OFFICIAL DOCUMENTS GRANT NUMBER D686-ML CREDIT NUMBER 6720-ML Financing Agreement (West Africa Regional Energy Trade Development Policy Financing Program - Mali) between REPUBLIC OF MALI and INTERNATIONAL DEVELOPMENT ASSOCIATION GRANT NUMBER D686-ML CREDIT NUMBER 6720-ML FINANCING AGREEMENT AGREEMENT dated as of the Signature Date between the REPUBLIC OF MALI ("Recipienf') 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 Guinea, 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. -2- ARTICLE II- FINANCING 2.01. The Association agrees to extend to the Recipient grant and a credit, which are deemed as Concessional Financing for purposes of the General Conditions (collectively, "Financing"), in the following amounts: (a) an amount equivalent to twenty-two million Special Drawing Rights (SDR 22,000,000) ("Grant"); and (b) the amount of twenty-seven million six hundred thousand Euros (EUR 27,600,000) ("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 the greater of: (i) the sum of three-fourths of one percent (3/4 of 1%) per annum plus the Basis Adjustment to the Service Charge; and (ii) three-fourths of one percent (3/4 of 1%) per annum; on the Withdrawn Credit Balance. 2.04. The Payment Dates are May 15 and November 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 Euro. 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 I 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 -3- (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 I to this Agreement. 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: Ministare de 'Economie et des Finances Avenue du Mali Hamdallaye ACI 2000 BP 234 Bamako Republic of Mali; and (b) the Recipient's Electronic Address is: Facsimile: (+223) 202-21914 (+223) 202-21654 6.03. For purposes of Section 11.01 of the General Conditions: -4- (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 AGREED as of the Signature Date. REPUBLIC OF MALI By Authoriz dReprsentative Name- mtv ,. Title: _ _ _ _ _ _ Date: INTERNATIONAL DEVELOPMENT ASSOCIATION By ~ Authorized Representative Name: Deborah L. Wetzel Director of Regional Integration Title: Africa, Middle East and North Africa Date: January 5th, 2021 -5- SCHEDULE 1 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: 1I 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 directive no. 20-004 dated April 16, 2020, adopted by the Regulatory Commission on Electricity and Water. 2. EDM-SA has concluded an agreement with CIE and CI-Energies for the payment of bills due, supported by a financial counter-guarantee issued by the Recipient, and the Recipient has implemented the related legal and financial arrangements on the prioritization of payments for imports of electricity through the establishment of a dedicated account with ringfenced funding from the pledge of incoming electricity sales revenues. 3. The Recipient has: (i) mandated that any capacity expansion project of the power sector must be accompanied by the publication of the economic rationale of the said project which explicitly includes the analysis of the regional options, as evidenced by the publication in the official gazette (Journal Officiel) of the interministerial order (Arretd interministdrielle) no. 2020-1534/MEF-MEE-SG dated April 17, 2020, jointly signed by the Recipient's Minister of Economy and Finance and Minister of Energy and Water; and (ii) advanced the preparation of the Least Cost Plan as evidenced by the issuance of the letter of invitation of expression of interest for the consultants to be employed by the Recipient in the preparation thereof. 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 Transmission Tariff Methodology for the West African Power Pool, as evidenced by the publication in the official gazette (Journal Officiel) of the Directive no. 20-003 dated April 16, 2020, adopted by the Regulatory Commission on Electricity and Water; and (ii) the use of the West African Power Pool Operating Manual, as evidenced by the publication in the official gazette (Journal Officiel) of the order (Arritd ministiriel) no. 2020-1 532/MEE-SG dated April 17, 2020, signed by the Recipient's Minister of Energy and Water. 5. The Recipient has: (i) submitted the updated Recovery Plan, including a suitable methodology and periodicity for future updates thereof, approved on May 6, 2020, by the Recipient's Minister of Economy and Finance; and (ii) established the -6- obligation to report to ERERA the future updates of the Recovery Plan every six months, as evidenced by the publication in the official gazette (Journal Officiel) of the ministerial order (Arrtj ministdriel) no. 2020-1533/MEE-SG dated April 17, 2020, signed by the Recipient's Minister of Energy and Water. 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 EUR) (expressed in SDR) (1) Single Withdrawal 27,600,000 22,000,000 Tranche TOTAL AMOUNT 27,600,000 22,000,000 C. Withdrawal Tranche Release Conditions. 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 Euros ("Foreign Currency Dedicated Account"); and (ii) a dedicated account in West African CFA 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 -7- Dedicated Account, the Recipient shall deposit an equivalent amount into the Local Currency Dedicated Account. 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 West African CFA 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: 1. 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 four (4) 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 Date Payment Due Credit repayable (expressed as a percentage)* On each May 15 and November 15, commencing on 1.5625% November 15, 2026 to and including May 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. "Basis Adjustment to the Service Charge" means the Association's standard basis adjustment to the Service Charge for credits in the currency of denomination of the Credit, in effect at 12:01 a.m. Washington, D.C. time, on the date on which the Credit is approved by the Executive Directors of the Association, and expressed either as a positive or negative percentage per annum. 2. "CIE" means the Compagnie Ivoirienne d'Electricit, the company in the Ivorian energy sector responsible for the supply of electricity in C6te d'Ivoire since 1990. 3. "Cl-ENERGIES" means Societ des Energies de C6te d'Ivoire, the state-owned asset holding company in C6te d'lvoire responsible for managing public assets in the electricity sector as well as planning and contracting investments. 4. "Dedicated Accounts" means both the Foreign Currency Dedicated Account and the Local Currency Dedicated Account (as both are hereinafter defined). 5. "EDM-SA" means Enerigie du Nali - SocictdAnonyme, the Recipient's company responsible for the production, transport and distribution of electricity in the country. 6. "ERERA" rneans the ECOWAS Regional Electricity Regulatory Authority, the regional regulator for cross-border electricity interconnections in West Africa. 7. "Foreign Currency Dedicated Account" means the account referred to in Part D. I (a)(i) of Section II of Schedule 1 to this Agreement to be opened by, the Recipient in the Central Bank of West African States (Banque Centrale des Eats de ['Afrique de ['Ouest). 8. "General Conditions" means the "International Development Association General Conditions for IDA Financing, Development Policy Financing", dated December 14, 2018. 9. "Least Cost Plan" means the updated least-cost development plan for power generation to be prepared by the Recipient, supporting the scale-up of renewable generation and integrating national and regional power supply options. 10. "Local Currency Dedicated Account" means the account referred to in Part D. 1 (a)(ii) of Section II of Schedule I to this Agreement. 11. "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 -10- 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. 12, "Recovery Plan" means the Recipient's Actualisation du Plan de Redressement du Secteur de I'Electricite adoptd le 7 novembre 2019 approved by the Recipient on May 6, 2020, setting forth short-term and medium-term measures to address key challenges of the Malian energy sector, including costs, revenues, subsidy needs for the sector and policy reform targeting gender gaps in employment. 13. "Regulatory Commission on Electricity and Water" means the Recipient's Commission de RJgulation tie l'Electricite et de l'Eau. 14. "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. 15. "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 II of Schedule I to this Agreement. 16. "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. 17. "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. 18. "West African Power Pool Operating Manual" means the operating manual approved by ERERA on September 29, 2015, by its Resolution No. 007/ERERA/15 on "Adopting the Operating Manual for the West African Power Pool".