OFFICIAL DOCUMENTS 7 MEMORANDUM OF UNDERSTANDING ON COOPERATION between Asian Development Bank and World Bank December 6th, 2023 MEMORANDUM OF UNDERSTANDING ON COOPERATION This MEMORANDUM OF UNDERSTANDING ON COOPERATION dated December G. 2023 (hereinafter referred to as the "Memorandum") represents a statement of intent by the International Bank for Reconstruction and Development ("IBRD") and the International Development Association {"IDA") (together, the "World Bank" or "WB") and the Asian Development Bank ("ADB"), collectively referred to as "Participants", to collaborate in the achievement of common objectives as outlined below. BACKGROUND The Participants recognize the importance of fostering cooperation to achieve their development agendas and acknowledge the need to increase the development impact of their projects for the benefit of their borrowers. In pursuance of such increased cooperation and increased development impact, the Participants have financed, and intend to continue jointly financing, projects within the jurisdictions of their common borrowers. In procurements matters, for jointly financed projects the Participants have increased efficiency and avoided duplication by agreeing to a Procurement Framework Agreement dated December 3, 2018, that contemplates (i) the designation of a lead co-financier early on in the process, {ii) reliance on the procurement policies, regulations, rules and instructions of the lead co-financier for procurement of goods, works and services, and (iii) reliance on the lead co-financier's implementation support and monitoring of procurement activities. The Participants acknowledge that in jointly financed projects a coordinated and unified approach to other fiduciary matters would increase efficiency and avoid duplication of efforts. The Participants want to pilot a coordinated and unified approach based on mutual reliance in the sustainable development of the hydropower sector in Nepal, specifically in the context of a number of large and ambitious hydropower projects being considered for financing (see item 2.1 below). I - PURPOSE OF THE COOPERATION 1.1 Consistent with their respective development mandates, the Participants intend to cooperate in furtherance of their desire to increase the development impact of their support to Nepal's hydropower sector, including in matters related to its development strategy, policy, regulatory frameworks, institutional setup, projects' identification, capital investments, project financings, trading strategies and arrangements, and knowledge sharing. II - SCOPE AND ACTIVITIES OF COOPERATION 2.1 The scope of cooperation between the WB and the ADB will focus on the hydropower sector in Nepal, specifically in the context of two high priority projects: the Upper Arun and Dudh Koshi hydropower projects (HPPs). Activities may include close collaboration in knowledge, information and experience sharing, joint analytical studies and consultation, institutional strengthening and capacity building of the executing and implementing agencies, project preparation, financing and project administration. 2.1.1 Knowledge, information, and experience sharing: Participants will strengthen communication and information sharing with each other to ensure common understanding of the hydropower sector in Nepal and to help integrate and align current and future efforts. This may include sector assessment, analytical work, ongoing and pipeline programs and projects, and investment and financing plans. 2.1.2 Analytical studies and consultations: Participants may seek to jointly conduct analytical studies and thematic consultations in support of the development of the hydropower sector in Nepal such as policy dialogues, regulatory frameworks, renewables profiles, network resilience and reliability, design and structure of the power market, regional integration, and cross border coordination. 2.1.3 Institutional strengthening and Capacity building of Executing and implementing agencies: Participants may seek to jointly identify and address institutional weaknesses and lack of capacity and capability in Nepal Electricity Authority (NEA) and affiliated companies to handle large scale hydropower project developments as well as transmission and distribution projects. This may include (i) technical and contract management, (ii) E&S management; (iii) financial management. 2.1.4 Project preparation, and financing: In addition to the HPPs, Participants may seek to jointly identify additional projects, including in areas of transmission and sector regulation, they can support, either mutually or by including other development partners. Thematic, economic, and financial activities pertaining to project preparation and financing may include, feasibility, site assessment, environmental and socioeconomic impact, hydrological modeling, climate change and resilience, risk and sensitivity, trading strategies and arrangements, financing options and sources, financial projections and cashflow, tariff and pricing, and licensing and permitting. 2.1.5 Project administration: Participants will conduct joint review missions of co- financed projects and debriefing with NEA/Ministry of Finance; joint tripartite portfolio review with Government of Nepal and high level meeting to address implementation performance issues and bottlenecks. Ill - PROCEDURES FOR COOPERATION 3.1 For item 2.1.1, information and data sharing are subject to each Participant's applicable rules governing disclosure of information. Consequently, each Party will share sector-pertinent information and data, except for those the client deems confidential. 3.2 To effectively manage preparation and implementation of the HPPs, the Participants will, through their respective project teams or any other appropriate arrangement, finalize and enter into separate co-financing agreements which will provide for coordinated management of procurement and safeguard requirements of the Participants, and other project management issues. Where Participants' cooperation is in the form of co-financing, Participants acknowledge the benefits of a unified and coordinated approach to the preparation and supervision of the operation. Accordingly, Participants will establish dedicated co-financing arrangements that streamline technical and fiduciary requirements, to the extent permissible under their respective policies and procedures. Participants will rely on corporate-level efforts to establish comprehensive co-financing arrangements aligning safeguard, procurement, and other fiduciary processes for all co-financed operations and pilot agreed approaches in proposed Nepal operations. In support of corporate level efforts, country teams working in Nepal are expected to submit recommendations for mutual reliance arrangements in specific fiduciary areas. 3.3. Participants may set up a Coordination Committee under the leadership of their Energy sector directors/senior sector directors and country directors to facilitate the implementation of the proposed activities under this MOU. The Committee will provide semiannual reports to the Regional Vice President of the WB, or their designates, and Vice President South, Central and West Asia and the Vice President (Sectors and Themes) of the ADB, or their designates, in support of the preceding scope of activities and cooperation. It is anticipated that the senior officials of the Participants will meet at least semi-annually during the preparation and processing of the HPPs. Thematic meetings, which can be either periodic or ad hoc depending on Participants needs and interests, shall be held as agreed between Participants. 3.4. In cases where there are differing opinions or conflicts regarding the coordination of processes, the Coordination Committee will facilitate discussions and decision-making, and will work towards consensus-building. IV - OTHER PROVISIONS 5.1. Intellectual Property. The Participants acknowledge that nothing in this Memorandum is intended to grant a Participant the right to use intellectual property owned or controlled by another Participant. The Participants intend to jointly decide in writing on the ownership and use of any intellectual property deriving from activities under this Memorandum. The Participants also acknowledge that they may not use the name, mark, or logo of another Participant, or any variation thereof, without the prior written approval of the appropriate Participant. 5.2. Publicity and Confidentiality. This Memorandum may be publicly disclosed by the Participants. Such disclosure will be made subject to the Participants' respective disclosure or access to information policies. Any information shared between the Participants under this Memorandum that is designated as "CONFIDENTIAL" shall be kept confidential. The Participants may consider the need for a separate binding non-disclosure agreement to be entered into between the Participants. 5.3. Disclaimers. (a) Nothing in this Memorandum is intended to be construed as creating a joint venture, an agency relationship, or a legal partnership between the Participants. (bl Nothing in this Memorandum is intended to constitute an agreement or commitment by any Participant to enter into or provide support for any specific activity or project. (c) Nothing in this Memorandum is intended to constitute commitment with regards to the financing of any specific activity or project. (d) Each Participant is responsible for its respective costs and expenses that may be incurred in connection with the activities described in this Memorandum. {e) Nothing in this Memorandum restricts a Participant from entering similar arrangements with third parties covering the same or similar subject matter areas or activities. (f) Nothing herein is intended to prevent the Participants from entering into separate and legally binding agreements related to the areas of collaboration described in this Memorandum, or otherwise, provided, however, that any such separate and legally binding agreements are discussed and executed separately from this Memorandum and be subject to the specific terms and conditions set forth therein. 5.4. Privileges and Immunities. Nothing in this Memorandum is intended to be a waiver of the privileges and immunities of any of the Participants or their officers and employees, as applicable, which privileges and immunities are hereby specifically reserved. S.S. Disagreements. The Participants acknowledge their intent to resolve any disagreements arising out of this Memorandum amicably. 5.6. Term and Termination. The Participants intend to cooperate as set out in this Memorandum for an initial period of five years. The Participants may, if they wish to no longer collaborate as set out in this Memorandum, end their collaboration under this Memorandum by: (1) mutual written declaration of the Participants; or (2) a unilateral statement in writing by any Participant (30) calendar days in advance of the intended end of their engagement to the other Participant. 5.7. Notices, Communications and Amendments. The Participants intend to make notices, communication, and amendments related to this Memorandum in writing (wet ink or electronic mail). 5.8. Representatives. Unless notified otherwise, each Participant designates below its representative with overall responsibility for all activities and communication in connection with this Memorandum: ForWB For ADB Martin Raiser Fatima Yasmin South Asia Regional Vice President Vice President (Sectors and Themes) The World Bank The Asian Development Bank 1818 H Street, N.W. 6 ADB Avenue, Mandaluyong City 1550 Washington, DC 20433, USA Metro Manila, Philippines 5.9. This Memorandum is only intended to set out a summary of the understandings between the Participants. Nothing expressed or implied herein (whether by operation of law or otherwise) is intended to legally commit or oblige any Participant to perform or observe any of the provisions herein, and this Memorandum is not intended to create any binding and enforceable obligations nor any rights to the Participants. Signed in Dubai on December 61 \ 2023, in two originals. VICE PRESIDENT (SECTORS AND THEMES) Date SOUTH ASIA REGIONAL VICE PRESIDENT International Bank for Reconstruction and Development International Development Association Date