OFFICIAL DOCUMENTS THE WORLD BANK IBRD * IDA I WORLD BANKGROUP January 31, 2018 Hon. Brenson S. Wase Minister of Finance Ministry of Finance, Banking and Postal Services Po Box D Majuro Republic of the Marshall Islands Dear Minister, IDA Grant D261-MH (Sustainable Energy Development Project) Additional Instructions: Disbursement and Financial Information Letter (DFIL) I refer to the Financing Agreement between the Republic of the Marshall Islands (the "Recipient") and the International Development Association (the "Association") providing the above-referenced grant ("Financing") for the above-referenced project. The General Conditions, as defined in the Financing Agreement, provide that the Association may issue additional instructions regarding the withdrawal of the proceeds of the Financing and specify certain financial management reporting and audit requirements. This letter ("Disbursement and Financial Information Letter" or "DFIL"), as revised from time to time, constitutes such additional instructions. The Disbursement Guidelines for Investment Project Financing dated February 2017, ("Disbursement Guidelines") are available in the Association's public website at https://www.worldbank.org and its secure website "Client Connection" at https://clientconnection.worldbank.org. The Disbursement Guidelines are an integral part of this Disbursement and Financial Information Letter, and the manner in which the provisions in the guidelines apply to the Financing is specified below. I. Disbursement Arrangements, Withdrawal and Reporting of Financing Proceeds (i) Disbursement Arrangements: * Instructions (Schedule 1). The table provides the disbursement methods, and conditions, information on registration of authorized signatories, processing of withdrawal applications (including advances), instructions on supporting documentation, and frequency of reporting on the Designated Account. * Minimum Value of Applications (subsection 3.5). The Minimum Value of Applications for Reimbursement, Special Commitment and Direct Payment is USD140,000 equivalent. * Disbursement Deadline Date, DDD (subsection 3.7). The DDD is four (4) months after the Closing Date. Any changes to this date will be notified by the Association. (ii) Electronic Delivery. Refer to section 11.01 (c) of the General Conditions: * The Association may permit the Recipient to electronically deliver applications (with supporting documents) through the Association's web-based portal (https://clientconnection.worldbank.org) "Client Connection". This option may be effected if: (a) the Recipient has designated in writing, its officials who are authorized to sign and deliver Applications and to receive Secure Identification 1818 H Street NW * Washington, DC 20433 USA Hon. Brenson S. Wase -2- January 31, 2018 Credentials ("SIDC") from the Association for the purpose of delivering such Applications by electronic means; and (b) all such officials designated by the Recipient have registered as users of "Client Connection". The designated officials may deliver Applications electronically by completing the Form 2380, which is accessible through "Client Connection". The Recipient may continue to exercise the option of preparing and delivering Applications in paper form. The Association reserves the right and may, in its sole discretion, temporarily or permanently disallow the electronic delivery of Applications by the Recipient. By designating officials to use SIDC and by choosing to deliver the Applications electronically, the Recipient confirms through the authorized signatory letter its agreement to: (a) abide by the Terms and Conditions of Use of Secure Identification Credentials in connection with Use of Electronic Means to Process Applications and Supporting Documentation, available in the Association's public website at https:/Jworldbank.org and "Client Connection"; and (b) to cause such official to abide by those terms and conditions. II. Financial Reports and Audits (i) Financial Reports. The Recipient shall prepare and furnish to the Association not later than forty five (45) days after the end of each semester of the Recipient's fiscal year, interim unaudited financial reports (IFR) for the Project covering the semester. (ii) Audits. Each audit of the Financial Statements shall cover the period of one fiscal year of the Recipient. The audited Financial Statements for each such period shall be furnished to the Association not later than nine (9) months after the end of such period. III. Other Important Information For additional information on disbursement arrangements, please refer to the Loan Handbook available on the Association's public website and "Client Connection". The Association recommends that you register as a user of "Client Connection". From this website you will be able to prepare and deliver Applications, monitor the near real-time status of the Financing, and retrieve related policy, financial, and procurement information. For more information about the website and registration arrangements, please contact the Association by email at clientconnectionaworldbank.org. If you have any queries in relation to the above, please contact Carmenchu Austriaco at caustriaco(O)worldbank.org with copy to Joan Toledo, Finance Analyst at itoledo(&worldbank.org using the above reference. Sincerely, Mona Sur Acting Country Director Papua New Guinea & Pacific Islands East Asia and Pacific Region Attachments 1. Form of Authorized Signatory Letter 2. Form of Statement of Expenditure 3. Form of Designated Account Reconciliation Statement Hon. Brenson S. Wase -3- January 31, 2018 Cc with copies: Ms. Maybelline Bing Secretary of Finance Ministry of Finance, Banking and Postal Services PO Box D, Majuro 96960, RMI Ms. Jennifer Y. Tseng Director, Division of International Development Assistance Ministry of Finance, Banking and Postal Services Hon. Brenson S. Wase -4- January 31, 2018 Schedule 1 Disbursement Arrangements Country The Republic of the Marshall Islands Loan Number Beneficiary Ministry of Finance, Banking and Postal Services Name of the Project Sustainable Energy Development Project Rm M, Disbursement Methods Methods Available Supporting Documentation Section 2 (**) Subsections 4.3 and 4.4 (**) Direct Payment Yes Copy of Records (such as copies of receipts, supplier invoices) Reimbursement Yes Statement of Expenditure in the format provided in Attachment 2 Copy of Records evidencing eligible expenditures (e.g., copies of receipts, supplier invoices) for payments against contracts that are subject to the Association's prior review Advance: Yes Statement of Expenditure in the format provided in Attachment 2 Copy of Records evidencing eligible expenditures (e.g., copies of receipts, supplier invoices) for payments against contracts that are subject to the Association's prior review Designated Account Reconciliation Statement in the format provided in Attachment 3 and related bank statement Special Commitment Yes Cop of Letter of Credit Type Segregated Ceiling Fixed .iaca ntiuin-Nm To be established at a financial institution CurnyUSD acceptable to the Association Frequency of Reporting, Quarterly AmutUSD 700,000 Subsection 6.3 (* The World Bank 26th Floor, One Global Place 5th Avenue corner 25th Street Bonifacio GlobalI Taguig Philippines Attention: Loan Department ** Sections and subsections indicated relate to the Disbursement Guidelines for Investment Project Financing dated February 2017 Hon. Brenson S. Wase -5- January 31, 2018 Attachment 1 [Letterhead] Ministry of Finance Majuro [DATE] The World Bank The World Bank Level 19, 14 Martin Place CML Building Sydney NSW 2000, Australia Attention: Michel Kerf Country Director IDA Grant No. D261-MH (Sustainable Energy Development Project) I refer to the Financing Agreement ("Agreement") between the International Development Association (the "Association") and the Republic of the Marshall Islands ("Recipient"), dated - , providing the above grant ("Financing"). For the purposes of Section 2.03 of the General Conditions as defined in the Agreement, any '[one] of the persons whose authenticated specimen signatures appear below is authorized on behalf of the Recipient to sign applications for withdrawal [and applications for a special commitment] under this Financing. For the purpose of delivering Applications to the Association, 2[each] of the persons whose authenticated specimen signatures appears below is authorized on behalf of the Recipient, acting '[individually] 4[ointly], to deliver Applications, and evidence in support thereof on the terms and conditions specified by the Association. '[This confirms that the Recipient is authorizing such persons to accept Secure Identification Credentials (SIDC) and to deliver the Applications and supporting documents to the Association by I Instruction to the Recipient: Stipulate if more than one person needs to sign Applications, and how many or which positions, and if any thresholds apply. Please delete this footnote in final letter that is sent to the Bank. 2 Instruction to the Recipient: Stipulate if more than one person needs tojointly sign Applications, if so, please indicate the actual number. Please delete this footnote in final letter that is sent to the Bank. Instruction to the Recipient: Use this bracket if any one of the authorized persons may sign; if this is not applicable, please delete. Please delete this footnote in final letter that is sent to the Bank. 4 Instruction to the Recipient: Use this bracket only if several individuals must jointly sign each Application; if this is not applicable, please delete. Please delete this footnote in final letter that is sent to the Bank. Hon. Brenson S. Wase -6- January 31, 2018 electronic means. In full recognition that the Association shall rely upon such representations and warranties, including without limitation, the representations and warranties contained in the Terms and Conditions of Use of Secure Identification Credentials in connection with Use of Electronic Means to Process Applications and Supporting Documentation ("Terms and Conditions of Use of SIDC"), the Recipient represents and warrants to the Association that it will cause such persons to abide by those terms and conditions.] This Authorization replaces and supersedes any Authorization currently in the Association records with respect to this Agreement. [Name], [position] Specimen Signature: [Name], [position] Specimen Signature: [Name], [position] Specimen Signature: Yours truly, / signed / [Position] 5 Instruction to the Recipient: Add this paragraph if the Recipient wishes to authorize the listed persons to accept Secure Identification Credentials and to deliver Applications by electronic means; if this is not applicable, please delete the paragraph. Please delete this footnote in final letter that is sent to the Bank. Hon. Brenson S. Wase -7- January 31, 2018 Attachment 2 page of STATEMENT OF EXPENDITURES Fiancier Loan/Credit/Grant # Appication # PAYMENTS MADE DURING THE REPORTING PERIOD FROM TO Category # Page # The following expenditures have been incurred during the retroactive financing period (please tick) yes NO The following expenditures have been incurred during the closing date of the loan/credit/grant (please tick) Yes No ONLY fo the Designated Account 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Contract # Total amount Date of Amount Prior Review (Client Contract of invoice % Financed Eligible Withdrawal Withdrawn item N Brief Description of the Connection# currency and Invoice Date of covered by Amount Exchange form the form the NO. expenditure for Prior amount (original number payment Application a (Col 9 x Rate A uDesignated Review + amendment) (net of 10) Account (Col I contracts I retention) Account 11/12) Total drm Supporting documents for this SOIE are retained at (nsrloao) Hon. Brenson S. Wase -8- January 31, 2018 Attachment 3 DESIGN ATED ACCOUNT RECONCILIATION STATEMENT LOAN/CREDITGRANT/PPF/COFINANCIER NUMBER ACCOUNT NUMBFR WITH (BANK) 1. TOTAL ADVANCED BY WORI.D BANK (OR COFINANCIER) $ 2 LESS: TOI AL AMOUNT RECOVERED BY WORLD BANK - $ 3. EQUIALS PRESENT01 JTSTANDING AMOUNT ADVANCFD TO THE DESIGNATF) ACCOUNT (NUMBER l LESS NUiMBER 2) S 4. BALANCE OF SPECIAL. ACCOUNT PER Al IACHED BANK SlATEMENT AS OF DATE $ 5. PLUS: TOTAL AMOUNT CLAIMED IN lillS APPLICATION NO. $ 6 PLUS: TOTAL AMOUNT WI THDRAWN AND NOT YET CLAIMED REASON: $ 7. PLUS: AMOUNTS CLAIMED IN PREVIOUS APPLICATIONS NOT YET CREDITED Al DAl L OF BANK STATEMENTS APPLICATIOlNNQ. AMOUNT * SUBIlOTAL F01 PREViOIS APPLICATIONS NOT YFT CRE7DITED $ 8. MINUS: INTERLSI EARNED - s 9. TOTAL ADVANCIE ACCOUNT ElD FOR (NO. 4 THROUGH NO. 9) - 5 Part 1I l0. FORECASI VOR NEXT SIX MONTHS (From Table x) $ Il. Less: BALANCE OF DA ACCOUNT (iwm 4) . $ 12. AMOUNT RFQUESTI ) FOR ADVANCE 5 13. FXPI ANA1 ION OF ANY DIFFERENCE BFTWFEN THE TOTALS APPEARING ON LINES 3 AND 9: