OPICAL The World Bank 1818 H Street N.W. (202) 477-1234 INTERNATIONAL BANK FOR RECONSTRU:TION ANI) DE /ELO1 MENT Washington, D.C. 20433 Cable Address: INTBAFRAD INTERNATIONAL DEVELOPMENT ASSOCIATION U.S.A. Cable Address: INDEVAS May 30, 2013 H.F. Ridvan Bode Min,ster of Finance Ministry of Finance Bulevardi Deshmoret e Kombit Tirana, Albania Re: SwAedis i Grant for Co-financing of the Albania 'Vate - Resources and Irrigation Project (rant No. TF014255 Ex.ellency: In response to the requ:st 'or fi iancial assistance made on behalf of Albania ("Recipient"), I air pleased to inform you that the nternational Bank for Reconstruction and Development ("World Bank"), acting as admi iistrmtor of grant funds provided by Sweden, represented by Swedish International Development Cc operation Agency (Sida) ("Donor"), proposes to extend to the Recipient a grant n an aniount no: to exceed four million six hundred seventy-five thousand Un ted States Dollars (US$ 4,675,000) "Grant") on the terms and conditions set forth or referred to in this letter agreement ("A&reeneni"), which includes the attached Annex, to assist in the firancing of the project described in the Annex ("Project"). The purpose of the Grant is to cofinance a Water Resources and In igation Project, for which a loan (IBRD Loan Number 82 1-AL) has been extended to Albtnia, pursuant to the Agreement between Albania and the World Bank dated December 14, 201 !, in the amount of thirty-one million Euros (E31,000,000) (the "IBRD Loan Agreement"). This Grant is funded ou- of he abovementioned trust fund for which the World Bank re:cives periodic contribution.; from t ie Donor. In accordance with Section 3.02 of the Standard Conditions (as defined in the nnex t( this Agreement), the World Bank's payment obligations in connection with this Aigreemi,nt are limited to the amount of funds made available to it by the Donor under the abovementioneJ trt st fund, and the Recipient's right to withdraw the Grant proceeds is subject to :he availability oFsuch funds. The Recipient represcnts by (onfirning its agreement below, that it is authorized to enter irlo this Agreement and to cirry out ihe Project in accordance with the terms and conditions set fth or referred to in :his Agr.er ent. Please confirm the Kecipiei t's agreement to the foregoing by having an authorized official of the Recipient sign an i da e the enclosed copy of this Agreement, and returning it to th.- World Bank. U-on receipt by t ie World Bank of this countersigned copy, this Agreement suEll become effective aft.!r notif cation by the Recipient of completion of its internal pro;Jures; provided, however, thit th! offer of this Agreement shall be deemed withdrawn if the World Bank has nct receiv.ed ihe c)untersigned copy of this Agreement and the respective notification within 60 days aft.r tie d ite of signature of this Agreement by the World Bank, unlc is the World Bank shall ha ,e c stab ished a later date for such purpose. Very truly yours, INT ER qATIONAL BANK FOR RECONSTRL CTION AND DEVELOPMENT By nthony A. Gaeta Acting Countr v Director for Southeast Europe Euiope and Central Asia Region AGEED: ALBANIA By:2 Aut hed Reprsa Tifle: CC-fj~l/ )N I Enclosures: (1) Standard Conditi:ns for 3rants Made by the World Bank Out of Various Funds, dated February l', 2012. (2) Disbursement Le ter of tf e same date as this Agreement, together with World Bank Disbursement Guide ines for Projects, dated May 1, 2006. 2 Sida Grant No. TF014255 ANNEX Article I Standarc Conditions; Definitions 1.01. Standard Conditions. I he Stan lard Conditions for Grants Made by the World Bank out of 1 trious Funds dated Februar, 1:i, 2012 ("Standard Conditions") constitute an integral part of this Agreement. 1.02. Definitions. Unless th: conte> t requires otherwise, the capitalized terms used in this Agreement have the meanings ascribe(I to them in the Standard Conditions, the Loan IBRD Agr cement, or in this Agreemen i. Article II 1'roject Execution 2.0 . Project Objective and .Descripion. The objective of the Project is to co-finance Parts 3 and 4 of the Water Resources z.nd Irrig; Ltion Project (Loan 8211 -AL) which aims to establish the strategic framework to manage water r,,sources at the national level and in the Drin-Buna and Serani river basins. Th. Projeci consists of the following parts: Part 3: Institutional Support I.or Inte, rated Water Resources Management Provision of works, co isu tant.,' services, goods, and training for the establishment of a strategic framework for managc ment of water resources through, inter alia: (i) preparation of;a natiom 1 integrated water resource management strategy; (ii) preparation of iver ba in management plans for the Drin-Buna and Semani river basins; and (iii) establishment of a con olidated water resources database to be used as a basis for national water rescurce; planning and programming. Patt 4: Implementation Sup:ort Provision of works, tochnical assistance, training, office equipment and vehicles, and incremental operating coEts ir support of project management, and establishment and implementatio i of a pc rfoiman ze based management information system. 2.02. Project Execution Generally. The Recipient declares its commitment to the objective of the Project. To this end, th: Recip ent shall carry out the Project through the Ministry of Ervironment, Forestry and Water Adilinistration (MEFWA) in accordance with the provisions of (a) Article II of the Standard Con litions; (b) the "Guidelines on Preventing and Combating Fraud and Corruption in Proje,ts Fina iced by IBRD Loans and IDA Credits and Grants", dated O-ober 15, 2006 and revised in Jaituary 2011 ("Anti-Corruption Guidelines"); and (c) this Ai icle II. 3 2.03. Institutional and Other Arrangements. The Recipient shall carry out the Project in accordance with the Project Operations Manual and shall not amend, suspend, abrogate, repeal or waive any provision of the Project Operations Manual without prior approval by the Bank. 2.04 Safeguards. (a) Environment Protection and Resettlement The Recipient , through MAFCP and MEFWA, shall carry out, and cause to be carried out, the following actions: (a) implement the Environmental and Social Safeguard Framework; (b) prepare and furnish to the World Bank for approval, site- specific environmental and social management plans (including provisions relating to pest management) in accordance with the Environmental and Social Safeguard Framework; and (c) implement said site-specific environmental and social management plans that have been approved by the World Bank, all in a manner satisfactory to the World Bank, and necessary to ensure that the Project is implemented in accordance with sound environmental practices and standards. (b) Without limitation to sub-paragraph (a) of this paragraph, on Environment Protection and Resettlement, the Recipient shall not commence tendering for works under the Project until the World Bank has approved the site-specific environmental and social management plan relating to such works in accordance with the provision of said sub-paragraph 2.04 (a). (c) The Recipient, through MAFCP and MEFWA, shall: (i) take all necessary actions to minimize, to the extent possible, any involuntary loss by persons of shelter, productive assets or access to productive assets or income or means of livelihood, temporarily or permanently, in carrying out the Project; and (ii) whenever implementation of the Project or modification/finalization of any Project design or works would give rise to Displaced Persons, prior to commencement of any works related to such implementation, modification or finalization, provide to the World Bank for its review and approval, a site- specific resettlement action plan prepared in accordance with the principles and procedures set forth in the Resettlement Policy Framework and, thereafter, implement in a manner satisfactory to the World Bank (which includes, unless otherwise agreed with the World Bank, payment in full of compensation to all Displaced Persons) such site-specific resettlement action plan as shall have been approved by the World Bank. 2.05. Donor Visibility and Visit. (a) The Recipient shall take or cause to be taken all such measures as the World Bank may reasonably request 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, take all measures required on its part to enable the representatives of the Donor to visit any part of the Recipient's territory for purposes related to the Project. 4 2.06 Project Monitoring, Ret orting and Evaluation. (a) The Recipient through MEFWA shall monitor and evaluate the p-ogi ess if the Project and prepare Project Reports in accordance with the provisions of Section 1.06 of he Standard Conditions and on the basis of indicators acceptable to the Worll Bank. Each Project Report shall cover the period of one calendar sem.ster, and shall be furnishec to the World Bank not later than 45 days after the end of the period covered by such report. (b) The Recipient through MEFWA shall prepare the Completion Report in acccrdance with the provisions of Sect on 2.06 of the Standard Conditions. The Completion Repcrt shall be furnished to the World B nk not later than six months after the Closing Date. 2.07. Financial Managemeni.. () The Recipient shall ensure that a financial management syst:rm is maintained in accordance vith the provisions of Section 2.07 of the Standard Coid tions. (b) The Recipient, through MEFWA, shall ensure that interim unaudited financial reports for the Project are prepared and furnished to the World Bank not later than 45 days after the end of each calendzr quarter, c over ng the quarter, in form and substance satisfactory to the World Bank. (c) The Recipient hro,ugh MEFWA shall have its Financial Statements related to the Project audited in accordance wit i the provisions of Section 2.07 (b) of the Standard Conditions. Each such audit of the Finan.ial Statements shall cover the period of one fiscal year of the R.ecipient. The audited Financi,l Stitements for each such period shall be furnished to the World Bank not later th2n six mont s aft -r the end of such period. 2.0U. Procurement (a) General. All goods, w, rks 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 rect irements set forth or referred to in: (i) Sectioii I of ti e "Guidelines: Procurement of Goods, Works and Non- consul ing Ser rices under IBRD Loans and IDA Credits and Grants by World Bank Borrowers" dated January 2011 ("Procurement Guide'ine:;"), i i the case of goods, works and non-consulting services; (ii) Sectio:is anc IV of the "Guidelines: Selection and Employment of Consultants ui der IBRD Loans and IDA Credits and Grants by World Bank 3orrow(rs" dated January 2011 ("Consultant Guidelines") in the case of1 consul ants' services; and (iii) the provi:;ion5 of this Section, as the same shall be elaborated in the procuremnt )lan prepared and updated from time to time by the Recip,ent through MEFWA for the Project in accordance with paragiapt 1.1:1 of the Procurement Guidelines and paragraph 1.25 of the Constultait GL idelines ("Procurement Plan"). 5 (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 and Works (i) Except as otherwise provided in sub-paragraph (ii) below, goods and works shall be procured under contracts awarded on the basis of International Competitive Bidding. (ii) The following methods, other than International Competitive Bidding, may be used for procurement of goods and works for those contracts which are specified in the Procurement Plan: (A) Shopping; (B) Direct Contracting; and (C) National Competitive Bidding, subject to the following additional provisions: Modifications to the Recipient's National Competitive Bidding Procedures. The National Competitive Bidding procedures ("NCB") shall be based on the Open Tendering procedures as defined in the Public Procurement Law ("PPL") of Albania (Law No. 9643 dated November 20, 2006, as amended), provided, however, that such procedure shall be subject to the provisions of Section I and Paragraphs 3.3 and 3.4 of the Procurement Guidelines and the following additional provisions: (i) "Open Tendering" procedures as defined in the PPL of Albania shall apply to all contracts financed by the World Bank. (ii) Foreign bidders shall not be precluded from bidding and no preference of any kind shall be given to national bidders in the bidding process. Government-owned enterprises in Albania shall be permitted to bid only if they are legally and financially autonomous and operate under commercial law of the Republic of Albania. Registration shall not be used to assess bidders' qualifications. (iii) Bids shall be opened in public in one location, immediately after the deadline for submission of bids in the presence of the representatives who choose to attend. (iv) The procuring entities shall use sample bidding documents as approved by the World Bank. (v) In case of higher bid prices compared to the official estimate, all bids shall not be rejected without the prior concurrence of the World Bank. (vi) A single-envelope procedure shall be used for the submission of bids. (vii) Post-qualification shall be conducted only on the lowest evaluated bidder; no bid shall be rejected at the time of bid opening on qualification grounds. (viii) Bidders in the form of a joint venture shall be held jointly and severally liable. (ix) Before rejecting all bids and soliciting new bids, the prior concurrence of the World Bank shall be obtained. 6 (x) Contracl.s siall t e awarded to the lowest evaluated, substantially respons ve )idd(:r who is determined to be qualified to perform in accorda:ice with pre-defined and pre-disclosed evaluation criteria. (xi) Post-biciding negotiations shall not be allowed with the lowest evaluated or any c the - bid lers. (xii) Contrac:s of lon,, duration (more than 18 months) shall contain appropriate pric. adjustment provisions. (xiii) Bid and contrac guarantees shall be in the format included in the bidding documc nts. The bid guarantee shall be valid for twenty-eight days (28) beyond the orig nal validity period of the bid, or beyond any period of extension i 'req iested. No advance payments shall be made to without a suitable ad,'anc, payment guarantee. (xiv) The biddin)r do(ument and contract as deemed acceptable by the World Bank shall inch de provisions stating the World Bank's policy to sanction firms o- individ ials, found to have engaged in fraud and corruption as defined in -he P ocurement Guidelines. (xv) In accoirdai ice with the Procurement Guidelines, each bidding document and cot tract fin nced out of the proceeds of the Loan shall provide that bidders., su ppli rs and contractors, and their subcontractors, agents, personi n,e 1, cons.iltants, service providers, or suppliers, shall permit the World 3ark to nspect all accounts, records, and other documents relatini. to the s abmission of bids and contract performance, and to have them aidit.d b:' auditors appointed by the World Bank. Acts intended to materi.lly imp de the exercise of the World Bank's inspection and audit rights proN ided for in the Procurement Guidelines constitute an obstru.tivc pra..tice as defined in the Procurement Guidelines. (d) Particular Methods of I rocurement of Consultants' Services (i) Excepi as otherwise provided in item (ii) below, consultants' services shall be p -ocui ed under contracts awarded on the basis of Quality- and Cost-b ised Sel ,ction. (ii) The f Ilowing methods, other than Quality- and Cost-based Selection, may I t sed for the procurement of consultants' services for those assign ner ts ws aich are specified in the Procurement Plan: (A) Quality- based Sel,-ctio-i; (B) Selection under a Fixed Budget; (C) Least Cost Select on; (D Selection based on Consultants' Qualifications; (E) Single-source Selection of consulting firms; (F) Selection of Individual Consultants; nd (G) Single-source procedures for the Selection of Individual Cor sultants. (e) Review by th: orld Bank of Procurement Decisions. The Procurement Plan shall set forth those contracts whi(h sh ill be subject to the World Bank's Prior Review. All other cortracts shall be subject to Pcst Revie N by the World Bank. 7 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: (a) the Standard Conditions; (b) this Section; and (c) 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 Expenditures Category Allocated to be financed (expressed in USD) (exclusive of Taxes) (1) Works, Goods, 4,675,000 100% Consultants' Services, Training, and Incremental Operating Costs for Parts 3 and 4 of the Project TOTAL AMOUNT 4,675,000 For the purposes of this Section, "Incremental Operating Costs" means the reasonable incremental administration costs of MAFCP and MEFWA administration associated with the implementation of Project activities, including office maintenance, equipment, furniture, materials and supplies, communication costs and cost of fuel for field trips. 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 countersignature of this Agreement by the Recipient. 3.03. Withdrawal Period The Closing Date referred to in Section 3.06 (c) of the Standard Conditions is May 31, 2018. Article IV Recipient's Representative; Addresses 4.01. Recipient's Representative. The Recipient's Representative referred to in Section 7.02 of the Standard Conditions is the Minister of Finance. 4.02. Recipient's Address.. The Recipient's Address referred to in Section 7.01 of the Standard Conditions is: 8 Ministry of Finance Bulevardi Deshmoret e K om it, I 0.1 Tirana, Albania Tel.,pho ie: Facsimile: 355-4-2:12-8405 355-4-222-8494 4.0-. World Bank's Address. The V Torld Bank's Address referred to in Section 7.01 of the Standard Conditions is: International Bank for Recc nstri ction and Development 1818 H Street, N.W. Washington, D.C. 20433 United States o- Ameri.a Cable: Te ex: Facsimile: INTBAFRAD 24 3423 (MCI) or 1-202-477-6391 Washington, D C. 64145 1 MCI) 9