedures on the following matters: (i) capacity building activities for sustained achievement of the Project's objectives; (ii) financial management and disbursement; (iii) procurement; (iv) environmental and social safeguards management; (v) institutional administration, coordination and day to day execution of Project activities; (vi) monitoring and evaluation, reporting, information, education and communication of Project activities; and (vii) such other administrative, financial, technical and organizational arrangements and procedures including grievance redress mechanism as shall be required for the Project. 2. The Recipient shall afford the Association a reasonable opportunity to exchange views with the Recipient on said Project implementation manual, and thereafter, adopt, and cause EDSA to adopt, such updated Project implementation manual, as approved by the Association ("Project Implementation Manual"). 3. The Recipient shall ensure that the Project is carried out in accordance with the Project Implementation Manual; provided, however, that in case of any conflict -10- between the provisions of the Project Implementation Manual and the provisions of this Agreement, the provisions of this Agreement shall prevail. 4. Except as the Association shall otherwise agree, the Recipient shall not amend, abrogate or waive any provision of the Project Implementation Manual. D. Annual Work Plans and Budgets 1. Each year the Recipient shall prepare a draft annual work plan and budget for the Project (including Training and Operating Costs) for each subsequent year of Project implementation, of such scope and detail as the Association shall have reasonably requested. 2. The Recipient shall furnish to the Association, as soon as available, but in any case not later than October 31 of each year, the annual work plan and budget for their review and approval. Only the activities included in an annual work plan and budget expressly approved by the Association (each an "Annual Work Plan and Budget") are eligible to a financing from the proceeds of the Financing. 3. The Recipient shall ensure that the Project is carried out in accordance with the Annual Work Plans and Budgets. E. Safeguards 1. The Recipient shall ensure that: (a) the Additional Activities are carried out with due regard to appropriate health, safety, social, and environmental practices and standards, and in accordance with the Safeguards Instruments; (b) for each activity under the Additional Activities for which the RPF provides for the preparation of a RAP: (i) proceed to have a RAP: (A) prepared and disclosed in accordance with the RPF; (B) consulted upon adequately with Affected Persons as per the RPF, and submitted to the Association for review and approval; and (C) thereafter adopted, prior to implementation of the activity; (ii) take all measures as shall be necessary or appropriate to ensure compliance with the requirements of such RAP in a manner satisfactory to the Association; and (c) all measures are taken to implement the RAP in a manner and timeframe satisfactory to the Association. To this end, the Recipient shall ensure that: -11- (i) sufficient funds are made available to cover all the costs of implementing the RAP; (ii) prior to the start of any works that will require displacement, Affected Persons shall be compensated at full replacement cost, resettled and provided with resettlement assistance in accordance with the RAP, as applicable; and (iii) the implementation, monitoring and evaluation of such RAP is completed and reported in a manner satisfactory to the Association. 2. The Recipient shall ensure that the obligation to comply with the relevant Safeguard Instruments is incorporated: (a) in the contracts between the Recipient and the relevant contractors; and (b) in the contracts between the relevant contractors and the contractors' subcontractors. 3. The Recipient shall ensure that all the bidding documents and contracts for works or non-consulting services under the Project require that the contractor, sub- contractor or consultant adopt a code of conduct that shall be provided to and signed by all workers, as applicable to such works or non-consulting services commissioned or carried out pursuant to said contracts, which shall, inter alia, cover gender-based violence, and sexual exploitation and abuse, along with an action plan designed to effectively implement said code of conduct, including appropriate training on said code of conduct. 4. Except as the Association shall otherwise agree, the Recipient shall ensure, and cause to ensure, that none of the provisions of the Safeguard Instruments is abrogated, amended, repealed, suspended or waived. In case of any inconsistencies between the provisions of any of the Safeguard Instruments and the provisions of this Agreement, the provisions of this Agreement shall prevail. 5. Without limitation upon its other reporting obligations under this Agreement, the Recipient shall: (a) take all measures necessary on its part to regularly collect, compile, and submit to the Association, as part of the Project Reports, and promptly in a separate report whenever the Association may require, information on the status of compliance with the Safeguards Instruments. Such information shall include: (i) measures taken in furtherance of the Safeguards Instruments; -12- (ii) conditions, if any, which interfere or threaten to interfere with the smooth implementation of the Safeguards Instruments; and (iii) remedial measures taken or required to be taken to address such conditions; and (b) promptly notify the Association of any incident or accident related to or having an impact on the Project which has, or is likely to have, a significant adverse effect on the environment, the affected communities, the public or workers. F. Project Grievance Mechanism The Recipient shall maintain, throughout Project implementation, and publicize the availability of a grievance mechanism, in form and substance satisfactory to the Association, to hear and determine fairly and in good faith all complaints raised in relation to the Project and take all measures necessary to implement the determinations made by such mechanism in a manner satisfactory to the Association. Section H. Project Monitoring. Reporting and Evaluation The Recipient shall furnish to the Association each Project Report not later than forty-five (45) days after the end of each calendar quarter, covering the calendar quarter. Section HI. Withdrawal of the Proceeds of the Financing A. General Without limitation upon the provisions of Article II of the General Conditions and in accordance with the Disbursement and Financial Information Letter, the Recipient may withdraw the proceeds of the Financing to finance Eligible Expenditures in the amount allocated and, if applicable, up to the percentage set forth against each Category of the following table: -13- Category Amount of the Percentage of Financing Allocated Expenditures to be (expressed in SDR) Financed (inclusive of Taxes) (1) Goods, works, non-consulting 0 0 services, consulting services and Operating Costs under Parts 1 and 2 of the Project, except under Parts 1(b), 2(c) and 2(d). (2) Consulting services, non- 0 0 consulting services, Training and Operating Costs under Part 3 of the Project, except Part 3(c). (3) Goods, works, non-consulting 33,900,000 100% services, consulting services and Operating Costs under Parts 1(b), 2(c) and 2(d) of the Project. (4) Consulting services, non- 2,200,000 100% consulting services, Training and Operating Costs under Part 3(c) of the Project. TOTAL AMOUNT 36,100,000 B. Withdrawal Conditions; Withdrawal Period 1 . Notwithstanding the provisions of Part A above, no withdrawal shall be made for payments made prior to the Signature Date. 2. The Closing Date is December 31, 2022. -14- SCHEDULE 3 Repayment Schedule Date Payment Due Principal Amount of the Credit repayable (expressed as a percentage)* On each February 15 and August 15: Commencing August 15, 2025, to and including 1,5625% February 15, 2057 * 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. -15- APPENDIX Definitions 1. "Additional Activities" means the Project activities under Parts 1(b), 2(c), 2(d), and 3(c) of the Project. 2. "Affected Person" means a person or entity who, on account of the execution of the Project, has experienced or would experience direct economic and social impacts caused by: (i) the involuntary taking of land resulting in: (A) relocation or loss of shelter; (B) loss of assets or access to assets; or (C) loss of income sources or means of livelihood, whether or not such person must move to another location; or (ii) the involuntary restriction of access to legally designated parks and protected areas, resulting in adverse impacts on the livelihood of such person. 3. "Annual Work Plan and Budget" means the annual work plan and budget approved by the Association and adopted by the Recipient in accordance with the provisions of Section I.D of Schedule 2 to this Agreement. 4. "Anti-Corruption Guidelines" means, for purposes of paragraph 5 of the Appendix to the General Conditions, 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. 5. "Category" means a category set forth in the table in Section III.A of Schedule 2 to this Agreement. 6. "Electricity Distribution and Supply Authority" or "ESDA" means the authority for electricity distribution and supply established by Act Number 16 of 2011 of the laws of the Recipient, signed on December 31, 2011. 7. "Environmental, Social and Health Impact Assessment" or "ESHIA" means, the document prepared and adopted by the Recipient and satisfactory to the Association for the Additional Activities, disclosed in country on March 13, 2019 and on the Association's website on March 14, 2019, setting out details of potential environmental, social and health risk, including risks of gender-based violence and sexual exploitation and abuse, and adverse impacts associated with the Additional Activities, together with an environmental, social and health management measures to manage such risk and impacts, including measures that endeavor to prevent procedural, budget and institutional arrangement and actions needed to implement these measures, including any schedule to such assessment, and as such assessment may be amended by the Recipient from time to time, with prior written approval of the Association. -16- 8. "ESMP" means any environmental and social management plan prepared by the Recipient, as part of the ESHIA or separately, satisfactory to the Association, and disclosed in country and on the Association's website, which details (a) the measures to be taken during the implementation of the Project to avoid, minimize, mitigate or offset adverse environmental and social impacts (including health and safety issues), or to reduce them to acceptable levels; (b) the measures that endeavor to prevent and respond to gender-based violence and sexual exploitation and abuse; and (c) the procedural, budget and institutional arrangements and actions needed to implement these measures, including any schedules to such plan, and as such plan may be amended by the Recipient from time to time, with the prior written approval of the Association. 9. "Fiscal Year" means the fiscal year of the Recipient commencing on January 1 and ending on December 31 of the same year. 10. "General Conditions" means the "International Development Association General Conditions for IDA Financing, Investment Project Financing", dated December 14,2018. 11. "kV" means Kilovolt. 12. "LV" means low voltage. 13. "Ministry of Energy" or "MoE" means the Recipient's ministry responsible for energy, and any successor thereto. 14. "MV" means medium voltage. 15. "Operating Costs" means the reasonable incremental expenses arising under the Project, and based on the Annual Work Plan and Budget, on account of vehicle operation and maintenance, maintenance of equipment, communication and insurance costs, office administration costs, utilities, rental, accommodation, banking charges, advertising expenses, travel and per diem, but excluding the salaries of the Recipient's civil servants. 16. "Original Activities" means the Project activities under Part 1(a), 2(a), 2(b), 3(a) and 3(b) described in Schedule 1 to this Agreement. 17. "Original Agreement" mean the financing agreement entered into between the Association and the Recipient on January 17, 2014 (credit number 5333-SL). 18. "Original Project" means the Project activities described in Schedule 1 to the Original Agreement. -17- 19. "Procurement Regulations" means, for purposes of paragraph 87 of the Appendix to the General Conditions, the "World Bank Procurement Regulations for IPF Borrowers", dated July 2016, revised November 2017 and August 2018. 20. "Project Implementation Manual" means the manual referred to in Section I.C. of Schedule 2 to this Agreement. 21. "Project Implementing Entity" means the Electricity Distribution and Supply Authority. 22. "Project Management Unit" or "PMU" means the Recipient's unit referred to in Section I.A.3 of Schedule 2 to this Agreement. 23. "Project Oversight Committee" or "POC" means the Recipient's committee referred to in Section I.A.2 of Schedule 2 to this Agreement. 24. "Resettlement Action Plan" or "RAP" means any resettlement plan adopted by the Project Implementing Entity, satisfactory to the Association, and disclosed on the Association's website, which includes the principles, guidelines, procedures, organizational arrangements and budget to implement the resettlement related activities under Parts 2(c) and 2(d) of the Project, as said resettlement action plan may be revised from time to time with the prior written agreement of the Association; and "RAPs" means, collectively, all such RAP. 25. "Resettlement Policy Framework" or "RPF" means the framework prepared and adopted by the Project Implementing Entity, satisfactory to the Association, and disclosed in-country on March 13, 2019 and on the Association's website on March 14, 2019, which sets out the resettlement principles (including compensation to Affected Persons), guidelines, organizational arrangements (including consultation and budget), and design criteria for the preparation of RAPs under the Project, as such framework may be amended from time to time with the prior written agreement of the Association. 26. "Safeguard Instrument" means the ESHIA, RPF, ESMP, or any RAP, respectively, and "Safeguard Instruments" means, collectively, two or more such instruments. 27. "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. 28. "Subsidiary Agreement" means the agreement referred to in Section I.B of Schedule 2 to this Agreement. 29. "Subsidiary Financing" means the principal amount of the Credit to be made available to the Project Implementing Entity under the Subsidiary Agreement. -18- 30. "Training" means the reasonable costs associated with the training, workshop and study tour participation of personnel involved in Additional Activities, as specified in the Annual Work Plan and Budget, said costs to consist of travel and subsistence for training, workshop and study tour participants, costs associated with securing the services of trainers, rental of training and workshop facilities, preparation and reproduction of training and workshop materials, and other costs directly related to training course, workshop or study tour preparation and implementation (but excluding costs of consulting services).