OFFICIAL TroAjq93 DOCUMENTS The World Bank 1818 H Street N.W. (202) 473-1000 INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Washington, D.C. 20433 Cable Address: INTBAFRAD INTERNATIONAL DEVELOPMENT ASSOCIATION U.S.A. Cable Address: INDEVAS July 18, 2016 H.E. Vjekoslav Bevanda Minister BiH Ministry of Finance and Treasury Trg BiH I Sarajevo, Bosnia and Herzegovina Re: EC IPA TF Grant No. TF0A1998 (Sarajevo Wastewater Project, Butila Waste Water Treatment Plant Rehabilitation) Excellency: In response to the request for financial assistance made on behalf of Bosnia and Herzegovina ("Recipient"), I am pleased to inform you that the International Bank for Reconstruction and Development ("World Bank"), acting as administrator of grant funds provided by the European Commission on behalf of the European Union ("EU") ("Donor" or 'EU" under the EC IPA Sarajevo Waste Water Treatment Plant (Butila) Trust Fund, proposes to extend to the Recipient a grant in an amount not to exceed two million three hundred and twenty two thousand five hundred Euro (E2,322,500.00) ("Grant") on the terms and conditions set forth or referred to in this letter agreement ("Agreement"), which includes the attached Annex and Appendix, to assist in the financing of the project described in the Annex ("Project"). This Grant is funded out of the abovementioned trust fund for which the World Bank receives periodic contributions from the Donor. In accordance with Section 3.02 of the Standard Conditions (as defined in the Annex to this Agreement), the World Bank's payment obligations in connection with this Agreement are limited to the amount of funds made available to it by the Donor under the abovementioned trust fund, and the Recipient's right to withdraw the Grant proceeds is subject to the availability of such funds. The Recipient represents, by confirming its agreement below, that it is authorized to enter into this Agreement and to carry out the Project in accordance with the terms and conditions set forth or referred to in 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. Very truly yours, INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By W Tatia oskuryakova Country Manager, Bosnia and Herzegovina Europe and Central Asia Region AGREED: BOSNIA ANID E A By: Authorz presentat e Name: )KoLi Title: I / , IF Date: Z, L 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; (3) "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; (4) "Guidelines: Procurement of Goods, Works and Non-consulting Services under IBRD Loans and IDA Credits and Grants by World Bank Borrowers", dated January 2011 and revised in July 2014; (5) "Guidelines: Selection and Employment of Consultants under IBRD Loans and IDA Credits and Grants by World Bank Borrowers", dated January 2011 and revised in July 2014. 2 EC IPA TF Grant No. TF0A1998 ANNEX Article I Standard Conditions; Definitions 1.01. Standard Conditions. The "Standard Conditions for Grants Made by the World Bank out of Various Funds" dated February 15, 2012 ("Standard Conditions"), with the modifications set forth in the Appendix to this Agreement, 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. (a) "Environmental Impact Assessment" means the environmental impact assessment dated October 26, 2009, prepared by VIK and satisfactory to the Bank, describing possible environmental impacts of the Project and proposed mitigation measures, and including the Environmental Management Plan. (b) "Environmental Management Plan" means the environmental management plan dated October 26, 2009, prepared by VIK and satisfactory to the Bank, describing the social and environmental mitigation, monitoring and institutional measures under the Project, and including an implementation schedule and the record of the public consultations in relation to said Plan. (c) "FM Manual" means the Financial Management Manual prepared by the Project Management Team for the Project, as an integral part of the Operational Manual and satisfactory to the Bank, setting out the financial management and internal control policies and procedures for the financial management of the Project, including accounting, auditing and reporting requirements. (d) "Operating Costs" means the reasonable and necessary incremental expenditures related to the operation of the PMT and PIT on account of Project implementation, management, coordination, and monitoring and evaluation, as approved by the Bank of the basis of budgets acceptable to the Bank, and including, inter alia, the costs of: (i) maintenance and operation of equipment and vehicles used for the management of the Project; (ii) capacity building, training and salaries for PMT and PIT staff hired for the purposes of the Project, other than civil servants' salaries and salaries of VIK staff; (iii) travel costs and per diems; (iv) consumable office supplies; (v) communication, printing and publications; and (vi) costs of translation and interpretation. (e) "Operational Manual" means the manual prepared by PMT and adopted by the Recipient and Project Implementing Entity, setting forth the operational and administrative responsibilities, procedures and rules for the implementation of the Project and including the FM Manual. (f) "PIT" means the Project implementation team within VIK. 3 (g) "PMT" means the Project management team established within the Recipient's Ministry of Foreign Trade and Economic Relations, and includes any successor. (h) "Project Agreement" means the agreement between the World Bank and the Project Implementing Entity for the same Project, as the same may be amended from time to time, and such term includes all schedules and agreements supplemental to the Project Agreement. (i) "Project Implementation Agreement" means the Project implementation agreement among the Project Implementing Entity, the Sarajevo Canton and VIK, executed in accordance with Section 5.01(d) of this Agreement, setting forth VIK and PIT's responsibilities for Project management and implementation, including reporting, disbursement, procurement and financial management arrangements, as the same may be amended from time to time with the prior approval of the World Bank, and such term includes all schedules and agreements supplemental to the Project Implementation Agreement. (j) "Project Implementing Entity" means the Federation of Bosnia and Herzegovina, a constitutive part of the Recipient, and includes any successor or successors thereto. (k) "Sub-Grant Agreement" means the agreement between the Project Implementing Entity and the Sarajevo Canton, executed in accordance with Section 5.01(c) of the Annex to this Agreement, pursuant to which the Project Implementing Entity shall make the proceeds of the Subsidiary Grant available to the Sarajevo Canton for the benefit of VIK in the carrying out of the Project, as the same may be amended from time to time with the prior approval of the World Bank, and such term includes all schedules and agreements supplemental to the Sub-Grant Agreement. (1) "Subsidiary Agreement" means the Subsidiary Agreement referred to in Article 2.03(c)(i) of the Annex to this Agreement, pursuant to which the Recipient shall make the proceeds of the Grant available to the Project Implementing Entity for carrying out the Project, as the same may be amended from time to time with the prior approval of the World Bank, and such term includes all schedules and agreements supplemental to the Subsidiary Agreement. (m) "VIK" means Cantonal Public Utility Company "Water Supply and Sanitation" d.o.o. Sarajevo, a public company providing water supply and sanitation services in the Sarajevo Canton, owned by the Sarajevo Canton, established by a Decision of the Assembly of Sarajevo Canton (Decision on Harmonizing the Status of the Cantonal Public Utility Company "Water Supply and Sewage" Sarajevo with the Law on Public Companies of the Federation of Bosnia and Herzegovina, adopted in 2005 by the Assembly of Sarajevo Canton (Official Gazette of Sarajevo Canton, no. 30/05) and operating pursuant to the Law on Public Utilities of Sarajevo Canton, adopted in 2004 (Official Gazette of Sarajevo Canton, no. 31/04, with subsequent amendments in 2005 published in no. 21/05). 4 Article II Project Execution 2.01. Project Objectives and Description. The objective of the Project is to improve the living conditions of populations in the areas covered by the Sarajevo Water and Waste Company and in downstream riverside communities by: (a) reducing the populations' exposure to, and reliance on, highly polluted water from the Miljacka and Bosna River; and (b) improving the efficiency of the waste water collection network in the Sarajevo Canton. The Project consists of the following activities: * Construction of the Butila wastewater treatment boiler room and related facilities for sludge treatment, including the provision of goods, civil works, operating costs, training and consultants' services. 2.02. Project Execution Generally. The Recipient declares its commitment to the objectives of the Project. To this end, the Recipient shall cause the Project to be carried out by the Project Implementing Entity in accordance with the provisions of: (i) Article II of the Standard Conditions; (ii) 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"); and (iii) this Article II. 2.03. Institutional and Other Arrangements (a) Institutional Arrangements. The Recipient shall, and shall cause the Project Implementing Entity to carry out the Project in accordance with the following institutional and other arrangements: (i) The Project shall be implemented by the PMT which shall comprise a PMT manager, a procurement manager and a procurement officer, a financial manager and other experts as needed for the implementation of the Project. The PMT shall be responsible for Project management, including procurement, financial management, disbursements, monitoring and evaluation and reporting arrangements. The PMT shall also ensure compliance of all Project activities with the Bank's social and environmental safeguards. (ii) The PIT, established within VIK and which shall comprise an engineer assisting the PMT procurement officer in reviewing technical specifications and certifying completion of works and a financial officer reporting to the Sarajevo Canton and the PMT on VIK's financial performance, shall be responsible for day-to-day management and technical supervision of the Project in coordination with the PMT. The PIT shall handle procurement, financial and social and environmental aspects of the Project, which shall subsequently be reviewed and cleared by the PMT to ensure compliance with Bank guidelines and procedures. 5 (b) Implementation Covenants (i) The Project Implementing Entity shall maintain the PIT at all times during Project implementation with terms of reference and resources satisfactory to the Bank, and with competent staff in adequate numbers. (ii) The Project Implementing Entity shall, and shall cause the PMT and the PIT to: (A) duly perform all obligations under the Operational Manual, the Environmental Impact Assessment and the Environmental Management Plan in a timely manner and in accordance with their respective terms, and apply and implement, as the case may be, the actions, criteria, policies, procedures and arrangements therein set forth; and (B) not amend or waive, or permit to be amended or waived the Operational Manual, the Environmental Impact Assessment or the Environmental Management Plan or any provisions of any one thereof, except with the prior written approval of the Bank. (iii) The Recipient shall and shall cause the Project Implementing Entity, the PMT and the PIT to ensure that no land acquisition, relocation of population or temporary and/or permanent restrictions on access to economic resources shall be required under the Project. (c) Subsidiary Agreement (i) To facilitate the carrying out of the Project, the Recipient shall make the proceeds of the Grant available to the Project Implementing Entity under a subsidiary agreement ("Subsidiary Agreement") between the Recipient and the Project Implementing Entity, under the same terms and conditions as this Agreement, approved by the World Bank and including the Anti- Corruption Guidelines. (ii) The Recipient shall exercise its rights under the Subsidiary Agreement in such manner as to protect the interests of the Recipient and the World Bank and to accomplish the purposes of the Grant. Except as the World Bank shall otherwise agree, the Recipient shall not assign, amend, abrogate or waive the Subsidiary Agreement or any of its provisions. (iii) The Recipient shall ensure that under the Subsidiary Agreement, the Project Implementing Entity shall be required to: (A) duly perform all obligations under the Operational Manual, the Environmental Impact Assessment and the Environmental Management Plan in a timely manner and in accordance with their respective terms, and apply and implement, as the case may be, 6 the actions, criteria, policies, procedures and arrangements therein set forth; and (B) not amend or waive, or permit to be amended or waived the Operational Manual, the Environmental Impact Assessment or the Environmental Management Plan or any provisions of any one thereof, except with the prior written approval of the World Bank. (d) Sub-Grant Agreement (i) The Recipient shall take, or cause to be taken, all measures necessary to ensure that for the purposes of carrying out the Project, the Project Implementing Entity shall on-grant the proceeds of the Grant received by it from the Recipient under the Subsidiary Agreement to the Sarajevo Canton, for the benefit of VIK, under a Sub-Grant Agreement with the Sarajevo Canton, under the same terms and conditions as the Subsidiary Agreement, approved by the World Bank and including the Anti- Corruption Guidelines. (ii) The Recipient shall ensure that the Project Implementing Entity exercise its rights under the Sub-Grant Agreement in such manner as to protect the interests of the Recipient and the World Bank and to accomplish the purposes of the Grant. Except as the World Bank shall otherwise agree, the Recipient shall ensure that the Project Implementing Entity shall not assign, amend, abrogate or waive the Subsidiary Agreement or any of its provisions. (iii) The Recipient shall ensure that under the Sub-Grant Agreement, the Sarajevo Canton shall be required to: (A) duly perform all obligations under the Operational Manual, the Environmental Impact Assessment and the Environmental Management Plan in a timely manner and in accordance with their respective terms, and apply and implement, as the case may be, the actions, criteria, policies, procedures and arrangements therein set forth; and (B) not amend or waive, or permit to be amended or waived the Operational Manual, the Environmental Impact Assessment or the Environmental Management Plan or any provisions of any one thereof, except with the prior written approval of the World Bank. (e) Project Implementation Agreement. (i) The Recipient shall take, or cause to be taken, all measures necessary to ensure that for the purposes of carrying out the Project, the Project Implementing Entity shall enter into a Project Implementation Agreement with the Sarajevo Canton and VIK, approved by the World Bank and including the Anti-Corruption Guidelines. 7 (ii) The Recipient shall ensure that the Project Implementing Entity, the Sarajevo Canton, and VIK exercise their rights under the Project Implementation Agreement in such manner as to protect the interests of the Recipient and the World Bank and to accomplish the purposes of the Grant. Except as the World Bank shall otherwise agree, the Recipient shall ensure that the Project Implementing Entity, the Sarajevo Canton, and VIK shall not assign, amend, abrogate or waive the Project Implementation Agreement or any of its provisions. (iii) The Recipient shall ensure that under the Project Implementation Agreement, VIK shall be required to: (A) duly perform all obligations under the Operational Manual, the Environmental Impact Assessment and the Environmental Management Plan in a timely manner and in accordance with their respective terms, and apply and implement, as the case may be, the actions, criteria, policies, procedures and arrangements therein set forth; and (B) not amend or waive, or permit to be amended or waived the Operational Manual, the Environmental Impact Assessment or the Environmental Management Plan or any provisions of any one thereof, except with the prior written approval of the World Bank (f) Safeguards. The Recipient, through the Project Implementing Entity, shall ensure that all measures necessary for the carrying out of the Environmental Impact Assessment and the Environmental Management Plan are taken in a timely manner. 2.04. Donor Visibility and Visit. (a) The Recipient shall take or cause to be taken all such measures as the World Bank shall reasonably request, on the basis of the visibility note made available by the World Bank to the Recipient, 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 Donor to visit any part of the Recipient's territory for purposes related to the Project. 2.05. Documents; Records In addition and without limitation to the obligations set forth in Section 2.05 of the Standard Conditions, the Recipient shall ensure that: (a) all records evidencing expenditures under the Project are retained for seven years and six months after the Closing Date, such records to include: (i) this Agreement, all addenda thereof, and any amendments thereto; (ii) the Recipient's financial and narrative progress reports submitted to the World Bank; (iii) the Recipient's financial information related to the Grant, including audit reports, invoices and payroll records; (iv) the Recipient's implementation 8 documentation (including sub-agreements, procurement files, contracts, purchase orders); and (v) the corresponding supporting evidence referred to in Section 3.04 of the Standard Conditions; and (b) the representatives of the World Bank are: (i) able to examine all records referred to above in paragraph (a); (ii) provided all such information concerning such records as they may from time to time reasonably request; and (iii) able to disclose such records and information to the Donor. 2.06. Project Monitoring, Reporting and Evaluation (a) The Recipient, through the PMT, shall, and shall cause the Project Implementing Entity, through the PIT, to monitor and evaluate the progress of the Project and prepare Project Reports in accordance with the provisions of Section 2.06 of the Standard Conditions and on the basis of the indicators acceptable to the World Bank. Each Project Report shall cover the period of one calendar quarter, and shall be furnished to the World Bank not later than forty-five (45) days after the end of the period covered by such report. (b) The Recipient shall prepare the Completion Report in accordance with the provisions of Section 2.06 of the Standard Conditions. The Completion Report shall be furnished to the World Bank not later than six (6) months after the Closing Date. 2.07. Financial Management. (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 shall ensure that interim unaudited financial reports for the Project are prepared and furnished to the World Bank as part of the Project Report not later than forty-five (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 Section 2.07 (b) of the Standard Conditions. In addition, the Recipient shall cause VIK to have its Financial Statements audited in accordance with local laws and regulations to the Bank. Each audit of the Financial Statements shall cover the period of one fiscal year of the Recipient. The audited Financial Statements for each period shall be furnished to the World Bank not later than six months after the end of such period. 2.08. Procurement (a) General. All goods, works, non-consulting services and consultants' services required for the Project and to be financed out of the proceeds of the Grant shall be procured in accordance with the requirements set forth or referred to in: (i) Section I of the "Guidelines: Procurement of Goods, Works and Non- consulting Services under IBRD Loans and IDA Credits and Grants by World Bank Borrowers" dated January 2011 (revised July 2014) ("Procurement Guidelines"), in the case of goods, works and non- consulting services; 9 (ii) Sections I and IV of the "Guidelines: Selection and Employment of Consultants under IBRD Loans and IDA Credits and Grants by World Bank Borrowers" dated January 2011 (revised July 2014) ("Consultant Guidelines") in the case of consultants' services; and (iii) the provisions of 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 1.18 of the Procurement Guidelines and paragraph 1.25 of the Consultant Guidelines ("Procurement Plan"). (b) Definitions. The capitalized terms used in the following paragraphs of this Section to describe particular procurement methods or methods of review by the World Bank of particular contracts, refer to the corresponding method described in Sections II and III of the Procurement Guidelines, or Sections II, III, IV and V of the Consultant Guidelines, as the case may be. (c) Particular Methods of Procurement of Goods, Works and Non-consulting Services (i) Except as otherwise provided in sub-paragraph (ii) below, goods, works and non-consulting services shall be procured under contracts awarded on the basis of International. (ii) The following methods, other than International Competitive Bidding, may be used for procurement of goods, works and non-consulting services for those contracts which are specified in the Procurement Plan: (A) National Competitive Bidding, subject to the additional provisions set forth in Appendix 1 attached hereto; (B) Shopping; and (C) Direct Contracting (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) Selection under a Fixed Budget; (C) Least Cost Selection; (D) Selection based on Consultants' Qualifications; (E) Single-source Selection of consulting firms; (F) Selection of Individual Consultants; and 10 (G) Single-source procedures for the Selection of Individual Consultants. (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. (f) Document Retention. Notwithstanding the provisions of paragraphs 2(j) and 5 of Appendix 1 to the Procurement Guidelines, and paragraphs 2(k) and 5 of Appendix I to the Consultant Guidelines, the Recipient: (i) shall retain all documentation with respect to each contract as described in said paragraphs for at least seven years and six months after the Closing Date set forth in Section 3.03 of this Agreement; (ii) shall furnish such documentation to the World Bank at any time upon request; and (iii) hereby authorizes the World Bank to disclose such documentation to the Donor. (g) Right to use Project outputs. To the extent the Recipient has the intellectual property rights to Project outputs and subject to any third party proprietary or confidential obligation it may have, the Recipient shall grant the Donor the right to use such outputs for purposes limited to the development, implementation and monitoring of EU programs, including distribution to the public, translation, storage and archive. 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: (i) the Standard Conditions; (iii) this Section; and (iv) 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: Amount of the Grant Percentage of Category Allocated Expenditures to be (expressed in EUR) Financed (exclusive of Taxes) (1) Goods, works, operating 2,322,500 100% cost and consultants' services under the Project TOTAL AMOUNT 2,322,500 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 this Agreement, except that withdrawals up to an aggregate amount not to exceed C2,322,500 equivalent may be II made for payments made prior to this date but on or after July 24, 2015, for Eligible Expenditures under Category (1). 3.03. Withdrawal Period The Closing Date ("Closing Date") referred to in Section 3.06 (c) of the Standard Conditions is December 30, 2016. Article IV Additional Remedies 4.01. The Additional Events of Suspension referred to in Section 4.02(k) of the Standard Conditions consist of the following: (a) the Project Implementing Entity shall have failed to perform any of its obligations under the Project Agreement or the Subsidiary Agreement; (b) the Sarajevo Canton shall have failed to perform any of its obligations under the Sub-Grant Agreement; (c) as a result of events which have occurred after the date of this Agreement, an extraordinary situation shall have arisen which shall make it improbable that the Project Implementing Entity shall be able to perform its obligations under the Subsidiary Agreement; (d) as a result of events which have occurred after the date of this Agreement, an extraordinary situation shall have arisen which shall make it improbable that the Sarajevo Canton shall be able to perform its obligations under the Sub-Grant Agreement; (e) the Sub-Grant Agreement or the Subsidiary Agreement shall have been amended without prior approval of the World Bank; (f) VIK shall have failed to perform any of its obligations under the Project Implementation Agreement; and (g) VIK's legislation has been amended, suspended, abrogated, repealed or waived so as to affect materially and adversely the ability of VIK to perform any of its obligations under the Project Implementation Agreement. 4.02. The Additional Event of Acceleration consists of the following, namely that any event specified in paragraphs (a), (b), (e), (f) and (g) of Section 4.01 of this Agreement occurs and is continuing for a period of sixty (60) days after notice of the event has been given by the World Bank to the Recipient. Article V Effectiveness; Termination 5.01. The following events are specified as additional conditions to the effectiveness of this Agreement. 12 (a) the Project Agreement has been executed on behalf of the World Bank and the Project Implementing Entity; (b) the Subsidiary Agreement has been executed on behalf of the Recipient and the Project Implementing Entity, on terms and conditions satisfactory to the World Bank; (c) the Sub-Grant Agreement has been executed on behalf of the Project Implementing Entity and the Sarajevo Canton, on terms and conditions satisfactory to the World Bank; (d) the Project Implementation Agreement has been executed on behalf of the Project Implementing Entity, the Sarajevo Canton and VIK, on terms and conditions satisfactory to the World Bank; and (e) the Project Implementing Entity has adopted the Operational Manual in form and substance satisfactory to the World Bank. 5.02. The additional Legal Matters consist of the following: (a) the Project Agreement has been duly authorized or ratified by the Project Implementing Entity and is legally binding upon said Entity in accordance with its terms; (b) the Subsidiary Agreement has been duly authorized or ratified by the Recipient and the Project Implementing Entity, and is legally binding upon the Recipient and the Project Implementing Entity in accordance with its terms; (c) The Sub-Grant Agreement has been duly authorized or ratified by the Project Implementing Entity and the Sarajevo Canton is legally binding upon the Project Implementing Entity and the Sarajevo Canton in accordance with its terms; and (d) The Project Implementation Agreement has been duly authorized or ratified by the Project Implementing Entity, the Sarajevo Canton and VIK and is legally binding upon the Project Implementing Entity, the Sarajevo Canton and VIK in accordance with its terms. 5.03. This Agreement and all obligations of the parties under it shall terminate if it has not entered into effect by the date one hundred and twenty (120) days after the date of this Agreement, unless the World Bank, after consideration of the reasons for the delay, establishes a later date for the purpose of this Section. The World Bank shall promptly notify the Recipient of such later date. Article VI Recipient's Representative; Addresses 6.01. Recipient's Representative. The Recipient's Representative referred to in Section 7.02 of the Standard Conditions is the Minister of Finance and Treasury. 13 6.02. Recipient's Address. The Recipient's Address referred to in Section 7.01 of the Standard Conditions is: Ministry of Finance and Treasury TrgBih 1 71000 Sarajevo Bosnia and Herzegovina Facsimile: (387-33) 202-930 6.03. World Bank's Address. The World Bank's Address referred to in Section 7.01 of the Standard Conditions is: International Bank for Reconstruction and Development 1818 H Street, N.W. Washington, D.C. 20433 United States of America Telex: Facsimile: 248423 (MCI) or 1-202-477-6391 64145 (MCI) 14 Appendix 1 Additional Provisions for National Competitive Bidding For the purposes of following National Competitive Bidding procedures in the procurement of goods, works and non-consulting services to be financed under the Grant, the following modifications and additions shall apply: (1) Registration (a) bidding shall not be restricted to pre-registered firms; (b) where registration is required, bidders: (i) shall be allowed a reasonable time to complete the registration process; and (ii) shall not be denied registration for reasons unrelated to their capability and resources to successfully perform the contract, which shall be verified through post-qualification; and (c) foreign bidders shall not be precluded from bidding. If a registration process is required, a foreign bidder declared the lowest evaluated bidder shall be given a reasonable opportunity to register. (2) Advertising Invitations to bid shall be advertised in at least one widely circulated national daily newspaper allowing a minimum of thirty (30) days for the preparation and submission of bids. (3) Pre-qualification When pre-qualification shall be required for large or complex works, invitations to pre- qualify for bidding shall be advertised in at least one widely circulated national daily newspaper a minimum of thirty (30) days prior to the deadline for the submission of pre- qualification applications. Minimum experience and technical and financial requirements shall be explicitly stated in the pre-qualification documents. (4) Participation by Government-owned enterprises Government-owned enterprises in Bosnia and Herzegovina, including those in the Federation of Bosnia and Herzegovina and Republika Srpska, shall be eligible to participate in bidding only if they can establish that they are legally and financially autonomous, operate under commercial law and are not a dependent agency of the contracting authority. Furthermore, they will be subject to the same bid and performance security requirements as other bidders. (5) Bidding Documents Procuring entities shall use the appropriate standard bidding documents for the procurement of goods, works or services, acceptable to the World Bank. 15 (6) Bid Opening and Bid Evaluation (a) bids shall be opened in public, immediately after the deadline for submission of bids; (b) evaluation of bids shall be made in strict adherence to the monetarily quantifiable criteria declared in the bidding documents; and (c) contracts shall be awarded to the qualified bidder having submitted the lowest- evaluated, substantially responsive bid and no negotiation shall take place. (7) Price Adjustment Civil works contracts of long duration (more than 18 months) shall contain an appropriate price adjustment clause. (8) Rejection of Bids All bids shall not be rejected and new bids solicited without the World Bank's prior concurrence. (9) Securities (a) bid security and performance security should follow the generally accepted practice used in the local market; (b) alternative methods such as bid securing declaration may be acceptable, in which case the Borrower may require bidders to sign a declaration accepting that if they withdraw or modify their bids during the period of validity or they are awarded the contract and they fail to sign the contract or to submit a performance security before the deadline defined in the bidding documents, the bidder will be suspended for bidding in any contract with the implementing unit; and (c) no advance payment shall be made to contractors without a suitable advance payment security. These securities shall be included in the bidding documents in a text and format acceptable to the World Bank. (10) Right to inspect and audit Each contract financed out of the proceeds of the Loan shall provide that the suppliers, contractors and subcontractors shall permit the World Bank, at its request, to inspect their accounts and records relating to the procurement and performance of the contract and to have said accounts and records audited by auditors appointed by the World Bank. The deliberate and material violation by the supplier, contractor or subcontractor of such provision may amount to obstructive practice. 16 (11) Fraud and Corruption The World Bank shall declare a firm or individual ineligible, either indefinitely or for a stated period, to be awarded a contract financed by the World Bank, if it at any time determines that the firm or individual has, directly or through an agent, engaged in corrupt, fraudulent, collusive, coercive or obstructive practices in competing for, or in executing, a contract financed by the World Bank Group. 17 APPENDIX 2 Modifications to the Standard Conditions The Standard Conditions are hereby modified as follows: Paragraph (c) of Section 3.06. (Eligible Expenditures) is modified to read as follows: "The Recipient shall ensure that the proceeds of the Grant are used exclusively to finance expenditures which, except as otherwise provided in the Grant Agreement, satisfy the following requirements ("Eligible Expenditures"): (a) the payment is for the reasonable cost of goods, works or services required for the Project, to be financed out of the proceeds of the Grant and procured, all in accordance with the provisions of the Grant Agreement; (b) the payment is not prohibited by a decision of the United Nations Security Council taken under Chapter VII of the Charter of the United Nations; and (c) the expenditures are incurred, and the payments are made: (i) during the dates specified in the Grant Agreement for that purpose; and (ii) except as the World Bank may otherwise agree, the expenditures are incurred prior to the Closing Date." 18