OFFICIAL
DOCUMENTS
GRANT NUMBER D933-MZ
Financing Agreement
(Additional Finance for the Urban Sanitation Project)
between
REPUBLIC OF MOZAMBIQUE
and
INTERNATIONAL DEVELOPMENT ASSOCIATION


GRANT NUMBER D933-MZ
FINANCING AGREEMENT
AGREEMENT dated as of the Signature Date between REPUBLIC OF
MOZAMBIQUE        ("Recipient")  and   INTERNATIONAL         DEVELOPMENT
ASSOCIATION ("Association") for the purpose of assisting in financing the project
described in Schedule 1 to this Agreement ("Project"). 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 II - FINANCING
2.01.  The Association agrees to extend to the Recipient a grant, which is deemed as
Concessional Financing for purposes of the General Conditions, in an amount
equivalent to thirty-five million and four hundred thousand Special Drawing
Rights (SDR 35,400,000) ("Financing"), to assist in financing the project
described in Schedule 1 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 Payment Dates are February 15 and August15 in each year.
2.05.  The Payment Currency is Dollar.
ARTICLE III - PROJECT
3.01.  The Recipient declares its commitment to the objectives of the Project. To this end,
the Recipient shall: (a) carry out Part 5 of the Project; (b) carry out Parts 2, 3 and
4(a), (b) and (c) of the Project through the DNAAS; and (c) cause the AIAS to
carry out Part I and 4(d) of the Project, all in accordance with the provisions of
Article V of the General Conditions and Schedule 2 to this Agreement.


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ARTICLE IV - EFFECTIVENESS; TERMINATION
4.01.  The Effectiveness Deadline is the date ninety (90) days after the Signature Date.
4.02.  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 economy and
finance.
5.02.  For purposes of Section 11.01 of the General Conditions:
(a)    the Recipient's Address is:
Ministry of Economy and Finance
Praqa da Marinha Popular
Av. 10 de Novembro no929
Maputo
Republic of Mozambique
(b)    the Recipient's Electronic Address is:
Facsimile:    (+258) 21313747
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


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AGREED as of the Signature Date.
REPUBLIC OF MOZAMBIQUE
By:
Authorized Representative
Name: 4 1iti 6
Title:  I         { 4   7/1wc
Date:
INTERNATIONAL DEVELOPMENT ASSOCIATION
By:            /
Authorized Representative
Title: &A%xn4i 21-ne CNT)l
Date: DCoynve Xl


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SCHEDULE 1
Project Description
The objectives of the Project are to increase access to safely managed sanitation
services and strengthen municipal sanitation service delivery capacity in Selected Cities;
in case of an Eligible Crisis or Emergency, respond promptly and effectively to it.
The Project consists of the following parts:
Part 1: Priority Sewerage Investments in Maputo, Quelimane and Tete
Supporting sewerage investments, including:
(a)    Priority sewerage investments in Maputo, including, inter alia: (i) rehabilitation
and expansion of the Infulene wastewater treatment plant; (ii) rehabilitation and
upgrade of sewers; (iii) rehabilitation and upgrade of pumping stations; and (iv)
upgrade of existing sewer connections.
(b)    Priority sewerage investments in Quelimane, including, inter alia: (i) construction
of a wastewater treatment plant; (ii) rehabilitation and expansion of sewers; (iii)
upgrade of existing sewer connections; (iv) construction of pilot condominial
sewer systems to serve new connections; and (v) rehabilitation of small to medium
scale drains to channel excess storm water and water-logged areas, and reduce the
risk of urban floods.
(c)    Priority sewerage works for Tete, including, inter alia: (i) construction of a
wastewater treatment plant; (ii) rehabilitation and expansion of sewers; (iii)
upgrade of existing sewer connections; (iv) construction of pilot condominial
sewer systems to serve new connections; and (v) rehabilitation of small to medium
scale drains to channel excess storm water and water-logged areas, and reduce the
risk of urban floods.
Part 2: On-site Sanitation Investments for Quelimane and Tete
Supporting priority on-site sanitation at the household level, and the construction of public
sanitation facilities, in Quelimane and Tete, including:
(a)    On-site sanitation investments in Quelimane, including, inter alia: (i) sanitation
marketing and hygiene promotion to influence sanitation behaviors; (ii) support to
the construction and upgrade of household on-site sanitation systems; (iii)
construction of public sanitation systems in schools and markets, including
dedicated facilities for menstrual hygiene management; (iv) construction of fecal
sludge treatment plants; (v) support to private sector on fecal sludge management
business development.


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(b)    On-site sanitation investments in Tete, including, inter alia: (i) sanitation
marketing and hygiene promotion to influence sanitation behaviors; (ii) support to
the construction and upgrade of household on-site sanitation systems; (iii)
construction of public sanitation systems in schools and markets, including
dedicated facilities for menstrual hygiene management; (iv) construction of fecal
sludge treatment plants; (v) support to private sector on fecal sludge management
business development.
Part 3: Municipal Sanitation Service Improvements
Provide Performance-based Grants to Beneficiary Cities to finance goods, works, services,
Incremental Operating Costs and Training to support improved sanitation service delivery
in Maputo, Quelimane, Tete, Beira and Nampula.
Part 4: Technical Assistance and Project Management Support
Provision of: (a) technical assistance to DNAAS to support national institutional
strengthening through, inter alia: (i) review and harmonization of the legal and institutional
framework regulating urban sanitation to clarify roles and responsibilities for sanitation
investment planning, implementation and service provision at the central and municipal
levels; (ii) development of regulatory tools for urban sanitation delivery; and (iii) key
preparatory studies for the next priority sanitation investments; (b) technical assistance at
municipal level, including through, inter alia, development of institutional and financing
arrangements for sanitation at the municipal level; (c) support to DNAAS to carry out
Project coordination and implementation, including but not limited in relation to
monitoring and evaluation, financial management, procurement and environmental and
social safeguards; and (d) support to AIAS to carry out Project implementation, including
but not limited in relation to monitoring and evaluation, financial management,
procurement and environmental and social safeguards.
Part 5: Contingency and Emergency Response
Provision of immediate response to an Eligible Crisis or Emergency, as needed.


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SCHEDULE 2
Project Execution
Section I.    Implementation Arrangenents
A.     Institutional Arrangements
DNAAS PIU
1I The DNAAS shall: (a) maintain, at all times throughout Project implementation, a
Project implementing unit within DNAAS ("DNAAS PIU"), with a team comprised
of a full-time Project coordinator, a procurement specialist, a sanitation engineer, a
financial management specialist, a social and environmental safeguards specialist, a
monitoring and evaluation specialist, and such other technical, safeguards and
fiduciary specialists as may be agreed with the Association, all under terms of
reference, and with qualifications and experience satisfactory to the Association; and
(b) ensure that throughout Project implementation, the DNAAS PIU has adequate
resources and staffing to carry out its responsibilities under the Project, all as further
detailed in the Project Implementation Manual. The DNAAS shall be responsible for
the overall Project coordination and the day-to-day management and implementation
of Parts 2, 3 and 4(a), (b) and (c) of the Project, including its technical, fiduciary,
safeguards, monitoring and evaluation, supervision and reporting aspects.
AIAS PIU
2.   The Recipient shall cause AIAS to: (a) maintain, at all times throughout Project
implementation, a Project implementing unit within AIAS ("AIAS PIU"), with a
team comprised of Project manager, a sewerage engineer, a procurement specialist,
a financial management specialist, an environmental safeguards specialist, a social
safeguards specialist, and a project assistant and such other technical, safeguards and
fiduciary specialists as may be agreed with the Association, all under terms of
reference, and with qualifications and experience satisfactory to the Association; and
(b) ensure that throughout Project implementation, the AIAS PIU has adequate
resources and staffing to carry out its responsibilities under the Project, all as further
detailed in the Project Implementation Manual. The AIAS shall be responsible for
the day-to-day management and implementation of Parts I and 4(d) of the Project,
including its technical, fiduciary, safeguards, monitoring and evaluation, supervision
and reporting aspects.
Municipal-level Technical Implementation Teams
3.     The Recipient shall ensure that the Project coordinator appointed within the
municipal departments of sanitation in Beira and Nampula, and that technical
teams established within the municipal departments of sanitation in Maputo,


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Quelimane and Tete, are maintained with resources, functions and staff in adequate
numbers and with experience and qualifications acceptable to the Association,
which shall include a Project coordinator, a sewerage engineer, an onsite sanitation
engineer, a safeguards specialist, a community development specialist, and
monitoring and evaluation specialist and any other technical and/or fiduciary
specialist, as further detailed in the PIM. The municipal-level technical
implementation teams shall be responsible for, inter alia, supporting and
supervising of the implementation of Project activities at the municipal level, as
further detailed in the PIM.
Independent Veriication Agent
4.     For purposes of Part 3 of the Project, the Recipient shall, through DNAAS,
maintain an independent verification agent, under terms of reference and with
qualifications and experience acceptable to the Association.
B.     Subsidiary Agreement
1. To facilitate the carrying out of Parts 1 and 4(d) of the Project, the Recipient,
through the Ministry of Economy and Finance ("MEF"), shall make part of the
proceeds of the Financing allocated from time to time to Category 1 of the table
set forth in Section JJI.A of this Schedule available to AIAS under a subsidiary
agreement ("Subsidiary Agreement") between the Recipient, through MEF and
AIAS, under terms and conditions approved by the Association, which shall
include the following:
(a)    AlAS shall not be required to repay the proceeds of the subsidiary
financing received from the Recipient, except for the Commitment Charge
referred to in Section 2.03 of the Financing Agreement, if applicable;
(b)    the obligation of the AIAS to carry out Parts I and 4(d) of the Project with
due diligence and efficiency, in conformity with appropriate
administrative, economic, managerial, financial, environmental, social
and technical standards and practices, and provide promptly as needed, the
facilities, services and other resources required for Parts 1 and 4(d) of the
Proj ect;
(c)    the obligation of the AIAS to: (i) exchange views with the Recipient, and
the Association with regard to the progress of Parts 1 and 4(d) of the
Project, and the performance of its obligations under the Subsidiary
Agreement; and (ii) assist the Recipient in complying with its obligations
referred to in Section II of this Schedule, as applicable to Parts 1 and 4(d)
of the Project;


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(d)    the obligation of the AIAS to promptly inform the Recipient and the
Association of any condition which interferes or threatens to interfere with
the progress of Part 1 and 4(d) of the Project;
(e)    the obligation of AIAS to carry out Parts 1 and 4(d) of the Project in
accordance with the PIM;
(f)    the obligation of the AIAS to carry out Parts 1 and 4(d) of the Project in
compliance with the Anti-Corruption Guidelines;
(g)    the obligation of the AIAS to: (i) maintain a financial management system
and prepare financial statements in accordance with consistently applied
accounting standards acceptable to the Association, both in a manner
adequate to reflect the operations, resources and expenditures related to
Parts 1 and 4(d) of the Project; and (ii) have such financial statements
audited by independent auditors acceptable to the Association, in
accordance with consistently applied auditing standards acceptable to the
Association, and promptly furnish the statements as so audited to the
Recipient and the Association; and
(h)    the right of the Recipient to take remedial actions against the AIAS, in
case the AIAS shall have failed to comply with any of its obligations under
the Subsidiary Agreement, which actions may include, inter alia, the
partial or total suspension and/or cancellation or refund of all or any part
of the proceeds of the Subsidiary Financing transferred to AIAS pursuant
to the Subsidiary Agreement.
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. 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.     Performance-based Agreements under Part 3 of the Project
1. For purposes of carrying out Part 3 of the Project, the Recipient, through DNAAS,
shall make a portion of the Financing available under Category 3 of the table set
forth in Section III.A of this Schedule available to as cash and/or in-kind grants
("Performance-based Grants"), each Performance-based Grant to be provided
under an agreement ("Performance-based Grant Agreement") between the
Recipient, through DNAAS, and the respective Beneficiary City on terms and
conditions approved by the Association, and in accordance with the PIM, said
Performance-based Grant Agreement to include the following:
(a)    The Performance-based Grant shall be made on grant terms.


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(b)    The Recipient shall not provide to a Beneficiary City a Performance-based
Grant unless and until the Recipient has received a Performance
Verification Report, acceptable to the Recipient and the Association,
showing that such Beneficiary City has achieved the required minimum
performance as specified in the Performance-based Grant Agreement.
(c)    The Recipient shall obtain rights adequate to protect its interests and those
of the Association, including the right to:
(i)    suspend or terminate the right of the Beneficiary City to use the
proceeds of the Performance-based Grant, or all or any part of the
amount of the Performance-based Grant then withdrawn, upon the
Beneficiary City's failure to perform any of its obligations under
the Performance-based Grant Agreement; and
(ii)   require each Beneficiary City to: (A) carry out its Subproject with
due diligence and efficiency and in accordance with sound
technical, economic, financial, managerial, environmental, labor
and social standards and practices satisfactory to the Association,
including in accordance with the Financing Agreement, the
Safeguard Instruments, the Procurement Regulations, and the
provisions of the Anti-Corruption Guidelines applicable to
recipients of Financing proceeds other than the Recipient; (B)
provide, promptly as needed, the resources required for the
purpose; (C) procure the goods, works, non-consulting services
and services to be financed out of the Performance-based Grant in
accordance with the provisions of the Procurement Regulations
and this Agreement; (D) maintain policies and procedures
adequate to enable it to monitor and evaluate in accordance with
indicators acceptable to the Association, the progress of the
Subproject and the achievement of its objectives; (E)(1) maintain
a financial management system and prepare financial statements
in accordance with consistently applied accounting standards
acceptable to the Association, both in a manner adequate to reflect
the operations, resources and expenditures related to the
Subproject; and (2) at the Association's or the Recipient's request,
have such financial statements audited by independent auditors
acceptable to the Association, in accordance with consistently
applied auditing standards acceptable to the Association, and
promptly furnish the statements as so audited to the Recipient and
the Association; (F) enable the Recipient and the Association to
inspect the Subproject, its operation and any relevant records and
documents; and (G) prepare and furnish to the Recipient and the


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Association all such information as the Recipient or the
Association shall reasonably request relating to the foregoing.
2.     The Recipient, through DNAAS, shall exercise its rights under each Performance-
based Grant Agreement in such manner as to protect the interests of the Recipient
and the Association and to accomplish the purposes of the Financing. Except as
the Association shall otherwise agree in writing, the Recipient shall not assign,
amend, abrogate or waive any Performance-based Grant Agreement or any of its
provisions.
D.     Project Implementation Manual ("PIM")
1.     The Recipient shall, through DNAAS, and shall cause AIAS to carry out the
Project in accordance with the Project Implementation Manual, which shall contain
the detailed work flow, arrangements, methods and procedures for the
implementation of the Project, including but not limited to: (a) administration and
coordination, including placement of necessary human resources within DNAAS,
AIAS and at the municipal levels; (b) a template Performance-based Grant
Agreement, performance indicators (institutional, operational and financial) and a
performance-based scorecard for purposes of Part 3 of the Project; (c) monitoring
and evaluation arrangements; (d) social and environmental safeguards
arrangements; (e) corruption and fraud measures; (f) roles and responsibilities of
various agencies in the implementation of the Project, at central, provincial/district
and municipal levels; (g) details on the Project grievance redress mechanism and
procedure; and (h) notification requirements in the case of Project-related
accidents and incidents (including but not limited Project-related fatalities or
allegations of gender-based violence); and except as the Association shall
otherwise agree in writing, not amend, abrogate or waive, or permit to be amended,
abrogated or waived any provision of the Project Implementation Manual.
2.     In case of conflict between the provisions of the Project Implementation Manual
and this Agreement, those of this Agreement shall prevail.
E.     Annual Work Plans and Budget
The Recipient shall, through DNAAS, and shall cause AIAS to, prepare and furnish to the
Association for its approval, not later than November 30 of each calendar year during the
implementation of the Project, or such later date as the Association may agree, the Annual
Work Plans and Budget containing all activities to be carried out in the following fiscal
year, modified in a manner satisfactory to the Association, taking into account the
Association's comments and views on the matter.


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F.     Safeguards
1. The Recipient shall ensure that the Project is carried out in accordance with the
Safeguard Instruments and shall ensure that no provision of the Safeguard
Instruments is amended, suspended, abrogated, repealed or waived without the
prior written approval of the Association.
2.     The Recipient shall ensure that all bidding documents and contracts for civil works
under the Project include the obligation of contractors, subcontractors and
supervising entities to: (a) comply with the relevant aspects of the Safeguard
Instruments; (b) adopt and implement measures to assess and manage the risks and
impacts of labor influx; and (c) adopt and enforce codes of conduct that should be
provided to and signed by all workers, detailing measures on environmental,
social, health and safety, and gender-based violence; all as applicable to such civil
works commissioned or carried out pursuant to said contracts.
3.     The Recipient shall ensure that the following actions are taken in a manner
acceptable to the Association:
(a)    Project activities shall be screened in accordance with the ESMF and RPF
to determine if any ESMP, or RAP is needed.
(b)    Whenever an ESMP would be required on the basis of the ESMF:
(i) each ESMP shall be prepared in accordance with the requirements of
the ESMF, adopted and disclosed by the Recipient, and subject to prior
approval by the Association; and (ii) the Recipient shall refrain from
tendering any civil works contract during Project implementation unless
and until such ESMP has been prepared in accordance with the ESMF,
adopted and disclosed by the Recipient, and approved by the Association.
(c)    Whenever a RAP would be required on the basis of the RPF: (i) each such
RAP shall be prepared in accordance with the requirements of the RPF,
adopted and disclosed by the Recipient, and subject to prior approval by
the Association; (ii) sufficient funds are made available to cover all the
costs of implementing Project-related resettlement, in accordance with the
RPF and resettlement action plan(s); (iii) the Recipient shall refrain from
tendering any civil works contract during Project implementation unless
and until such RAP has been prepared in accordance with the RPF,
adopted, disclosed and implemented by the Recipient, and approved by
the Association; and (iv) no works under the Project shall be commenced
until: (A) all measures required to be taken under said RAP prior to the
initiation of said works have been taken, including but not limited Project
affected persons shall be compensated at full replacement cost, resettled
and provided with assistance in accordance with the RPF and resettlement
action plan(s); (B) the Recipient has prepared and furnished to the


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Association a report in form and substance satisfactory to the
Association, on the status of compliance with the requirements of said
RAP and detailing that the implementation, monitoring and evaluation of
such resettlement action plan is completed and reported in a manner
satisfactory to the Association; and (C) the Association has confirmed that
said works may be commenced.
4.     The Recipient shall ensure that all measures necessary for carrying out the
requirements of the Safeguard Instruments will be taken in a timely manner.
5.     Without limitation to paragraph 1(b) of Section III.B of this Schedule, no works
shall be eligible for financing unless and until prior to the commencement of such
works: (i) an ESMP was prepared, adopted and disclosed by the Recipient, and
approved by the Association; and (ii) in case such works are expected to cause
involuntary resettlement, a RAP was prepared, adopted, disclosed and
implemented by the Recipient, and approved by the Association.
6.     Without limitation to the excluded expenditures provision set forth in the ESMF
and/or RPF, the following activities shall not be eligible to be included in or funded
under the Project ("Negative List"):
(a)    any activities that would lead to conversion or degradation of critical
natural habitats or their supporting areas;
(b)    any activities that would lead to conversion or degradation of critical forest
areas, related critical natural habitats, clearing of forests or forest
ecosystems;
(c)    activities involving the financing, the rehabilitation, or the construction of
dams;
(d)    activities involving nuclear reactors and parts thereof and fuel elements
(cartridges), non-irradiated, for nuclear reactors; and
(e)    goods intended for a military or paramilitary purpose.
7.     The Recipient shall, or shall cause to be maintained, throughout Project
implementation, and publicized the availability of a grievance and feedback
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.
8.     Without limitation to its other reporting obligations under this Agreement and
under Section 5.08 of the General Conditions, the Recipient shall or shall cause to,


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throughout Project implementation, include in the Project Reports referred to in
Section II of this Schedule adequate infonnation on the implementation of the
Safeguard Instruments, and shall:
(a)    take all measures necessary on its part to collect, compile, and furnish to
the Association through Project Reports, and promptly in a separate report
or reports, if so requested by the Association, information on the status of
compliance with the Safeguard Instruments and the management tools and
instruments referred to therein, all such reports in form and substance
acceptable to the Association, setting out, among other things: (i) the status
of implementation of the Safeguard Instruments; (ii) conditions, if any,
which interfere or threaten to interfere with the implementation of the
Safeguard Instruments; and (iii) corrective and preventive measures taken
or required to be taken to address such conditions;
(b)    promptly notify the Association of any incident or accident related to or
having an impact on the Project, including but not limited any Project-
related allegation of gender-based violence or alleged violation of Project-
related labor and working conditions, which has, or is likely to have, a
significant adverse effect on the environment, the affected communities,
the public or workers, including, in accordance with the Safeguard
Instruments, and the instruments referenced therein.
9.     The Recipient shall ensure that all technical assistance and capacity building
activities undertaken under the Project, application of whose results would have
environmental or social implications, shall only be undertaken pursuant to terms
of reference reviewed and found satisfactory by the Association, such terms of
reference to ensure that the technical assistance takes into account, and calls for
application of the Association's environmental and social safeguards policies and
the Recipient's own laws relating to the environment and social aspects.
10.    In the event that any provision of the Safeguards Instruments shall conflict with
any provision under this Agreement, the provisions of this Agreement shall prevail.
G.     Contingent Emergency Response
1 .    In order to ensure the proper implementation of contingent emergency response
activities under Part 5 of the Project ("Contingent Emergency Response Part"), the
Recipient shall ensure that:
(a)    a manual ("CERC Manual") is prepared and adopted in form       and
substance acceptable to the Association, which shall set forth detailed
implementation arrangements for the Contingent Emergency Response
Part, including: (i) any structures or institutional arrangements for
coordinating and implementing the Contingent Emergency Response Part;


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(ii) specific activities which may be included in the Contingent Emergency
Response Part, Eligible Expenditures required therefor ("Emergency
Expenditures"), and any procedures for such inclusion; (iii) financial
management arrangements for the Contingent Emergency Response Part;
(iv) procurement methods and procedures for the Contingent Emergency
Response Part; (v) documentation required for withdrawals of Financing
amounts to finance Emergency Expenditures; (vi) a description of the
environmental and social assessment and management arrangements for
the Contingent Emergency Response Part; and (vii) a template Emergency
Action Plan;
(b)    the Emergency Action Plan is prepared and adopted in form and substance
acceptable to the Association;
(c)    the Emergency Response Part is carried out in accordance with the CERC
Manual and the Emergency Action Plan; provided, however, that in the
event of any inconsistency between the provisions of the CERC Manual
or the Emergency Action Plan and this Agreement, the provisions of this
Agreement shall prevail; and
(d)    neither the CERC Manual or the Emergency Action Plan is amended,
suspended, abrogated, repealed or waived without the prior written
approval by the Association.
2.     The Recipient shall ensure that the structures and arrangements referred to in the
CERC Manual are maintained throughout the implementation of the Contingent
Emergency Response Part, with adequate staff and resources satisfactory to the
Association.
3.     The Recipient shall ensure that:
(a)    The environmental and social instruments required for the Contingent
Emergency Response Part are prepared, disclosed and adopted in
accordance with the CERC Manual and the Safeguards Instruments, and
in form and substance acceptable to the Association.
(b)    The Contingent Emergency Response Part is carried out in accordance
with the environmental and social instruments in a manner acceptable to
the Association.
4.     Activities under the Contingency Emergency Response Part shall be undertaken
only after an Eligible Crisis or Emergency has occurred.


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Section II.   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 semester, covering the calendar
semester.
Section III.  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: (a) finance Eligible
Expenditures; and (b) repay the Preparation Advance; in the amount allocated and,
if applicable, up to the percentage set forth against each Category of the following
table:
Category           Amount of the Grant       Percentage of
Allocated         Expenditures to be
(expressed in SDR)         Financed
(inclusive of Taxes)
(1) Goods, works, non-
consulting services,
consulting services,        4,602,000              100%
Training and
Incremental Operating
Costs for Parts 1 and
4(d) of the Project
(2) Goods, works, non-
consulting services,
consulting services,
Training and               29,736,000              100%
Incremental Operating
Costs for Part 2, 4(a),
4(b) and 4(c) of the
Project
(3) Performance-based
Grants under Part 3 of                                  a
the Project


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(4) Emergency
Expenditures under Part
5 of the Project
(5) Land Expenditures for      1,062,000               100%
Part 1 of the Project
TOTAL AMOUNT                  35,400,000
B.     Withdrawal Conditions; Withdrawal Period
1. Notwithstanding the provisions of Part A above, no withdrawal shall be made:
(a)    for payments made prior to the Signature Date;
(b)    for payments under Category (1), unless the Subsidiary Agreement has
been signed between the Recipient and AIAS in a manner satisfactory to
the Association; and
(c)    no withdrawal shall be made for Emergency Expenditures under Category
(4), unless and until all of the following conditions have been met in
respect of said expenditures: (i) the Recipient has determined that an
Eligible Crisis or Emergency has occurred, and has furnished to the
Association a request to withdraw Financing amounts under Category (4);
and (ii) the Association has agreed with such determination, accepted said
request and notified the Recipient thereof; and (iii) the Recipient has
adopted the CERC Manual and Emergency Action Plan, in form and
substance acceptable to the Association.
2.     The Closing Date is September 30, 2025


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APPENDIX
Definitions
1.     "Affected Person" means a person who as a result of: (a) the involuntary taking of
land under the Project is affected in any of the following ways: (i) relocation or
loss of shelter; (ii) loss of assets or access to assets; or (iii) loss of income sources
or means of livelihood, whether or not the affected person must move to another
location; or (b) the involuntary restriction of access to legally designated parks and
protected areas suffers adverse impacts on his or her livelihood; and "Affected
Persons" means more than one Affected Person.
2.     "AIAS" or "Administragdo de Infra-estruturas de Agua e Saneamento" means the
Recipient's water and sanitation infrastructure administration, established and
operating pursuant to Decree No. 18 and Decree No. 19, published in the Official
Gazette No. 19 dated May 13, 2009, and Regulation No. 34, published in the
Official Gazette No. 52 dated December 31, 2009, as amended, of the laws of the
Recipient, or any successor thereto.
3.     "AIAS's Legislation" means Decree No. 18 and Decree No. 19, published in the
Official Gazette No. 19 dated May 13, 2009, and Regulation No. 34, published in
the Official Gazette No. 52 dated December 31, 2009, as amended, of the laws of
the Recipient, including any legal or regulatory enactments upon which such
instruments are based, or any licenses granted to AIAS related to the Project, all as
in force on the date of this Agreement.
4.     "AIAS PIU" means the project management team within AIAS referred to in
paragraph 2 of Section I.A of Schedule 2 to this Agreement.
5.     "Annual Work Plans and Budget" means the work plan and budget prepared
annually for the Project, in accordance with Section I.E of Schedule 2 to this
Agreement.
6.     "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.
7.     "Beneficiary Cities" means Beira, Maputo, Nampula, Quelimane and Tete.
8.     "Category" means a category set forth in the table in Section III.A of Schedule 2
to this Agreement.
9.     "CERC Manual" means the manual referred to in Section I.G of Schedule 2 to this
Agreement, as such manual may be updated from time to time with the agreement
of the Association, and which is an integral part of the PIM.


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10.    "Contingent Emergency Response Part" means any activity or activities to be
carried out under Part 5 of the Project to respond to an Eligible Crisis or
Emergency.
11.    "DNAAS PIU" means the project implementation unit within DNAAS referred to
in Section I.A. 1. of Schedule 2 to this Agreement.
12.    "DNAAS" means Direcqdo Nacional de Abastecimento de Agua e Saneamento,
the Recipient's national directorate for water supply and sanitation, or any
successor thereto satisfactory to the Association.
13.    "Emergency Action Plan" means the plan referred to in Section I.G, detailing the
activities, budget, implementation plan, and monitoring and evaluation
arrangements, to respond to the Eligible Crisis or Emergency.
14.    "Eligible Crisis or Emergency" means an event that has caused, or is likely to
imminently cause, a major adverse economic and/or social impact to the Recipient,
associated with a natural or man-made crisis or disaster.
15.    "Emergency Expenditures" means any of the eligible expenditures set forth in the
CERC Manual referred to in Section I.G of Schedule 2 to this Agreement and
required for the Contingent Emergency Response Part.
16.    "Environmental and Social Impact Assessment" or "ESIA" means an
environmental and social management assessment to be prepared, adopted and
disclosed by the Recipient and the Association, and acceptable to the
Association, and giving details of the magnitude of the environmental and social
impacts, including procedures for the management of chance finds of physical
cultural resources and procedures to ensure protection, maintenance, and
rehabilitation of natural habitats, as well as the specific mitigation actions and
measures, including the budget and cost estimates, and sources of funding, along
with the institutional and procedural measures needed to implement such actions,
measures and policies, as the same may be amended from time to time with the
prior written agreement of the Association.
17.    "Environmental and Social Management Framework" or "ESMF" means the
environmental and social management framework, dated February 2019,
prepared, adopted and disclosed by the Recipient on March 15, 2019, and by the
Association on March 20, 2019, and updated and disclosed on January 30, 2020,
describing, inter alia, the modalities to be followed in screening Project activities
in order to assess and determine the need to prepare an ESIA and/or ESMP,
including the measures to be taken to offset, reduce, or mitigate adverse
environmental and social impact, procedures for the management of chance finds
of physical cultural resources and procedures to ensure protection, maintenance,


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and rehabilitation of natural habitats, as the same may be amended from time to
time with the prior written agreement of the Association.
18.    "Environmental and  Social Management Plan" or "ESMP" means an
environmental and social management plan, to be prepared, adopted and disclosed
by the Recipient, and acceptable to the Association, in accordance with the
ESMF, and giving details of the magnitude of the environmental and social
impacts, including procedures for the management of chance finds of physical
cultural resources and procedures to ensure protection, maintenance, and
rehabilitation of natural habitats, as well as the specific actions, measures and
policies designed to facilitate the achievement of the objective of the ESMF,
including the budget and cost estimates, and sources of funding, along with the
institutional and procedural measures needed to implement such actions, measures
and policies, as the same may be amended from time to time with the prior written
agreement of the Association.
19.    "General Conditions" means the "International Development Association General
Conditions for IDA Financing, Investment Project Financing", dated December
14, 2018 (revised on August 1, 2020 and April 1, 2021).
20.    "Incremental Operating Costs" means the reasonable incremental operating
expenses, approved by the Association, incurred by the DNAAS and/or AIAS or
its regional offices on account of the Project implementation, management and
monitoring, including operation and maintenance costs of office, vehicles and
office equipment; water and electricity utilities, telephone, office supplies, bank
charges, public awareness-related media expenditures, travel, supervision costs,
and salaries of Project implementation support staff, but excluding the salaries of
officials and public servants of the Recipient's civil service.
21.    "Land Law" means the Recipient's Law No. 19/97 of October 1 ("Lei das Terras"),
published in the Recipient Gazette I Series No 40, published October 7, 1997.
22.    "Land Expenditures" means the compensation paid in cash to Affected Persons in
relation to the implementation of the Resettlement Action Plan for the Maputo
wastewater treatment plant and/or any RAP.
23.    "Ministry of Economy and Finance" or "MEF" means the Recipient's ministry
responsible for economy and finance, and any successor thereto.
24.    "Negative List" means the lists of activities that cannot be funded or included
under the Project, as set out in Section I.F.6. of Schedule 2 to this Agreement, the
PIM and/or the Safeguard Instruments.


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25.    "Performance-based Grant" means the portion of the proceeds of the Financing
extended to an eligible Beneficiary City under a Performance-based Grant
Agreement for a Subproject under Part 3 of the Project.
26.    "Performance-based Grant Agreement" means an agreement between a
Beneficiary City and the Recipient, through DNAAS, for purposes of carrying out
a Subproject under Part 3 of the Project.
27.    "Performance Scorecard" means the scorecard developed by the Recipient to
monitor the delivery of services by each Beneficiary City and containing key
performance indicators to track: (a)the implementation of actions to strengthen the
institutional framework for sanitation service provision, (b) the provision of
sanitation services against defined targets, and (c) improvements in operating cost
recovery for sanitation services.
28.    "Performance Verification Report" means a report by the independent verification
agent validating the achievement of results by a Beneficiary City.
29.    "IM" or "Project Implementation Manual" means the manual prepared by
DNAAS and AIAS on August 27, 2019 for the Original Project and referred to in
Section 1.D. of Schedule 2 to this Agreement.
30.    "Procurement Regulations" means, for purposes of paragraph 87 of the Appendix
to the General Conditions, the "World Bank Procurement Regulations for IPF
Borrowers", dated November 2020.
31.    "Resettlement Action Plan" or "RAP" means in respect of any activity involving
resettlement, a resettlement plan for such activity prepared, adopted, disclosed and
implemented by the Recipient, and acceptable to the Association, such
resettlement plan to include a program of actions, measures and policies for
compensation and resettlement of Affected Persons, and setting forth the
magnitude of displacement, proposed compensation and resettlement
arrangements, budget and cost estimates, and sources of funding, together with
adequate institutional, monitoring and reporting arrangements designed to ensure
proper implementation of, and regular feedback on, compliance with such RAP, as
the same may be amended from time to time with the prior written agreement of
the Association.
32.    "Resettlement Action Plan for the Maputo wastewater treatment plant" or "RAP
for Maputo" means the Recipient's resettlement plan for Part 1(a) of the Project,
dated February 2019, disclosed by the Recipient on April 9, 2019 and the
Association on April 10, 2019, and acceptable to the Association, including a
program of actions, measures and policies for compensation and resettlement of
Affected Persons for Part 1(a) of the Project, and setting forth the magnitude of
displacement, proposed compensation and resettlement arrangements, budget and


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cost estimates, and sources of funding, together with adequate institutional,
monitoring and reporting arrangements designed to ensure proper implementation
of, and regular feedback on, compliance with such RAP for Maputo, as the same
may be amended from time to time with the prior written agreement of the
Association.
33.    "Resettlement Policy Framework" or "RPF" means the resettlement policy
framework, dated January 2019, prepared, adopted, and disclosed by the Recipient
on March 15, 2019 and by the Association on March 20, 2019, setting forth the
modalities for resettlement and compensation of Affected Persons under the
Project, as the same may be amended from time to time with the prior written
agreement of the Association.
34.    "Safeguard Instruments" means the ESIA, the ESMF, the RPF, the RAP for
Maputo and related ESMPs and RAPs, for the Project.
35.    "Selected Cities" means Maputo, Quelimane and Tete.
36.    "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.
37.    "Subsidiary Agreement" means the agreement referred to in Section I.B of
Schedule 2 to this Agreement pursuant to which the Recipient shall make part of
the proceeds of the Financing available to AIAS, as the same may be amended
from time to time with the prior written agreement of the Association; and such
term includes all schedules to the Subsidiary Agreement.
38.    "Subproject" means a specific subproject under Part 3 of the Project to be carried
out by a Beneficiary City utilizing the proceeds of a Performance-based Grant.
39.    "Training" means the reasonable cost of training under the Project, as approved by
the Association, including costs associated with seminars, workshops, conference
and study tours, travel and subsistence costs for training participants, services of
trainers, rental of training facilities, preparation and reproduction of training
materials and other activities directly related to course preparation and
implementation.