Conformed Copy -T025626 - LGU Urban Water and Sanitation Project - Phase II - Japanese Grant Agreement

Page 1 October 6, 1998 Mr. Edgardo Espiritu Secretary Department of Finance Manila Republic of the Philippines Re: Japanese Grant for Preparation of the Second Phase of the LGU Urban Water and Sanitation Project Grant TF25626 Dear Sir: I am writing on behalf of the International Bank for Reconstruction and Development (the Bank to indicate the Bank's agreement, as administrator of grant funds provided by Japan, to make a grant in an amount not exceeding one million one hundred and fifty dollars ($1,000,150) ( Grant) to the Republic of the Philippines (the Recipient). The Grant is made in response to the Recipient's request for financial assistance and for-the purposes and on the terms and conditions set forth in the Annex to this Letter Agreement. The Recipient represents by confirming its agreement below, that it is authorized to contract and withdraw the Grant for the said purposes and on the said terms and conditions. Please confirm your agreement with the foregoing, on behalf of the Recipient, by signing, dating, and returning to us the enclosed copy of this Letter Agreement. Upon receipt by the Bank of the copy of this Letter Agreement countersigned by you, this Letter Agreement will become effective as of the date of the countersignature Very truly yours, INTERNATIONAL BANK FOR RE NSTRUCTION AND DEVELOPMENT By /s/ Vinay K. Bhargava Country Director, Philippines East Asia and Pacific Region AGREED: REPUBLIC OF THE PHILIPPINES By /s/ JOEL A. BANARES Undersecretary of Finance Date: October 20, 1996 ANNEX Purposes, Terms, and Conditions of the Grant 1. Purposes and Activities . 1.1. The purpose of the Grant is to assist the Recipient in the preparation of the second phase of the proposed LGU Urban Water and Sanitation Program (the Program) in the Local Government Units that will be defined during the preparation of such phase (the Participating LGUs). The activities (the Activities) for which the Grant is given are as follows: (a) Preparation of feasibility studies and engineering designs for the water utilities run by the Participating LGUs based on the procedures of the Operational Manuals developed under the Program's first phase, including determination of budget Page 2 ceilings with long term financial planning models, systematic consultation with mayors and municipal councils before determining the investment levels LGUs would like to borrow for, and determination of service levels and water tariffs with communities in order to ensure full cost recovery; and (b) Organization of discussion workshops with a view to facilitate the involvement of communities and LGUs in the decision making process. 2. Implementation Generally 2.1. The Recipient shall: (a) carry out or cause to be carried out the Activities with due diligence and efficiency; (b) promptly provide the funds, facilities, services and other resources required for that purpose; (c) furnish all information covering the Activities and the use of the proceeds of the Grant as the Bank shall reasonably request; (d) from time to time exchange views with the Bank's representatives on the progress and results of the Activities; and (e) take all necessary measures required to enable the Bank to visit the territory of the Recipient for purposes related to the Grant. Without limitation on the foregoing, the Recipient shall, if the Bank shall so request, prepare and furnish to the Bank promptly upon completion of the Activities a report, in form and substance satisfactory to the Bank, on the results and impact of the Activities. 2.2. The Activities shall be carried out by the Development Bank of the Philippines (DBP) pursuant to a subsidiary grant agreement (the Sub-Grant Agreement) to be entered into between the Recipient and DBP which shall be substantially in the form of Attachment III and under terms and conditions acceptable to the Bank. The Recipient shall transfer the proceeds of the Grant to DPI on a non-reimbursable grant basis and shall cause DBP to carry out the Activities in accordance with DBP's obligations under the Sub-Grant Agreement. The Recipient shall exercise its rights under the Sub-Grant Agreement in such manner as to protect the interests of the Recipient and the Bank and to accomplish the purposes of the Grant, and, except as the Bank shall otherwise agree, shall not assign, amend, abrogate or waive the Sub-Grant Agreement or any provision thereof. 3. Procurement 3.1. Except as the Bank shall otherwise agree, procurement of the consultants' services required for the carrying out of the Activities and to be financed out of the proceeds of the Grant shall be governed by the provisions of Attachment I to this Annex. 4. Withdrawal of Grant Proceeds 4.1. The amount of the Grant shall be credited to an account opened by the Bank on its books in the name of the Recipient (the Grant Account), and may be withdrawn therefrom by the Recipient in accordance with the provisions of this Section 4, for expenditures in respect of the reasonable cost of services required for the Activities and to be financed out of the proceeds of the Grant. 4.2. The expenditures for the following items may be financed out of the proceeds of the Grant and shall be used exclusively in the carrying out of the Activities: Amount of the Grant Allocated % of (in United States Expenditures Category Dollars) to be Financed (1) Consultants