Credit Number 4818-Kh

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CONFORMED COPY

CREDIT NUMBER 4818-KH

GRANT NUMBER H613-KH

Financing Agreement

(Ketsana Emergency Reconstruction and Rehabilitation Project)

between

KINGDOM OF CAMBODIA

and

INTERNATIONAL DEVELOPMENT ASSOCIATION

Dated November 11, 2010

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CREDIT NUMBER 4818-KH

GRANT NUMBER H613-KH

FINANCING AGREEMENT

AGREEMENT dated November 11, 2010, entered into between KINGDOM OF CAMBODIA (“Recipient”) and INTERNATIONAL DEVELOPMENT ASSOCIATION (“Association”). 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) constitute an integral 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, on the terms and conditions set forth or referred to in this Agreement, a grant and a credit (collectively, “Financing”) in the following amounts to assist in financing the Project described in Schedule 1 to this Agreement (“Project”):

(a) an amount equivalent to thirteen million two hundred thousand Special Drawing Rights (SDR 13,200,000) (“Grant”); and

(b) an amount equivalent to thirteen million two hundred thousand Special Drawing Rights (SDR 13,200,000) (“Credit”).

2.02.  The Recipient may withdraw the proceeds of the Financing in accordance with Section IV of Schedule 2 to this Agreement.

2.03.  The Maximum Commitment Charge Rate payable by the Recipient on the Unwithdrawn Financing Balance shall be one-half of one percent (1/2 of 1%) per annum.

2.04. The Service Charge payable by the Recipient on the Withdrawn Credit Balance shall be equal to three-fourths of one percent (3/4 of 1%) per annum.

2.05. The Payment Dates are March 15 and September 15 in each year.

2.06. The principal amount of the Credit shall be repaid in accordance with the repayment schedule set forth in Schedule 3 to this Agreement.

2.07. The Payment Currency is Dollars.

ARTICLE III — PROJECT

3.01.  The Recipient declares its commitment to the objective of the Project. To this end, the Recipient shall carry out Part 1(a) of the Project through MEF, Part 1(b), Part 2 and Part 3 of the Project through MRD, and Part 4 of the Project through NCDM, in each case, in accordance with the provisions of Article IV of the General Conditions.

3.02.  Without limitation upon the provisions of Section 3.01 of this Agreement, and except as the Recipient and the Association shall otherwise agree, the Recipient shall ensure that the Project is carried out in accordance with the provisions of Schedule 2 to this Agreement.

ARTICLE IV — EFFECTIVENESS; TERMINATION

4.01. The Effectiveness Deadline is the date ninety (90) days after the date of this Agreement.

4.02. For purposes of Section 8.05(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 date of this Agreement.

ARTICLE V — REPRESENTATIVE; ADDRESSES

5.01. The Recipient’s Representative is the Minister of Economy and Finance.

5.02. The Recipient’s Address is:

Ministry of Economy and Finance

Street 92, Sang Kat Wat Phnom

Phnom Penh

Kingdom of Cambodia

Facsimile:

855-23-427798 / 855-23-430241

5.03. The Association’s Address is:

International Development Association

1818 H Street, N.W.

Washington, D.C. 20433

United States of America

Cable: Telex: Facsimile:

INDEVAS 248423 (MCI) 1-202-477-6391

Washington, D.C.

AGREED at Phnom Penh, Kingdom of Cambodia, as of the day and year first above written.

KINGDOM OF CAMBODIA

By: /s/ Keat Chhon

Authorized Representative

INTERNATIONAL DEVELOPMENT ASSOCIATION

By: /s/ Qimiao Fan

Authorized Representative

SCHEDULE 1

Project Description

The objective of the Project is to restore the service levels of transport and water and sanitation to the affected people in the Project Provinces and strengthen the Recipient’s capacity in disaster preparedness and management.

The Project consists of the following parts:

Part 1. Support for Emergency Response

Provision of support to the Recipient for, inter alia:

(a)  rehabilitation and reconstruction works needed after the typhoon Ketsana; and

(b)  conducting a road and village survey; and initial preparation and implementation of the Project.

Part 2. Rural Road Rehabilitation and Reconstruction in the Project Provinces and Provision of Community-Level Water Supply and Sanitation Facilities

Provision of support to the Recipient for, inter alia:

(a)  rural road rehabilitation and improvement in accordance with the road village survey referred to in Part 1(b) of this Schedule 1, including:

(i)  rehabilitation of, inter alia, fully and partially damaged gravel surfaced roads, reconstruction of bridges, major culverts and drainage facilities; and

(ii) three (3) years of maintenance of unimproved gravel surface rural roads affected by the typhoon Ketsana;

(b)  dust control, including seal surface treatment in selected villages in accordance with the road village survey referred to in Part 1(b) of this Schedule 1;

(c)  water and sanitation activities, including:

(i)  building community-based wells with hand pumps in selected villages; and

(ii)  providing prefabricated one pour-flush latrines to households.

Part 3. Project Implementation Support

Provision of support to the MRD to, inter alia:

(a)  develop detailed surveys and engineering designs;

(b)  conduct construction supervision;

(c)  monitor contracts deliverables in terms of quantity and quality;

(d)  strengthen capacity of local contractors;

(e)  strengthen MRD’s financial management and reporting;

(f)  strengthen MRD’s capacity in safeguards implementation;

(g)  support to MRD in project management; and

(h)  undertake outreach and dissemination activities on the sustainable use of water and sanitation facilities.

Part 4. Institutional Strengthening and Capacity Building

Provision of support to NCDM to develop, inter alia:

(a) national and provincial risk maps;

(b) emergency management information, an early warning system, and emergency response strategy; and

(c) housing and building codes.

SCHEDULE 2

Project Execution

Section I. Implementation Arrangements

A. Institutional Arrangements

1. For the purpose of providing oversight and overall coordination in the implementation of the Project, the Recipient shall maintain, throughout the period of implementation of the Project, a Project Steering Committee, to be chaired by MEF, with a mandate, terms of reference and composition that shall be satisfactory to the Association, whose membership includes representatives from, inter alia, MEF, MRD and NCDM.

2.  For the purpose of management, coordination and monitoring of the activities under Parts 1(b), 2 and 3 of the Project, the Recipient shall maintain throughout the period of implementation of the Project, an implementation unit within MRD, headed by a Project Director with sufficient resources, appropriately qualified and competent staff in adequate numbers with terms of reference satisfactory to the Association, including, inter alia, a procurement officer, financial management and safeguards specialists, and three (3) Project managers each responsible to coordinate the implementation of Parts 2(a), (b) and (c), respectively.

3.  The Recipient shall ensure that MRD maintains, throughout the period of implementation of the Project:

(a)  that the implementation unit is under the leadership and coordination of a Secretary of State;

(b)  a technical team which will conduct the survey referred to in Part 1(b) of the Project;

(c)  the managing consultant engaged to support the implementation of Parts 2 and 3 of the Project and be responsible for, inter alia, development and management of contracts resulting from the survey developed by the technical team pursuant to paragraph (b) above; and

(d)  the financial management consultant engaged in accordance with Section I.A.6(a) of this Schedule 2 to support the implementation of Parts 1(b), 2 and 3 of the Project.

4.  The Recipient shall, for the purpose of the implementation of Part 4 of the Project, ensure that NCDM:

(a)  maintain throughout the period of implementation of the Project, an implementation unit within NCDM, headed by a Project Director with sufficient resources, appropriately qualified and competent staff in adequate numbers with terms of reference satisfactory to the Association, including, inter alia, a Project Manager, a procurement officer, a financial management specialist, and a head of the technical operation unit;

(b)  carries out Part 4 of the Project in conformity with the financial management manual agreed with the Association under the Avian and Influenza Control and Preparedness Emergency Project;

(c)  develops within two (2) months of the Effective Date, on terms and conditions satisfactory to the Association, and thereafter implement, throughout the period of implementation of the Project, the NCDM Operational Manual for implementing Part 4 of the Project which shall include, inter alia: (i) Project implementation arrangements; (ii) financial arrangements; (iii) procurement procedures consistent with Section III of Schedule 2 to the Financing Agreement and standard procurement documentation; (iv) reporting requirements, financial management procedures and audit procedures; and (v) monitoring and evaluation arrangements; as such Manual shall be acceptable to the Association; and

(d)  does not assign, amend, abrogate, waive or permit to be amended, suspended, abrogated, repealed, or waived, the NCDM Operational Manual or any provisions thereof without the prior written agreement of the Association; and the event of any inconsistency between the provisions of this Agreement and those of the NCDM Operational Manual, the provisions of this Agreement shall prevail.

5.  The Recipient shall ensure that MRD:

(a)  develops within two (2) months of the Effective Date, on terms and conditions satisfactory to the Association, and thereafter implement, throughout the period of implementation of the Project, the MRD Operational Manual for implementing Parts 2 and 3 of the Project which shall include, inter alia: (i) Project implementation arrangements; (ii) financial arrangements; (iii) procurement procedures consistent with Section III of Schedule 2 to the Financing Agreement and standard procurement documentation; (iv) reporting requirements, financial management procedures and audit procedures; (v) monitoring and evaluation arrangements; and (vi) the Environmental Management Framework, and the Resettlement Policy Framework; as such Manual shall be acceptable to the Association; and

(b)  does not assign, amend, abrogate, waive or permit to be amended, suspended, abrogated, repealed, or waived, the MRD Operational Manual or any provisions thereof without the prior written agreement of the Association; and in the event of any inconsistency between the provisions of this Agreement and those of the MRD Operational Manual, the provisions of this Agreement shall prevail.

6.  The Recipient shall ensure that MRD, within one (1) month of the Effective Date:

(a)  engage a financial management consultant with appropriate experience and qualifications and under terms of reference acceptable to the Association; and

(b)  adopt and disclose the Environmental Management Framework, and a Resettlement Policy Framework of the Project both acceptable to the Association and the Recipient shall ensure that the said Resettlement Policy Framework takes into account the following principles:

(i)  avoid involuntary resettlement where feasible and minimize resettlement where population displacement is unavoidable;

(ii)  ensure that displaced people receive compensation, assistance and rehabilitation so that they will be at least as well off as they would have been in the absence of the Project;

(iii)  persons affected by the Project will benefit from the Project; and

(iv)  Project stakeholders, including the persons affected by the Project, are consulted and given the opportunity to participate, as practicable, in the design, implementation, and operation of the Project.

B. Anti-Corruption

The Recipient shall ensure that the Project is carried out in accordance with the provisions of the Anti-Corruption Guidelines and the Good Governance Frameworks.

C. Safeguards

1. The Recipient shall through MRD:

(a) ensure that all civil works to be financed through the Project are technically and economically viable, and have been designed and appraised, with due regard for public health, safety, social and environmental standards acceptable to the Association, and pursuant to the Environmental Management Framework;

(b) prior to the commencement of any civil work, ensure that an environmental screening for such civil work has been carried out and, if necessary on the basis of such screening and the Environmental Management Framework, an appropriate environmental impact assessment has been carried out and prepared by the Recipient, satisfactory to the Association, in order to determine any measures to be taken to prevent, minimize, mitigate or compensate any environmentally adverse effects;

(c) for each civil work: (i) minimize land acquisition; (ii) require that all civil works involving land acquisition meet commitments to replace acquired land with equivalent or better land or other equivalent productive assets; (iii) emphasize participatory resolution of land issues; (iv) ensure sign-off that the land acquisition rules are followed by the Project staff; (v) prepare an Environmental Management Plan, satisfactory to the Association, in accordance with the Environmental Management Framework; and (vi) require a full Resettlement Action Plan or an abbreviated Resettlement Action Plan, as the case may be, satisfactory to the Association, in accordance with the Resettlement Policy Framework in the event that any resettlement involves more than two hundred (200) persons, or less than two hundred (200) persons, respectively;

(d) (i) prior to the commencement of any civil work, ensure that a social screening of such civil work has been carried out and, if necessary on the basis of such screening and the Resettlement Policy Framework, all necessary actions have been taken in order 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; and (ii) in the event that the civil works would give rise to Displaced Persons ensure that a Resettlement Action Plan, satisfactory to the Association, has been prepared and implemented prior to commencing such civil works, in accordance with the Resettlement Policy Framework, and thereafter implement said Resettlement Action Plan in a manner and substance satisfactory to the Association;

(e) furnish to the Association for its prior approval any revisions proposed to be introduced into the Environmental Management Framework, the Resettlement Policy Framework, any Environmental Management Plan, and any Resettlement Action Plan in order to achieve their objectives; and thereafter introduce such revisions into and implement such Environmental Management Framework, Resettlement Policy Framework, Environmental Management Plan, and Resettlement Action Plan in a manner and substance satisfactory to the Association; and