OFFICE MEMORANDUM. Ms. Isabel C. Mignone-Del Carril, Operations Analyst, LEGCF. Marianne Bergstrom, Operations Officer, INFCS

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1 '. T-HE tgrld BANKI1FC/M.I.G.A. OFFICE MEMORANDUM DATE: September 16, 2004 TO: FROM: Ms. Isabel C. Mignone-Del Carril, Operations Analyst, LEGCF Marianne Bergstrom, Operations Officer, INFCS EXTENSION: (202) SUBJECT: Norwegian Trust Fund for Private Sector Development and Infrastructure NTF-PSI) TF Arrangement for CY2004 Enclosed for your legal records is original countersigned Arrangement for CY2004 between Government of Norway, IFC, IBRD and IDA. cc: Messrs./Mmes. N. Shafik (INFVP), A. Jabre (CIOVP), U. Wagle (CTADR), F. Wright (CTATF), M. Klein (PSDVP), A. Ravat (INFCS), C. Levenson (INFCS), C. Severino-Jones (INFCS), TF Admin File: TF _,~~~- C) r I1 CD' CD

2 World Bank Group Norwegian Trust Fund for Private Sector Development and Infrastructure (NTF-PSI) (TF050187) CY04 Arrangement In pursuance of Agreement dated August 22, 2002, between International Bank for Reconstruction and Development ("IBRD") and International Development Association ("IDA"), and International Finance Corporation ("IFC") (collectively, "World Bank Group"), and Ministry of Foreign Affairs of Kingdom of Norway ( "Donor"), and with reference to Cofinancing and Technical Assistance Framework Agreement between Donor and Bank, dated March 9, 1994 ( Framework Agreement); Donor hereby agrees to make available to World Bank Group financial support ( "Contribution") over a period of years as a grant for purpose of financing World Bank Group global emerging strategy for Private Sector Development and Infrastructure (NTF-PSI) ( "Project".) The terms of Agreement shall apply to this Contribution. The Donor has decided to make a Contribution in amount of NOK 55 million (Fifty Five Million Norwegian Kroner) in support of following windows (categories). The United States Dollar amounts for each activity are estimates only and may be lower. Window - Investment Climate and Governance Freestanding Activities 1. IFC - Investment Climate and Capacity Building for Small Business Development - 3rd funding $100, Bank - Building Capacity in Governance and Revenue Management for Extractive Industries -3 funding $180, Bank - Improving Investment Climate in Rural Areas - 2 nd funding $300, Bank - Products, Markets and Investment Climate: Costs of Logistics Constraints - 2 nd funding - $350, Bank - Capacity Building in Urban Transport in Sub-Saharan Africa - new $125, Bank - Entrepreneurship - A Topic in Doing Business in new $150, Bank - Land Rights - A Topic in Doing Business in new $ 125, IFC - Privatization in Sub-Saharan Africa: Assessment and Impact on Ground - new $300,000 Multi-donor Programmatic 1. IFC - Sustainable Financial Markets Facility (SFMF) - 3rd funding $200, IFC - Corporate Citizenship Facility (CCF) - 3 rd funding $150, IFC - Environmental Opportunities Fund (EOF) - 3 rd funding $200,000

3 Window - Infrastructure Service Delivery to Poor Freestanding Activities 1. Bank - Infrastructure Service Delivery in Context of Decentralization: A Regional Approach -3rd funding $75, Bank - Decentralization in MNA region and Impact on Service Delivery to Poor in MNA countries - 3rd funding $50, Bank - Private Sector in Rural Water Supply in Africa - 2 nd funding $100, Bank - Improving Rural Livelihoods through Infrastructure Services to Poor - 3rd funding $100, Bank - Improving Decisions in Water, Sanitation & Health - 2 nd funding $70, Bank - Ensuring Effective Accountability in Tripartnerships to Enhance Delivery of Water and Sanitation Services in Poor Communities - 2 nd funding $105, Bank - Poverty and Social Impact of PSI Portfolio in Sub-Saharan Africa - 2nd funding $189, Bank - Development Impact Evaluation of Infrastructure Projects - new $275, Bank - Petroleum Revenue Management and Petroleum Sector Governance (Angola) - new $125,000 Multi-donor Programmatic 1. Bank - Global Gas Flaring Reduction Public-Private Partnership - 3rd funding $400, Bank - Africa Water Resources Management Initiative (AWRMI) - 3rd funding $350,000 Existing global/regional private sector oriented multi-donor programmatic 1. IFC - ATMS/AMSCO - 3 rd funding $250, IFC - Foreign Investment Advisory Service (FIAS) - 3rd funding $250, IFC - African Project Development Facility (APDF) - 3rd funding $700, Bank - Water and Sanitation Program (WSP) - 3rd funding $950, Bank - Engage Private Sector in Energy Delivery (ESMAP) - 3rd funding $700, Bank - Public-Private Infrastructure Advisory Facility (PPIAF) - 3rd funding $400, Bank - Global Corporate Governance Forum (GCGF) - new $250, Bank - Sub-Saharan Africa Transport Policy (SSATP) - new $400,000 2

4 Secretariat Function Additional funding for Term Staff Position for coordination, administration, monitoring, evaluation and reporting for offsetting central administration/coordination in FY05-2nd funding $70,000 The Arrangement will be effective on date of its signature by all parties until two (2) years after completion date of individual activities. Expenses financed under this Arrangement must have been incurred after date of effectiveness of trust fund unless orwise agreed. The IBRD and IDA may disclose this Agreement and information with respect to this Trust Fund in accordance with IBRD and IDA's policy on disclosure of information. If, at any time, eir party determines that purposes of Arrangement can no longer be effectively or appropriately carried out, this Arrangement may be terminated at initiative of eir party by giving or party three (3) months' prior written notice to this effect. Upon termination of Arrangement, and unless parties orwise agree, any agreement entered into between World Bank Group entity and any third party prior to receipt of notice of termination of this Arrangement shall not be affected by termination and World Bank Group entity shall be entitled to continue to receive and disburse Grant funds in respect of such agreements to extent necessary in order to fulfill its obligations under such agreements as if Arrangement had not been so terminated. This Arrani!ement is vrevared in triplicate. Norway hereby approves above allocations. GOVERNMENT OF THE KINGDOM OF NORWAY By: i / l + ffi Date tgk,, 29Q C Mr. Nils stveit Director General Department for International Development Policy Royal Norwegian Ministry of Foreign Affairs A 3

5 CONFIRMED AND AGREED INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT INTERNATIONAL DEVELOPMENT ASSOCIATION BY: Date 07. INTERNATIONAL FINANCE CORPORATION Bv: e v Date Q\ C / / (f Assaad Jabre, Vice President Operations 4

6 Admninistrative Arrangements for multi-donor programs General administrative procedures common to all multi-donor programs Based on existing Global programs trust fund agreements, Contribution will not be tied to any specific activity and may be used for any activity conducted as part of multi-donor program. The grant funds may be used by Program at its discretion to pay for costs of staff time associated with global program projects, consultants services, travel and subsistence, equipment, workshop, training and or related work to carry out program activities as determined by each global program agreement. If at any time it appears to eir party that purpose of this Arrangement can no longer effectively or appropriately be carried out, arrangement may be terminated by eir party with ninety (90) days prior notice in writing. Upon such termination, unless parties hereto agree on anor course of action IFC or Bank will repay any unspent and uncommitted funds, including any unspent and uncommitted income derived from investment of funds, to Norway on a pro-rata basis. Promptly after termination, Bank shall furnish to Donor a final report and a financial statement on use of Contribution. Sustainable Financial Markets Facility (SFMF): The funds for SFMF will be administered as multi-donor agreement and commingled with funds of or donors (currently IFC and Nerlands). The allocation for SFMF will be transferred to SFMF Account (TF050768) and administered in United States Dollars (US$) in accordance with IFC Resolution IFC/R /2 for a five year period, July 1, 2002 through June 30, To defray internal administrative costs, IFC shall deduct three point five percent (3.5%) from amount transferred to SFMF Account. The funds in SFMF Account will be invested and reinvested. The income from such investment or reinvestment shall be retained in SFMF Account and used for purposes of SFMF. IFC shall provide semi-annual reports on activities of SFMF. Promptly after all disbursements have been made from SFMF Account, IFC shall furnish to Norway a final report on SFMF. If this Arrangement is terminated prior to full disbursement of SFMF Account (TF050768) IFC will repay any unspent and uncommitted funds, including any unspent and uncommitted income derived from investment of funds, to Norway on a pro-rata basis. Corporate Citizenship Facility (CCF): The funds for CCF will be administered as multi-donor agreement and commingled with funds of or donors (currently IFC and Nerlands). The allocation for CCF will be transferred to CCF Account (TF050767) and administered in United States Dollars (US$) in accordance with IFC Resolution IFC/R /1 for a five year period, July 1, 2002 through June 30, To defray internal administrative costs, IFC shall deduct three point five percent (3.5%) from amount transferred to CCF Account. The funds in CCF Account will be invested and reinvested. The income from such investment or reinvestment shall be retained in CCF Account and used for purposes of CCF. IFC shall provide semiannual reports on activities of CCF. Promptly after all disbursements have been made from CCF Account, IFC shall furnish to Norway a final report on CCF. If this Arrangement is 5

7 terminated prior to full disbursement of CCF Account (TF050767) IFC will repay any unspent and uncommitted funds, including any unspent and uncommitted income derived from investment of funds, to Norway on a pro-rata basis. Environmental Opportunities Facility (EOF) TA only: The funds for EOF will be administered as multi-donor agreement and commingled with funds of or donors (currently IFC and Nerlands). The allocation for EOF will be transferred to EOF Parent Account (TF050760) and promptly transferred to EOF TA subaccount (TF050770) and administered in United States Dollars (US$) in accordance with IFC Resolution IFC/R /3 for a five year period, July 1, 2002 through June 30, To defray internal administrative costs, IFC shall deduct three point five percent (3.5%) from amount transferred to EOF Account. The funds in EOF TA Account will be invested and reinvested. The income from such investment or reinvestment shall be retained in EOF TA Account and used for purposes of EOF TA Account. IFC shall provide semi-annual reports on activities of EOF. Promptly after all disbursements have been made from EOF Account, IFC shall furnish to Norway a final report on EOF. If this Arrangement is terminated prior to full disbursement of EOF TA Account (TF050770) IFC will repay any unspent and uncommitted funds, including any unspent and uncommitted income derived from investment of funds, to Norway on a pro-rata basis. Foreign Investment Advisory Services (FIAS) The funds for FIAS will be administered as a multi-donor agreement and will be transferred to multi-donor FIAS Trust Fund Account (TF050464), which is administered in United States Dollars (US$). Administration fee will not be deducted against allocation for FIAS. The allocation for FIAS will be commingled with or grant funds to FIAS. The resources of FIAS Trust Fund shall be utilized to meet costs to accomplish purposes of FIAS, including costs of administration and or expenses incurred in conduct of business of FIAS. The resources of FIAS Trust Fund pending ir application will be invested and reinvested and income earned will be used for purposes of FIAS. IFC shall provide an annual report of FIAS activities and results. A Consultative Committee of Donors to FIAS, composed of representatives of IFC, World Bank, and countries which participate in funding of FIAS, shall meet each year providing a forum to review activities of FIAS and provide guidance for its work. If this Arrangement is terminated prior to full disbursement of FIAS Accounts IFC will repay any unspent and uncommitted funds, including any unspent and uncommitted income derived from investment of funds, to Norway on a pro-rata basis. Public-Private Infrastructure Advisory Facility (PPIAF) The funds for PPIAF will be administered as multi-donor agreement and commingled with funds of or nine donors. The allocation for PPIAF will be transferred to PPIAF multidonor account (TF023361) and administered in United States Dollars (US$). To defray internal administrative costs, World Bank shall deduct three percent (3%) from amount transferred to PPIAF multi-donor account. The funds in PPIAF multi-donor account will be invested and reinvested. The income from such investment or reinvestment shall be retained 6

8 in PPIAF multi-donor account and used for multi-donor same purposes account. as contributions PPIAF shall to provide PPIAF quarterly expected reports that on Contribution activities Funds of PPIAF. will be fully It is after all utilized disbursements by June 30, have been Within made by six PPIAF, month report on PPIAF Bank and shall a furnish final unaudited to Norway financial a final Arrangement statement is with terminated respect prior to Trust to full Fund. disbursement If this three of months PPIAF following multi-donor such termination, accounts, within funds, Bank including will return any any unspent unspent and and uncommitted uncommitted Norway income on a derived pro-rata from basis. investment of funds, to Energy Sector Management Assistance Programme (ESMAP) The funds for ESMAP will be administered as additional contribution in accordance with existing Norway ESMAP Core funding Agreement (TF020184) dated September 1, 1999 Pending ir disbursement, ESMAP may invest and reinvest grant funds. Incomes from such investments and reinvestments will accrue to trust funds and will be used for same purposes as grant funds. In order to assist in defrayment of cost of administration and or expenses incurred by Bank with respect to Contribution, Bank may deduct from trust fund and retain for its own account up to five percent (5 percent) of grant funds as provided for in existing agreement. Global Gas Flaring Reduction Public-Private Partnership (GFRI) The Contribution will be administered by Bank on behalf of Donor in as additional contribution to existing NTF-PSI sub-account (TF050188) in accordance with terms of Framework Agreement and terms of Norway Gas Flaring Letter of Agreement dated July 24, Africa Water Resources Management Initiative (AWRMI) AWRMI is a multi-donor program without one cornmingled multi-donor account. AWRMI disburses funds through several separate single-donor accounts and follows standard rules of each donor. Therefore, administrative fee and investment income treatment is same as for any NTF-PSI non-programmatic Trust Fund. As for Norwegian core TF account for AWRMI, re is an NTF-ESSD account (TF023562) but it cannot be used for PSI funds.. Thus a new free-standing sub-account under NTF-PSI will be established. African Project Development Facility (APDF) The funds for APDF will be administered in APDF2000 accordance multi-donor with general agreement conditions signed of by transferred or donors. to APDF The allocation Account for (TF023632) APDF will and be in accordance administered with in United IFC Resolution States Dollars IFC/R (US$) June 30, for a five To year defray period, internal July 1, administrative 2000 through percent (3.5%) costs, from IFC shall amount deduct transferred three point to five Account will APDF be Account. invested and The reinvested. funds in The APDF shall income be retained from such in investment APDF Account or reinvestrnent and quarterly used for reports purposes on activities of APDF. of IFC APDF. shall Promptly provide from APDF after all Account, disbursements IFC shall have furnish been made to Norway a final report on APDF. If this 7

9 Arrangement is terminated prior to full disbursement of APDF Account (TF023632) IFC will repay any unspent and uncommitted funds, including any unspent and uncommitted income derived from investment of funds, to Norway on a pro-rata basis. Water & Sanitation Program (WSP): The funds for WSP will be administered in accordance with general conditions of NTF- PSI umbrella agreement as a free standing program. As agreed with its funding partners, 9 % of amounts contributed to WSP will be transferred upon receipt of funds into Water and Sanitation Program Global Programn management Trust Fund (GPMTF) (TF No ) and used to finance Global Program Management. No additional administrative fee is deducted from funds transferred into GPMTF. The investment income on funds in GPMTF is retained in GPMTF and used for purposes of GPMTF. The duration of GPMTF is open ended. If GPMTF is terminated prior to full disbursement of funds Bank will repay any unspent and uncommitted funds on a pro-rata basis. Global Corporate Governance Forum (GCGF) The funds for GCGF will be administered as multi-donor agreement and commingled with funds of or donors (currently India, Luxembourg, Nerlands, Sweden, Switzerland, United Kingdom and United States). The allocation for GCGF will be transferred to GCGF Trust Fund TF (successor to TF024872) and administered in United States Dollars (US$) in accordance with terms of Letter of Agreement. To defray internal administrative costs, World Bank Group shall deduct five percent (5%) from amount transferred to trust fund. GCGF Account. The resources of GCGF pending ir application will be invested and reinvested and income earned will be used for purposes of GCGF. The income from such investment or reinvestment shall be retained in GCGF Trust Fund and used for purposes of GCGF, with reports on activities of GCGF provided on a semi-annual basis, or orwise as required by Steering Committee or individual donors. A Steering Committee of Donors and Founders to GCGF, composed of representatives of World Bank Group, Organisation for Economic Co-operation and Development, and countries which participate in funding of GCGF, currently meet twice a year to review strategy, approve work program and budget, and generally provide guidance to Secretariat in its work. Upon final disbursement date specified in Trust Fund World Bank shall return any remaining balance of Contribution funds to Donors on a pro ata basis. Sub-Saharan Africa Transport Policy Program (SSATP) The Sub-Saharan Africa Transport Policy Program (SSATP)multi-donor trust fund was established in FY04 with objective of implementing transport sector strategies anchored in overarching national poverty reduction goals. Focusing on access, affordable transport and mobility needs of rural and urban poor are features of programmatic approach of SSATP's Long Term Development Plan (LTDP) This LTDP which was formulated with full participation of SSATP members countries, regional organizations and donors was formally adopted by program's stakeholders at annual meeting in Kigali in May The funds for SSATP will be administered as multi-donor agreement and commingled with funds of or donors. The allocation for SSATP will be transferred to SSATP multi-donor account (TF052640) and administered in United States dollars. To defray internal administrative 8

10 costs, World Bank shall deduct five percent (5%) from amount transferred to SSATP multi-donor account. The funds in SSATP multi-donor account will be invested and reinvested. The income from such investment or reinvestment shall be retained in SSATP multi-donor account. SSATP will provide bi-annual and annual reports of its activities to donors. 9