Global Environment Facility Trust Fund Grant Agreement. (Sustainability of the National System of Protected Areas Project - SERNAP) between

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1 Public Disclosure Authorized CONFORMED COPY GEF TRUST FUND GRANT No Public Disclosure Authorized Global Environment Facility Trust Fund Grant Agreement (Sustainability of the National System of Protected Areas Project - SERNAP) between REPUBLIC OF BOLIVIA and Public Disclosure Authorized Public Disclosure Authorized INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT acting as an Implementing Agency of the Global Environment Facility Dated February 16, 2001 GLOBAL ENVIRONMENT FACILITY TRUST FUND GRANT AGREEMENT GEF TRUST FUND GRANT No AGREEMENT, dated February 16, 2001, between REPUBLIC OF BOLIVIA (Bolivia) and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (the Bank) acting as Implementing Agency of the Global Environment Facility (the GEF), in respect of Grant funds provided to the Global Environment Facility Trust Fund (GEF Trust Fund) by certain members of the Bank as participants of the GEF. WHEREAS (A) the Bank, pursuant to Resolution No of March 14, 1991 of its Executive Directors, established the GEF to assist in the protection of the global environment and promote thereby environmentally sound and sustainable economic development; WHEREAS (B) following the restructuring of the GEF, such arrangements continued in place on the basis set forth in Resolution No of May 24, 1994 of the Executive Directors of the Bank, which, inter alia, established the GEF Trust Fund, authorized the first replenishment of the GEF Trust Fund and appointed the Bank as Trustee of the GEF Trust Fund (Resolution No. 94-2); WHEREAS (C) the second replenishment of the GEF Trust Fund was approved on the basis set forth in Resolution No of July 14, 1998, of the Executive Directors of the Bank (Resolution No. 98-2); WHEREAS (D) the Recipient, having satisfied itself as to the feasibility and priority of the project described in Schedule 2 to this Agreement (the Project), has requested assistance from the resources of the GEF Trust Fund for funding the Project, and said request having been approved in accordance with the provisions of the

2 Instrument for the Establishment of the Restructured Global Environment Facility approved under Resolution 94-2 and to be funded from the resources of the GEF Trust Fund; WHEREAS (E) by an agreement of even date herewith between the Bank, also acting as Implementing Agency of the GEF, and Fundación para el Desarrollo del Sistema Nacional de Areas Protegidas (FUNDESNAP), the Bank has agreed to make available additional GEF resources, on a grant basis, for the carrying out of Part D of the Project in an aggregate principal amount equivalent to four million one-hundred thousand Special Drawing Rights (SDR 4,100,000) (the FUNDESNAP GEF Trust Fund Grant), but only on condition that Bolivia agree to undertake such obligations toward the Bank as are set forth on this Agreement; WHEREAS (F) Bolivia has received from the Government of the Kingdom of the Netherlands (the Netherlands), grants (the Dutch Grants) in an aggregate amount equivalent to approximately $5,370,000 to assist in financing Bolivia s national system of protected areas (Sistema Nacional de Areas Protegidas - SNAP) on the terms and conditions set forth in agreements (the Dutch Grant Agreements) entered into between Bolivia and the Netherlands; WHEREAS (G) Bolivia has received from the Government of Germany (Germany), grants (the German Grants) in an amount equivalent to approximately $11,370,000 to assist in financing SNAP on the terms and conditions set forth in agreements (the German Grant Agreements) entered into between Bolivia and Germany; WHEREAS (H) Bolivia, the Netherlands, Germany and the Bank intend to enter into agreements regulating certain matters of common interest in connection with such financing; WHEREAS (I) the Bank has received a letter dated November 29, 2000 from Bolivia describing Bolivia s program for SNAP during the period 2000 to 2015 (the SNAP Program), of which the Project constitutes the first phase, setting forth Bolivia s plan of actions over the medium and longer term to achieve the development and strengthening of SNAP; and WHEREAS the Bank has agreed, on the basis, inter alia, of the foregoing, to extend the SERNAP GEF Trust Fund Grant to Bolivia upon the terms and conditions set forth in this Agreement; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I General Conditions; Definitions Section (a) The following provisions of the "General Conditions Applicable to Loan and Guarantee Agreements for Single Currency Loans" of the Bank, dated May 30, 1995 (as amended through October 6, 1999), with the modifications set forth in paragraph (b) of this Section (the General Conditions) constitute an integral part of this Agreement: (i) Article I; Sections 2.01 (1), (2), (3), (4), (5), (6), (7) (8), (9), (10), (14), (15), (16), (18) and (21), 2.02 and 2.03; (iii) Section 3.01; (iv) Sections 4.01 and 4.06; (v) Article V; (vi) (vii) Sections 6.01, 6.02 (c), (e), (f), (g), (i), (l), (m), (n), (o) and (p), 6.03, 6.04 and 6.06; Section 8.01 (b);

3 (viii)sections 9.01 (a) and (c), 9.04, 9.05, 9.06, 9.07, 9.08 and 9.09; (ix) Section 10.01, and 10.04; (x) Article XI; and (xi) Sections (c), and (b) The General Conditions shall be modified as follows: International of Agreement"; (i) a new paragraph shall be added to the end of Section 2.01 to read as follows: "the term "Special Drawing Rights" and the symbol "SDR" mean special drawing rights as valued by the Monetary Fund in accordance with its Articles use as an which the for (iii) (iv) (v) (vi) (vii) the term "Bank", wherever used in the General Conditions, other than in Sections 2.01 (6) and 6.02 (f) thereof, and the last of such term in Section 5.01 thereof, means the Bank acting Implementing Agency of the GEF, except that in Section 6.02, the term "Bank" shall also include the Bank acting in its own capacity; the term "Borrower", wherever used in the General Conditions, means Bolivia; the term "Loan Agreement", wherever used in the General Conditions, means this Agreement; the term "Loan" and "loan", wherever used in the General Conditions, means the SERNAP GEF Trust Fund Grant; the term "Loan Account", wherever used in the General Conditions, means the SERNAP GEF Trust Fund Grant Account, the account to be open by the Bank on its books in the name of Bolivia to amount of the SERNAP GEF Trust Fund Grant will be credited; a new subparagraph (q) shall be added after subparagraph (p) in Section 6.02 as follows: "(q) An extraordinary situation shall have arisen in which any further disbursement under the SERNAP GEF Trust Fund Grant would exceed the resources available disbursement from the GEF."; and (viii)section 9.07 (c) is modified to read: such request, on of derived their SERNAP recommendations phase of the "(c) No later than six months before the Closing Date, Bolivia shall prepare and furnish to the Bank a report, of scope and in such detail as the Bank shall reasonably the execution and continued operation of Parts A, B, C and E the Project, its cost and the benefits derived and to be from it, the performance by Bolivia and the Bank of respective obligations under the SERNAP GEF Trust Fund Grant Agreement, and the accomplishment of the purposes of the GEF Trust Fund Grant, and setting forth Bolivia s for the commencement and execution of the second SNAP Program." Section Unless the context otherwise requires, the several terms defined in the Preamble to this Agreement and in the General Conditions have the respective meanings therein set forth and the following additional terms have the following meanings: (a) "BCB" means Bolivia s central bank (Banco Central de Bolivia); (b) "Biodiversity Legislation" means the law to be approved by the Bolivian Congress for the conservation of biodiversity in the territory of Bolivia;

4 (c) "CAS Strategic Objectives for Opportunity" means Bolivia s strategic objectives set forth in the second column of the table in pages 2 through 5 of Annex B1 to the Memorandum of the President of the International Development Association and the International Finance Corporation to the Executive Directors on a Country Assistance Strategy for the Republic of Bolivia, dated May 21, 1998; (d) "Disbursement Letter" means the letter of even date herewith from the Bank to Bolivia setting forth the procedures for the withdrawal of the proceeds of the SERNAP GEF Trust Fund Grant; (e) "Environmental Impact Framework" means Bolivia s environmental impact framework for the civil works to be financed out of the proceeds of the SERNAP GEF Trust Fund Grant in Selected Protected Areas (as hereafter defined) referred to in the letter from Bolivia to the Bank dated December 15, 2000; (f) "Fiscal Year" means Bolivia s fiscal year which commences on January 1 and ends on December 31 of each calendar year; (g) "General Regulations for Protected Areas" means Bolivia s general regulations for Protected Areas (as hereinafter defined) approved by Supreme Decree No of July 31,1997; (h) "Implementation Agreement" means the agreement entered into between SERNAP and FUNDESNAP on October 27, 2000, and such term includes all schedules and agreements supplemental to the Implementation Agreement; (i) "Indigenous Strategy" means Bolivia s indigenous strategy for the Project referred to in the letter from Bolivia to the Bank dated December 15, 2000, that contains the principles and guidelines for the development of indigenous peoples living in Selected Protected Areas (as hereafter defined); (j) "Key SERNAP Personnel" means the personnel referred to in Section 6.01 (a) of this Agreement; (k) "Management Council" means any council established pursuant to Article 1 of Supreme Decree No of October 6, 2000 and Article 47 of the General Regulations for Protected Areas; (l) "Management Plan" means any plan prepared pursuant to Article 28 of the General Regulations for Protected Areas; (m) Hacienda); "Ministry of Finance" means Bolivia s ministry of finance (Ministerio de (n) "NRM Subproject" means any natural resource management subproject to be carried out by communities living in the Selected Protected Areas (as hereinafter defined) under Part E of the Project, as provided in the SERNAP Operational Manual (as hereinafter defined); (o) "Participation Arrangement" means any of the arrangements to be entered into between SERNAP and the Management Council of a Selected Protected Area (as hereinafter defined), pursuant to the provisions of paragraph 2 of Schedule 5 to this Agreement, and such term includes all schedules and arrangements supplemental to any Participation Arrangement; (p) "Population Issues Framework" means Bolivia s population issues framework for the Project referred to in the letter from Bolivia to the Bank dated December 15, 2000, that contains the principles and guidelines for eventual resettlement of the population living in Selected Protected Areas (as hereinafter defined) or limitations in the use of, or access to, natural resources in such Areas; (q) "Project Coordinator" means the Project coordinator referred to in Section 6.01 (a) (i) of this Agreement; (r) "Project Implementation Plan" means SERNAP s Project implementation plan referred to in the letter from SERNAP to the Bank dated December 15, 2000; (s) "Project Management Report" means each report prepared in accordance with Section 4.02 of this Agreement; (t) "Protected Area" means any area established pursuant to Article 2 of the General Regulations for Protected Areas;

5 (u) "Protected Areas Legislation" means the legislation to be passed by the Bolivian Congress providing a permanent framework for Protected Areas in the territory of Bolivia; (v) "Selected Protected Area" means any Protected Area listed in Schedule 6 to this Agreement, as the same may be amended from time to time by agreement between Bolivia and the Bank; (w) "SERNAP Annual Work Program" means the work program referred to in Section 3.05 (b) of this Agreement; (x) "SERNAP Operational Manual" means the operational manual of SERNAP referred to in the letter from SERNAP to the Bank dated December 15, 2000 that provides, inter alia: (a) detailed arrangements for the overall carrying out of Parts A, B, C and E of the Project including the participation of, and consultation with, indigenous peoples living in the Selected Protected Areas; (b) the requirements for the carrying out of any civil works to be financed out of the proceeds of the SERNAP GEF Trust Fund Grant, including the preparation of environmental and social assessments in accordance with the Environmental Impact Framework, and the implementation of the preventive and mitigation measures recommended by such assessments as approved by the Bank; and (c) the criteria for the selection of NRM Subprojects, as well as appropriate procedures for related monitoring and evaluation; (y) "SERNAP Performance Benchmarks" means the indicators for monitoring and evaluating progress towards the attainment of Project objectives set forth in Schedule 4 to this Agreement; (z) "Special Account" means the account referred to in paragraph 1 of Part B of Schedule 1 to this Agreement; and (aa) "Stakeholder" means any civil society organization operating in Bolivia interested in Protected Areas management and biodiversity conservation, including local communities, non-governmental organizations, and academic and scientific institutions. ARTICLE II The SERNAP GEF Trust Fund Grant Section The Bank agrees to make available to Bolivia, on the terms and conditions set forth or referred to in this Agreement, the SERNAP GEF Trust Fund Grant in an amount in various currencies equivalent to seven million eight-hundred thousand Special Drawing Rights (SDR 7,800,000). Section The amount of the SERNAP GEF Trust Fund Grant may be withdrawn from the SERNAP GEF Trust Fund Grant Account in accordance with the provisions of Schedule 1 to this Agreement for expenditures made (or, if the Bank shall so agree, to be made) in respect of the reasonable cost of goods, works and services required for Parts A, B, C and E of the Project and to be financed out of the proceeds of the SERNAP GEF Trust Fund Grant. Section The Closing Date shall be June 30, 2006 or such later date as the Bank shall establish. The Bank shall promptly notify Bolivia of such later date. ARTICLE III Execution of the Project Section Bolivia declares its commitment to the objectives of the Project as set forth in Schedule 2 to this Agreement and, to this end shall: (a) carry out, through SERNAP, Parts A, B, C and E of the Project, with due diligence and efficiency and in conformity with appropriate managerial, administrative, financial, ecological, environmental and conservation practices, and shall provide, promptly as needed, the funds, facilities, services and other resources

6 required for the Project; and (b) (i) assist FUNDESNAP in complying, in accordance with the provisions of the FUNDESNAP GEF Trust Fund Grant Agreement, with all the obligations of FUNDESNAP therein set forth; and not take or permit to be taken any action which would prevent or interfere with such compliance by FUNDESNAP. Section Without limitation upon the provisions of Section 3.01 of this Agreement, and except as Bolivia and the Bank may otherwise agree, Bolivia shall carry out Parts A, B, C and E of the Project in accordance with: (a) the Key Implementation Provisions set forth in Schedule 5 to this Agreement; (b) the Environmental Impact Framework; (c) the Population Issues Framework; and (d) the Indigenous Strategy, as applicable, so as to achieve SERNAP Performance Benchmarks. Section Except as the Bank shall otherwise agree, procurement of the goods, works and services required for Parts A, B, C and E of the Project and to be financed out of the proceeds of the SERNAP GEF Trust Fund Grant shall be governed by the provisions of Schedule 3 to this Agreement. Section Bolivia shall: (a) without limitation upon the provisions of Sections 9.01 (a) and 9.07 of the General Conditions, not later than July 31 of each year during the execution of the Project, furnish to the Bank reports on the progress in the implementation of Parts A, B, C and E of the Project, of such scope and in such detail as the Bank may reasonably request; (b) not later than September 30 of each year during Project implementation, hold reviews with the Bank and FUNDESNAP on the progress in the implementation of Parts A, B, C and E of the Project, such reviews to be based on the reports referred to in paragraphs (a) and (b) above; and (c) thereafter, take or cause to be taken all such action which shall have been agreed upon with the Bank and FUNDESNAP, during the reviews referred to in paragraph (b) above, as necessary or advisable for the efficient execution of Parts A, B, C and E of the Project and the attainment of its objectives, such action to be taken in a manner satisfactory to the Bank. Section Bolivia shall: (a) not later than October 31 of each year, furnish to the Bank, for its review and approval, a proposed annual work program prepared with participation of the Management Councils operating in the Selected Protected Areas and representatives of the Stakeholders; such program to specify the activities to be financed out of the proceeds of the SERNAP GEF Trust Fund Grant during the following year for the purposes of the implementation of Parts A, B, C and E of the Project; and (b) carry out such SERNAP Annual Work Program, under terms and conditions satisfactory to the Bank. Section Not later than September 30, 2005, Bolivia shall: (a) retain the services of consultants of experience and qualifications satisfactory to the Bank, under terms of reference satisfactory to the Bank, to carry out an independent evaluation of the implementation of Parts A, B, C and E of the Project; and (b) promptly thereafter, furnish to the Bank and FUNDESNAP the report of such independent evaluation. ARTICLE IV Financial Covenants Section (a) Bolivia shall maintain, within SERNAP, financial management systems, including records and accounts, and prepare financial statements in a format acceptable to the Bank, adequate to reflect the operations, resources and expenditures

7 related to Parts A, B, C and E of the Project. (b) Bolivia shall: accordance consistently Bank; (A) and (B) report such detail (i) (iii) have the records, accounts and financial statements referred to in paragraph (a) of this Section, and the records and accounts for the Special Account, for each Fiscal Year audited in with auditing standards acceptable to the Bank, applied, by independent auditors acceptable to the furnish to the Bank, as soon as available, but in any case not later than four (4) months after the end of each such Year: certified copies of the financial statements referred to in paragraph (a) of this Section for such Year as so audited; an opinion on such statements, records and accounts and of such audit by said auditors, of such scope and in as the Bank shall have reasonably requested; and furnish to the Bank such other information concerning said records and accounts, and the audit thereof, and concerning said auditors as the Bank shall from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the SERNAP GEF Trust Fund Grant Account were made on the basis of Project Management Reports or statements of expenditure, Bolivia shall: withdrawal records documents) the auditors of the preparation, withdrawals. (i) (iii) (iv) maintain or cause to be maintained, in accordance with paragraph (a) of this Section, records and accounts reflecting such expenditures; retain, until at least one (1) year after the Bank has received the audit report for the Fiscal Year in which the last from the SERNAP GEF Trust Fund Grant Account was made, all (contracts, orders, invoices, bills, receipts and other evidencing such expenditures; enable the Bank s representatives to examine such records; and ensure that such records and accounts are included in the annual audit referred to in paragraph (b) of this Section and that report of such audit contains a separate opinion by said as to whether the Project Management Reports or statements expenditure submitted during such Fiscal Year, together with procedures and internal controls involved in their can be relied upon to support the related Section (a) Without limitation upon the provisions of Section 4.01 of this Agreement, Bolivia, through SERNAP, shall carry out a time-bound action plan acceptable to the Bank for the strengthening of its financial management system for Parts A, B, C and E of the Project in order to enable SERNAP, not later than four (4) months after the Effective Date or such later date as the Bank shall agree, to prepare quarterly Project management reports, acceptable to the Bank, each of which: shows following (i) (A) sets forth actual sources and applications of funds for Parts A, B, C and E of the Project, both cumulatively and for the period covered by said report, and projected sources and applications of funds for Parts A, B, C and E of the Project for the six-month period following the period covered by said report, and (B) separately expenditures financed out of the proceeds of the SERNAP GEF Trust Fund Grant during the period covered by said report and expenditures proposed to be financed out of the proceeds of the SERNAP GEF Trust Fund Grant during the six-month period the period covered by said report;

8 covered actual and of the (iii) (A) describes physical progress in the implementation of such Parts of the Project, both cumulatively and for the period by said report, and (B) explains variances between the previously forecast implementation targets; and sets forth the status of procurement under Parts A, B, C and E of the Project and expenditures under contracts financed out of the proceeds of the SERNAP GEF Trust Fund Grant, as at the end period covered by said report. (b) Upon the completion of the action plan referred to in paragraph (a) of this Section, Bolivia, through SERNAP, shall prepare in accordance with guidelines acceptable to the Bank, and furnish to the Bank not later than forty-five (45) days after the end of each calendar quarter a Project Management Report for such period. ARTICLE V Remedies of the Bank Section Pursuant to Section 6.02 (p) of the General Conditions, the following additional events are specified: (a) for any Fiscal Year listed in the table in Schedule 4 to this Agreement any of the Performance Benchmarks shall have not reached the level indicated in said table, provided, however, that if such event occurs, and without prejudice to the rights of the Bank under Section 6.02 (p) of the General Conditions, Bolivia and the Bank shall exchange views on the situation in an effort to determine the most appropriate remedial measures to ensure the achievement of the objectives of the Project; Dutch or (b) (i) Subject to subparagraph of this paragraph, the right of Bolivia to withdraw the proceeds of any grant (including the Grants and the German Grants) or loan made to Bolivia for the financing of the Project shall have been suspended, canceled terminated in whole or in part, pursuant to the terms of the agreements providing therefor; Subparagraph (i) of this paragraph shall not apply if Bolivia establishes to the satisfaction of the Bank that: obligations (A) (B) such suspension, cancellation or termination is not caused by the failure of Bolivia to perform any of its under such agreements; and adequate funds for the Project are available to Bolivia from other sources on terms and conditions consistent with the obligations of Bolivia under this Agreement; and (c) the Biodiversity Legislation or the Protected Areas Legislation shall have not been approved, in form and substance satisfactory to the Bank, by June 30, 2003; (d) FUNDESNAP shall have failed to perform any obligation under the FUNDESNAP GEF Trust Fund Grant Agreement; and (e) the FUNDESNAP GEF Trust Fund Grant Agreement shall have failed to become effective by a date which is six (6) months from the Effective Date, or such later date as the Bank may agree. ARTICLE VI Effective Date, Termination Section The following events are specified as conditions precedent to the

9 effectiveness of the SERNAP GEF Trust Fund Grant Agreement within the meaning of Section (c) of the General Conditions: (a) that: (i) a Project coordinator of experience and qualifications acceptable to the Bank shall have been appointed by SERNAP, under terms of reference satisfactory to the Bank; and key personnel specified in SERNAP Operational Manual for the implementation of Parts A, B, C and E of the Project of experience and qualifications acceptable to the Bank shall have been selected by SERNAP, under terms of reference satisfactory to the Bank; and (b) that the auditor referred to in Section 4.01 (b) (i) of this Agreement shall have been appointed. Section The date May 16, 2001 is hereby specified for the purposes of Section of the General Conditions. ARTICLE VII Representative of Bolivia; Addresses Section The Minister of Finance of Bolivia is designated as representative of Bolivia for the purposes of Section of the General Conditions. Section The following addresses are specified for the purposes of Section of the General Conditions: For Bolivia: Ministerio de Hacienda Palacio de Comunicaciones, Piso 19 Av. Mariscal Santa Cruz, esq. Calle Oruro s/n La Paz, Bolivia For the Bank: Cable address: FINANZA La Paz, Bolivia International Bank for Reconstruction and Development 1818 H Street, N.W. Washington, D.C United States of America Cable address: Telex: INTBAFRAD (MCI) or Washington, D.C (MCI) IN WITNESS WHEREOF, the parties hereto, acting through their duly authorized representatives, have caused this Agreement to be signed in their respective names in La Paz, Bolivia, as of the day and year first above written. REPUBLIC OF BOLIVIA By /s/ Mario Requena Pinto Authorized Representative INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT

10 By /s/ John L. Newman Regional Vice President Latin America and the Caribbean SCHEDULE 1 Withdrawal of the Proceeds of the SERNAP GEF Trust Fund Grant Part A. General 1. The table below sets forth the Categories of items to be financed out of the proceeds of the SERNAP GEF Trust Fund Grant, allocation of the amounts of the SERNAP GEF Trust Fund Grant to each Category and the percentage of expenditures for items so to be financed in each Category: Amount of the SERNAP GEF Trust % of Fund Grant Allocated Expenditures Category (Expressed in SDR Equivalent) to be Financed (1) Works 740,000 85% (2) Goods 590, % of foreign expenditures and 85% of local expenditures (3) Consultants 2,140, % services and training (4) NRM Subprojects 310, % (5) SERNAP Incremental Recurrent Costs (a) For SERNAP s central offices 200,000 85% (b) For Selected Protected Areas (i) First year from the 1,080,000 85% Effective Date Second and third years 1,090,000 70% from the Effective Date (iii) Fourth and fifth years 1,000,000 40% from the Effective Date (6) Unallocated 850,000 TOTAL 7,800, For the purposes of this Section A of Schedule 1, the terms: (a) "foreign expenditures" means expenditures in the currency of any country other than Bolivia for goods supplied from the territory of any country other than Bolivia; (b) "local expenditures" means expenditures in the currency of Bolivia or for goods supplied from the territory of Bolivia; (c) "SERNAP Incremental Recurrent Costs" means SERNAP incremental recurrent administrative expenditures arising from Project implementation, including later alia:

11 (i) office space and utilities; office equipment and supplies; and (iii) staff salaries and benefits of the central and regional offices of SERNAP; and (d) "training" means expenditures incurred by SERNAP in connection with the carrying out of training activities under Parts A, B, C and E of the Project, including tuition, travel cost and per diem of trainers and trainees, rental of facilities and equipment, and training materials. 3. Notwithstanding the provisions of paragraph 1 above, no withdrawals shall be made in respect of payments made for expenditures prior to the date of this Agreement, except that withdrawals, in an aggregate amount not exceeding the equivalent of SDR 196,000, may be made in respect of Categories (1) through (5) of the table in Part A.1 of this Schedule on account of payments made for expenditures incurred within twelve (12) months prior to the date of this Agreement. 4. The Bank may require withdrawals from the SERNAP GEF Trust Fund Grant Account to be made on the basis of statements of expenditure for expenditures for goods, works, services, training and SERNAP Incremental Recurrent Costs, as set forth in the Disbursement Letter. Part B. Special Account 1. Bolivia shall open and maintain in Dollars a separate special deposit account for Parts A, B, C and E of the Project in BCB, on terms and conditions satisfactory to the Bank. Deposits into, and withdrawals from, the Special Account shall be made in accordance with the provisions of this Schedule and the procedures set forth in the Disbursement Letter. 2. (a) For the purposes of this Part B, the terms: and the time to (i) "Eligible Categories" means Categories (1) through (5) set forth in the table in Part A.1 of Schedule 1 to this Agreement; "Eligible Expenditures" means the expenditures referred to in Section 2.02 (a) of this Agreement and to be financed out of proceeds of the SERNAP GEF Trust Fund Grant allocated from time to the Eligible Categories. (b) Payments out of the Special Account shall be made exclusively for Eligible Expenditures. For each payment made out of the Special Account, Bolivia shall, at such time as the Bank shall reasonably request, furnish to the Bank such documents and other evidence showing that such payment was made exclusively for Eligible Expenditures. If the Bank determines at any time that any payment out of the Special Account was made for an expenditure which is not an Eligible Expenditure, the Bank may require the deposit into the Special Account (or, if the Bank shall so determine, require the refund to the Bank) of an amount equal to the amount of such payment. 3. The Bank shall not be required to make further deposits into the Special Account if, at any time: (a) Bolivia shall have failed to furnish to the Bank, within the period of time specified in Section 4.01 (b) of this Agreement, any of the audit reports required to be furnished to the Bank pursuant said Section in respect of the audit of the records and accounts for the Special Account; and (b) the Bank shall have notified Bolivia of its intention to suspend in whole or in part the right of Bolivia to make withdrawals from the SERNAP GEF Trust Fund Grant Account pursuant to Section 6.02 of the General Conditions. Upon such notification, the Bank shall determine, in its sole discretion, whether further deposits into the Special Account may be made and what procedures should be followed for making such deposits, and shall notify Bolivia of its

12 determination. SCHEDULE 2 Description of the Project In order to contribute to the achievement of the CAS Strategic Objectives for Opportunity, the objective of the Project is to conserve Bolivia s globally significant biodiversity through the sustainable management of SNAP. The Project, which constitutes the first phase of the SNAP Program, consists of the following Parts, subject to such modifications thereof as Bolivia, FUNDESNAP and the Bank may agree upon from time to time to achieve such objectives: Part A: Institutional and Policy Development Consolidation of SERNAP s role as the regulatory agency of SNAP by strengthening its planning and management capacities and its ability to operate as an autonomous institution, through: (a) preparation of a long-term master plan that sets forth policies, strategies and priorities for the management of Protected Areas, and carrying out of: (i) analysis of biodiversity gaps; and studies on re-categorization, boundary demarcation, abandonment and legal status of Protected Areas. (b) preparation of SERNAP s strategic institutional and financial plan, including a medium-term financial strategy; (c) strengthening of SERNAP s financial collection systems and revenue generation mechanisms; (d) institutional strengthening of SERNAP in the areas of planning, monitoring, evaluation and management; and Part B: (e) setting up of Project coordination mechanisms. Management of Selected Protected Areas Strengthening of the planning and management capacities of the Management Councils of Selected Protected Areas aimed at enhancing participation of local communities in decision-making, through: (a) strengthening of the operational capacity of the Selected Protected Areas, including preparation and implementation of Management Plans, capacity-building and environmental education of neighboring communities; and (b) strengthening of local participation and inter-institutional coordination in the Selected Protected Areas, including the establishment and operation of the respective Management Councils. Part C: Legal and Regulatory Framework Establishment of an adequate legal and regulatory framework for biodiversity conservation in Bolivia and management of SNAP, through: (a) Legislation; (b) preparation and dissemination of proposals for the Protected Areas review of cross-sectoral legislation, identification of gaps and

13 inconsistencies, and preparation of amendment proposals; and (c) preparation of specific SNAP regulations, including zoning, environmental protection and services, tourism and related activities within Protected Areas. Part D: Sustainable Financing Strengthening of SNAP through: (a) establishment and capitalization of FUNDESNAP, aimed at financing the incremental recurrent costs of managing the Selected Protected Areas; (b) initial support to FUNDESNAP aimed at: (i) consolidating the legal, financial and operational structure of FUNDESNAP; and providing managerial and technical support to enable FUNDESNAP to assume its financial and administrative oversight responsibilities in connection with the FUNDESNAP GEF Trust Fund Grant; and Part E: (c) long-term operation and administration of FUNDESNAP. Biodiversity Management and Monitoring in Selected Protected Areas Consolidation of resource management and monitoring in Selected Protected Areas and their buffer zones, through: (a) development of specific models for biodiversity and natural resources management in Selected Protected Areas, including systematization of ongoing experiences, piloting and validating such models, and sharing their results; and (b) monitoring and evaluation of biodiversity conservation, including the design and implementation of a system that evaluates the efficiency of conservation programs in place and provides SERNAP with inputs for planning for decision-making. * * * The Project is expected to be completed by December 31, SCHEDULE 3 Procurement and Consultants Services Section I. Procurement of Goods and Works 1. Guidelines Goods and works shall be procured in accordance with: (a) the provisions of Section I of the "Guidelines for Procurement under IBRD Loans and IDA Credits" published by the Bank in January 1995 and revised in January and August 1996, September 1997 and January 1999 (the Guidelines), as such Guidelines may be revised by the Bank from time to time; and (b) the applicable provisions of this Schedule. 2. Grouping of Contracts (a) Contracts for goods and works shall be packaged in sizes adequate to attract maximum competition and to ensure economy and efficiency in the procurement process. Contracts shall not be divided into smaller units in order to make them less appropriate for competitive procedures. Any proposal to divide a contract into smaller packages shall require the Bank s prior approval. (b) To the extent practicable contracts for goods and works shall be grouped in bid packages estimated to cost $200,000 and $250,000 equivalent or more each,

14 respectively. 3. Preference for Domestically Manufactured Goods In the procurement of goods under ICB (as defined below in Section V), the provisions of paragraphs 2.54 of the Guidelines and Appendix 2 thereto shall apply to goods manufactured in Bolivia. 4. Standard Documents In the procurement of goods or works under NCB, S(I/N) and PSW (as defined below in Section V), Bolivia shall use standard documents acceptable to the Bank. Section II: Employment of Consultants Consultant Guidelines Consultants services shall be procured in accordance with: (a) the provisions of the Introduction and Section IV of the "Guidelines: Selection and Employment of Consultants by World Bank Borrowers" published by the Bank in January 1997 and revised in September 1997 and January 1999 (the Consultant Guidelines), as such Consultant Guidelines may be revised by the Bank from time to time; and (b) the applicable provisions of this Schedule. Section III: Records and Audits 1. Records (a) Bolivia shall: (i) maintain Procurement Records (as hereinafter defined) adequate to reflect in accordance with sound procurement practices (including related supervision, review and auditing) the procurement activities with regard to Parts A, B, C and E of the Project; and ensure that all such Procurement Records (as hereinafter defined) evidencing such procurement activities are retained until at least two (2) years after the Closing Date. (b) For the purposes of this Section, Procurement Records mean: firms amendments; of time (i) with respect to procurement of goods and works: public notices of bidding opportunities; bidding documents and addenda; bid opening information; bid evaluation reports; formal appeals by bidders and outcomes; signed contracts, addenda and amendments; records on claims and dispute resolution; and records of time taken to complete key steps in the process; and with respect to selection of consultants: public notices for expressions of interest; requests for proposals and addenda; technical and final evaluation reports; formal appeals by and related outcomes; signed contracts, addenda and records on claims and dispute resolution, and records taken to complete key steps. 2. Audits: Bolivia shall: (a) have the Procurement Records audited each Fiscal Year, in accordance with internationally accepted procurement standards consistently applied, by independent procurement experts acceptable to the Bank; (b) furnish to the Bank, as soon as available, but in any case not later than four (4) months after the end of each such Year, the report of said audit, of such scope and in such detail as the Bank shall have reasonably requested; and (c) at any time during Project implementation, furnish to the Bank such other information concerning said audit, as the Bank may reasonably request. Section IV: Review of Procurement Action

15 1. Prior to the issuance of: (a) any invitations to bid for goods or works, the proposed procurement plan for Parts A, B, C and E of the Project shall be furnished to the Bank for its review and approval, in accordance with the provisions of paragraph 1 of Appendix 1 to the Guidelines. Procurement of all goods and works shall be undertaken in accordance with such procurement plan as shall have been approved by the Bank (the Procurement Plan), and with the provisions of said paragraph 1; and (b) any requests for proposals to consultants, the proposed consultant selection process plan for Parts A, B, C and E of the Project shall be furnished to the Bank for its review and approval, in accordance with the provisions of paragraph 1 of Appendix 1 to the Consultant Guidelines. Selection of all consultants services shall be undertaken in accordance with such selection process plan as shall have been approved by the Bank (the Consultant Selection Process Plan), and with the provisions of said paragraph Not later than June 1 and December 1 of each year of Project implementation, Bolivia shall furnish to the Bank, for its review and approval, a detailed update of the Procurement Plan and the Consultant Selection Process Plan for the upcoming calendar semester prepared under TORs (as defined below in Section V) satisfactory to the Bank. Such update shall include: (a) a firm list of contracts to be procured in the upcoming calendar semester and a tentative list of contracts to be procured in the subsequent semester; (b) estimated contract costs; (c) schedule for bidding; (d) particular methods of procurement of goods or works, or selection of consultants; and (e) particular thresholds and other criteria for Prior Review or Prior Review for Consultants (as defined below in Section V). 3. Bolivia shall arrange the publication of a summary of the Procurement Plan and the Consultant Selection Process Plan and any update thereof in Development Business * * See footnote 19 to paragraph 2.7 of the Guidelines.. 4. Bolivia and the Bank shall, from time to time, at the request of any one of them, exchange views with regard to the progress in the implementation of the Procurement Plan and the Consultant Selection Process Plan. 5 Any modification to the Procurement Plan and the Consultant Selection Process Plan shall require the Bank s prior review and approval. Section V: Specific Provisions for the Procurement of Goods and Works and the Employment of Consultants Definitions: PLEASE SEE ORIGINAL FOR TABLE, DONE IN WRONG FORMAT For the purposes of this Schedule: 1. "IC" means the individual consultants selection procedure set forth in paragraphs 5.1 through 5.3 of the Consultant Guidelines; 2. "ICB" means the international competitive bidding procedure set forth in Section II of the Guidelines and paragraph 5 of Appendix 1 thereto; 3. "NCB" means the national competitive bidding procedure set forth in paragraphs 3.3 and 3.4 of the Guidelines; 4. "Other Methods of Procurement" means any of the methods of procurement set forth in Section III of the Guidelines; 5. "Other Methods of Selection" means any of the methods of selection set forth in Section III of the Consultant Guidelines; 6. "Post Review" means the procedures set forth in paragraph 4 of Appendix 1 to the Guidelines, provided, however, that if the Bank determines, at any time, that the proposed procurement is inconsistent with the provisions of the Guidelines or this Schedule, it shall promptly inform Bolivia and state the reasons for its determination; 7. "Post Review for Consultants" means the procedures set forth in paragraph 4 of Appendix 1 to the Consultant Guidelines, provided, however, that if the Bank determines, at any time, that the proposed selection is inconsistent with the

16 provisions of the Guidelines or this Schedule, it shall promptly inform Bolivia and state the reasons for its determination; 8. "Prior Review" means the procedures set forth in paragraphs 2 and 3 of Appendix 1 to the Guidelines; 9. "Prior Review for Consultants" means the procedures set forth in paragraphs 1, 2 and 5 of Appendix 1 to the Consultant Guidelines; 10. "PSW" means the procurement of small works procedure for lump sum, fixed-price contracts awarded on the basis of quotations obtained from three (3) qualified domestic contractors in response to a written invitation. The invitation shall include a detailed description of the works, including basic specifications, the required completion date, a basic form of agreement acceptable to the Bank, and relevant drawings, where applicable. The award shall be made to the contractor who offers the lowest price quotation for the required work, and who has the experience and resources to complete the contract successfully; 11. "QCBS" means the Quality and Cost-based selection procedure set forth in Section II of the Consultant Guidelines, paragraph 3 of Appendix 1 thereto, Appendix 2 thereto, and the applicable provisions of paragraphs 3.13 through 3.18 thereof; 12. "S(I/N)" means the Shopping (International and National) procedure referred to in paragraphs 3.5 and 3.6 of the Guidelines; and 13. "TORs" means terms of reference. Section VI. Special Provisions for Bolivia A. Pursuant to Bolivia s Supreme Resolution No dated August 3, 1995, in addition to and without limitation on any other provision set forth in this Schedule or the Guidelines, the following rules shall govern all procurement of goods and works under NCB: 1. A merit point system shall not be used in the prequalification of bidders. 2. The award of goods and works contracts shall be based exclusively on price and, whenever appropriate, shall also take into account factors similar to those referred to in paragraph 2.51 of the Guidelines, provided, however, that the bid evaluation shall always be based on factors that can be quantified objectively, and the procedure for such quantification shall be disclosed in the invitation to bid. 3. Bolivia shall open all bids at the stipulated time and place in accordance with a procedure satisfactory to the Bank. 4. Bolivia shall use a single envelope procedure. 5. Whenever there is a discrepancy between the amounts in figures and in words of a bid, the amounts in words shall govern. 6. Except as the Bank shall otherwise agree, the bidding process shall not be declared void if only three (3) bids or less have been submitted unless such bids have been determined not to be responsive. 7. Any standards and technical specifications (quoted in the bidding documents) which are at least substantially equivalent to the national standards and technical specifications shall be acceptable. 8. Foreign bidders shall be allowed to participate. 9. Foreign bidders shall not be required to legalize any documentation related to their bids with Bolivia s authorities as a prerequisite of bidding. 10. No margin of preference shall be granted for any particular category of bidders. 11. The auction procedure (Puja Abierta) shall not be used. 12. In the event that a bidder whose bid was evaluated as the bid with the lowest evaluated price withdraws its bid, the contract may be awarded to the second lowest responsive evaluated bid.

17 13. Foreign bidders shall not, as a condition for submitting bids, be required to enter into a joint venture agreement with local bidders. 14. No other procurement rules or regulations of Bolivia shall apply without the prior review and consent of the Bank. B. Pursuant to Bolivia s Supreme Resolution dated August 3, 1995, in addition to and without limitation on any other provisions set forth in this Schedule or the Consultant Guidelines, the following rules shall govern all employment of consultants referred to in this Schedule: 1. As a condition for participating in the selection process, foreign consultants shall not be required to enter into a joint venture agreement with local consultants, unless the conditions stated in paragraph 1.12 of the Consultant Guidelines are met. 2. As a condition for participating in the selection process, foreign consultants shall not be required to legalize their proposals or any documentation related to such proposals with Bolivia s authorities. 3. Foreign consultants shall not be required to be registered in Bolivia s National Registry of Consultants (Registro Nacional de Consultoría). SCHEDULE 4 SERNAP Performance Benchmarks PLEASE SEE ORIGINAL FOR PERFORMANCE BENCHMARKS, FORMAT WOULD NOT FIT INTO DATABASE SCHEDULE 5 Key Implementation Provisions 1. Bolivia shall carry out Parts A, B, C and E of the Project, through SERNAP, in accordance with the SERNAP Operational Manual. 2. Bolivia, through SERNAP, shall: (a) enter into Participation Arrangements with the Management Councils of each Selected Protected Area for the purposes of ensuring the participation of each such Management Council in the implementation of Part B of the Project, under terms and conditions satisfactory to the Bank; (b) pursuant to the Project Implementation Plan, furnish to the Bank, for its review and approval, Management Plans for each such Selected Protected Area, in order to determine the eligibility of expenditures to be financed out of the proceeds of the SERNAP GEF Trust Fund Grant; and (c) provide financial assistance to SNAP as set forth in the SNAP Program. 3. Bolivia shall exercise its rights under the Implementation Agreement and the Participation Arrangements in such a manner as to protect the interests of Bolivia and the Bank and to accomplish the purposes of the SERNAP GEF Trust Fund Grant. SCHEDULE 6 Selected Protected Areas Parque Nacional y Area Natural de Manejo Integrado Kaa Iya del Gran Chaco Area Natural de Manejo Integrado El Palmar Parque Nacional y Area Natural de Manejo Integrado Otuquis Area Natural de Manejo Integrado San Matías Parque Nacional Toro Toro Reserva de la Biosfera y Territorio Indígena Pilón Lajas

18 Reserva Biológica Cordillera de Sama Reserva Nacional de Fauna Andina Eduardo Avaroa Reserva de la Biosfera Estación Biológica del Beni Area Natural de Manejo Integrado Apolobamba