LOAN NUMBER 2672-CAM (SF) GRANT NUMBER 0220-CAM (SF)

FINANCING AGREEMENT (Special Operations)

(Water Resources Management Sector Development Project)

between

KINGDOM OF CAMBODIA

and

ASIAN DEVELOPMENT BANK

DATED 22 OCTOBER 2010

FAS:CAM 38558

FINANCING AGREEMENT (Special Operations)

FINANCING AGREEMENT dated 22 October 2010 between KINGDOM OF CAMBODIA (the “Beneficiary”) and ASIAN DEVELOPMENT BANK (“ADB”).

WHEREAS (A) the Beneficiary has applied to ADB for a loan and a grant for the

purposes of the Project described in Schedule 1 to this Financing Agreement; (B) the Beneficiary has also applied to ADB for a loan from its Special

Funds resources in connection with the Water Resources Management Sector Development Program (the “Program”) and by an agreement of even date herewith (the “Loan Agreement”), ADB has agreed to provide a loan to the Beneficiary from ADB's Special Fund resources in an amount in various currencies equivalent to thirteen million two hundred seven thousand Special Drawing Rights (SDR13,207,000);

(C) the Beneficiary has also applied to the OPEC Fund for International

Development (“OFID”) for a loan in an aggregate amount of twelve million dollars ($12,000,000) to finance the Project, on a joint basis, to be administered by ADB (the “OFID Loan”); and

(D) ADB has agreed to provide financing by making a loan and a grant to

the Beneficiary from ADB's Special Funds resources upon the terms and conditions hereinafter set forth;

NOW THEREFORE the parties agree as follows:

ARTICLE I

Loan Regulations and Grant Regulations; Definitions Section 1.01. All provisions of the Special Operations Loan Regulations of ADB, dated 1 January 2006 (the “Loan Regulations”), are hereby made applicable to the Loan made pursuant to this Financing Agreement with the same force and effect as if they were fully set forth herein, subject, however, to the following modifications:

(a) The term “Loan Agreement”, wherever it appears in the Loan

Regulations, shall be substituted by the term “Financing Agreement”.

(b) The term “Borrower”, wherever it appears in the Loan Regulations, shall be substituted by the term “Beneficiary” as defined in the opening paragraph of this Financing Agreement.

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Section 1.02. All provisions of the Special Operations Grant Regulations of ADB, dated 7 February 2005 (the “Grant Regulations”), are hereby made applicable to the Grant made pursuant to this Financing Agreement with the same force and effect as if they were fully set forth herein subject, however, to the following modifications:

(a) The term “Grant Agreement”, wherever it appears in the Grant

Regulations, shall be substituted by the term “Financing Agreement”. (b) The term “Recipient”, wherever it appears in the Grant Regulations,

shall be substituted by the term “Beneficiary” as defined in the opening paragraph of this Financing Agreement.

Section 1.03. The definitions set forth in the Loan Regulations and Grant Regulations are applicable to this Financing Agreement, in each case unless the context requires otherwise. In addition, the following terms have the following meanings:

(a) “Consulting Guidelines” means ADB’s Guidelines on the Use of

Consultants by Asian Development Bank and its Borrowers dated April 2010, as amended from time to time;

(b) “Consulting Services” means the services to be financed out of the proceeds of the Loan referred to in paragraph 3 of Schedule 1 to this Financing Agreement, but excluding any services provided in relation to Goods and Works;

(c) “Department of FWUC” means the Department of Farmer Water Users Community within MOWRAM or any successor thereto;

(d) “EARF” means the Environmental Assessment and Review Framework prepared for the Project;

(e) “Fisheries Administration” means the Fisheries Administration within MAFF or any successor thereto;

(f) “FWUC” means the Farmer Water Users Community;

(g) “Gender Action Plan” means the Gender Action Plan as set out in one of the web-linked documents of the RRP;

(h) “Good Governance Framework” means the Good Governance Framework as set out in the PAM;

(i) “Goods” means the equipment and materials to be financed out of

the proceeds of the Loan; and including related services such as transportation, insurance, installation, commissioning, training, and initial maintenance, but excluding Consulting Services;

(j) “IEE” means the initial environmental examination to be prepared and approved for each subproject;

(k) “ITC” means Institut de Technologie du Cambodge of the Beneficiary or any successor thereto;

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(l) “IWRM” means integrated water resources management; (m) “Loan Disbursement Handbook” means the ADB’s Loan Disbursement

Handbook (2007, as amended from time to time);

(n) “MAFF” means the Ministry of Agriculture, Forestry and Fisheries of the Beneficiary or any successor thereto;

(o) “MEF” means the Ministry of Economy and Finance of the Beneficiary or any successor thereto;

(p) “MLMUPC” means the Ministry of Land Management, Urban Planning and Construction of the Beneficiary or any successor thereto;

(q) “MOE” means the Ministry of Environment of the Beneficiary or any successor thereto;

(r) “MOWRAM” means the Ministry of Water Resources and Meteorology of the Beneficiary or any successor thereto;

(s) “NBC” means the National Bank of Cambodia or any successor thereto;

(t) “O&M” means operation and maintenance;

(u) “OFID Loan Agreement” means the agreement between OFID and the Beneficiary that sets out the terms and conditions of OFID Loan;

(v) “PAM” means the project administration manual for the Project and

Program dated 25 August 2010 and agreed between the Beneficiary and ADB, as updated from time to time in accordance with the respective administrative procedures of the Beneficiary and ADB;

(w) “Part” means part of the Project as further described in paragraph 2 of Schedule 1 to this Financing Agreement;

(x) “PDA” means the provincial Department of Agriculture in each province within the Project Area or any successor thereto;

(y) “PDWRAM” means the provincial Department of Water Resources and Meteorology in each province within the Project Area or any successor thereto;

(z) “PIU” means the Project Implementation Unit to be established in each province within the Project Area and as further described in the PAM;

(aa) “PMO” means the Program Management Office to be established by the Beneficiary and as further described in the PAM;

(bb) “Procurement Guidelines” means ADB’s Procurement Guidelines

dated April 2010, as amended from time to time;

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(cc) “Procurement Plan” means the procurement plan for the Project dated

25 August 2010 and agreed between the Beneficiary and ADB, as updated from time to time in accordance with Procurement Guidelines, Consulting Guidelines, and other arrangements agreed with ADB;

(dd) “Project Area” means the areas within the provinces of Kampong

Thom, Banteay Meanchey, Pursat, Battambang and Siem Reap of the Beneficiary; (ee) “Project Executing Agency” means for the purposes of, and within the

meaning of, the Loan Regulations and Grant Regulations, MOWRAM or any successor thereto acceptable to ADB, which shall be responsible for the carrying out of the Project;

(ff) “Project facilities” means the facilities to be provided under the Project;

(gg) “PSC” means the Program Steering Committee to be established by the Beneficiary and as further described in the PAM;

(hh) “Resettlement Framework” means the Resettlement Framework prepared for the Project;

(ii) “RRP” means the Report and Recommendation of the President of ADB to the Board of Directors of ADB for the Program;

(jj) “subproject” means rehabilitation of an irrigation scheme that has been selected pursuant to the criteria and process set out under paragraphs 2 to 5 of Schedule 5 to this Financing Agreement;

(kk) “Support Units” means the two Program Support Units and the Project Support Unit to be established by the Beneficiary and as further described in the PAM;

(ll) “TSC” means the Training Services Center within MOWRAM or any successor thereto; and

(mm) “Works” means construction or civil works to be financed out of the

proceeds of the Loan, including services such as drilling or mapping, and project related services that are provided as part of a single responsibility or turnkey contract, but excluding Consulting Services.

ARTICLE II

The Loan and the Grant

Section 2.01. ADB agrees to provide to the Beneficiary from ADB's Special Funds resources, on terms and conditions set forth in this Financing Agreement:

(a) a loan in various currencies equivalent to six million six hundred three

thousand Special Drawing Rights (SDR6,603,000) (the “Loan”); and

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(b) a grant in the amount of two million eight hundred thousand Dollars

($2,800,000) (the “Grant”).

Section 2.02. (a) The Beneficiary shall pay to ADB an interest charge at the rate of one percent (1%) per annum during the grace period, and one and one-half percent (1.5%) per annum thereafter, on the amount of the Loan withdrawn from the Loan Account and outstanding from time to time.

(b) The term “grace period” as used in paragraph (a) of this Section

means the period prior to the first Principal Payment Date in accordance with the amortization schedule set forth in Schedule 2 to this Financing Agreement.

Section 2.03. The interest charge and any other charge on the Loan

shall be payable semiannually on 15 March and 15 September in each year.

Section 2.04. The Beneficiary shall repay the principal amount of the Loan withdrawn from the Loan Account in accordance with the amortization schedule set forth in Schedule 2 to this Financing Agreement.

Section 2.05. The currency of repayment of the principal amount of the Loan and the currency of payment of the interest charge for the purposes of Section 4.03(a) and 4.04 of the Loan Regulations shall be the Dollar.

ARTICLE III

Use of Proceeds of the Loan and the Grant

Section 3.01. The Beneficiary shall cause the proceeds of the Loan

and the Grant to be applied to the financing of expenditures on the Project in accordance with the provisions of this Financing Agreement.

Section 3.02. The Goods, Works and Consulting Services and other

items of expenditure to be financed out of the proceeds of the Loan and the Grant and the respective allocation of amounts of the Loan and the Grant among different categories of such goods and services and other items of expenditure shall be in accordance with the provisions of Schedule 3A and Schedule 3B, respectively, to this Financing Agreement, as such Schedule 3A and Schedule 3B may be amended from time to time by agreement between the Beneficiary and ADB.

Section 3.03. Except as ADB may otherwise agree, all Goods, Works

and Consulting Services to be financed out of the proceeds of the Loan and the Grant shall be procured in accordance with the provisions of Schedule 4 to this Financing Agreement.

Section 3.04. Withdrawals from the Loan Account and the Grant

Account in respect of Goods, Works and Consulting Services shall be made only on account of expenditures relating to

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(a) Goods which are produced in and supplied from and Works and Consulting Services which are supplied from such member countries of ADB as shall have been specified by ADB from time to time as eligible sources for procurement, and

(b) Goods, Works and Consulting Services which meet such other

eligibility requirements as shall have been specified by ADB from time to time.

Section 3.05. The Loan Closing Date for the purposes of Section 8.02

of the Loan Regulations and the Grant Closing Date for the purposes of Section 8.02 of the Grant Regulations shall be 30 June 2018 or, in each case, such other date as may from time to time be agreed between the Beneficiary and ADB.

ARTICLE IV

Particular Covenants

Section 4.01. In the carrying out of the Project and operation of the Project facilities, the Beneficiary shall perform, or cause to be performed, all obligations set forth in Schedule 5 to this Financing Agreement.

Section 4.02. (a) The Beneficiary shall (i) maintain, or cause to be

maintained, separate accounts for the Project, including separate accounts for the Loan and the Grant; (ii) have such accounts and related financial statements audited annually, in accordance with appropriate auditing standards consistently applied, by independent auditors whose qualifications, experience and terms of reference are acceptable to ADB; (iii) furnish to ADB, as soon as available but in any event not later than 6 months after the end of each related fiscal year, certified copies of such audited accounts and financial statements and the report of the auditors relating thereto (including the auditors' opinion on the use of the Loan proceeds and the Grant proceeds and compliance with the financial covenants of this Financing Agreement as well as on the use of the procedures for imprest accounts/statement of expenditures), all in the English language; and (iv) furnish to ADB such other information concerning such accounts and financial statements and the audit thereof as ADB shall from time to time reasonably request.

(b) The Beneficiary shall enable ADB, upon ADB's request, to discuss the

Beneficiary's financial statements for the Project and its financial affairs related to the Project from time to time with the auditors appointed by the Beneficiary pursuant to Section 4.02(a) hereabove, and shall authorize and require any representative of such auditors to participate in any such discussions requested by ADB, provided that any such discussion shall be conducted only in the presence of an authorized officer of the Beneficiary unless the Beneficiary shall otherwise agree.

Section 4.03. The Beneficiary shall enable ADB's representatives to inspect the Project, the Goods financed out of the proceeds of the Loan and the Grant, and any relevant records and documents.

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ARTICLE V

Suspension; Cancellation; Acceleration of Maturity

Section 5.01. The following is specified as an additional event for

suspension of the right of the Beneficiary to make withdrawals from (a) the Loan Account for the purposes of Section 8.01(m) of the Loan Regulations, and (b) the Grant Account for the purposes of Section 8.01(k) of the Grant Regulations, respectively:

(a) the Beneficiary shall have failed to perform any of its obligations under

the Loan Agreement; and (b) the OFID Loan shall have become liable for suspension or cancellation

or shall have become repayable prior to its agreed maturity date.

Section 5.02. The following is specified as an additional event for acceleration of maturity for the purposes of Section 8.07(d) of the Loan Regulations: the events specified in Section 5.01 of this Financing Agreement shall have occurred.

ARTICLE VI

Effectiveness

Section 6.01. The following are specified as additional conditions to the effectiveness of this Financing Agreement for the purposes of Section 9.01(f) of the Loan Regulations and Section 9.01(e) of the Grant Regulations, respectively:

(a) the Loan Agreement shall have been duly executed and delivered on

behalf of the Beneficiary and all conditions precedent to its effectives (other than a condition requiring the effectiveness of this Financing Agreement) shall have been fulfilled; and

(b) the OFID Loan Agreement shall have been duly executed and

delivered, and all conditions precedent to its effectiveness (other than a condition requiring the effectiveness of this Financing Agreement) shall have been fulfilled or arrangements satisfactory to ADB shall have been made for the fulfillment thereof within a period of time satisfactory to ADB.

Section 6.02. The following is specified as an additional matter, for

the purposes of Section 9.02(d) of the Loan Regulations and Section 9.02 (c) of the Grant Regulations, respectively, to be included in the opinion or opinions to be furnished to ADB: the Loan Agreement has been duly executed and delivered on behalf of and is legally binding upon the Beneficiary in accordance with its terms.

Section 6.03. A date ninety (90) days after the date of this Financing Agreement is specified for the effectiveness of the Financing Agreement for the purposes of Section 9.04 of the Loan Regulations and Section 9.04 of the Grant Regulations.

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ARTICLE VII

Miscellaneous

Section 7.01. The Minister of Economy and Finance of the Beneficiary is designated as representative of the Beneficiary for the purposes of Section 11.02 of the Loan Regulations and Section 11.02 of the Grant Regulations.

Section 7.02. The following addresses are specified for the purposes

of Section 11.01 of the Loan Regulations and Section 11.01 of the Grant Regulations: For the Beneficiary Ministry of Economy and Finance Phnom Penh, Cambodia Facsimile Numbers: (855 23) 428-424 (855 23) 427-798.

For ADB Asian Development Bank 6 ADB Avenue, Mandaluyong City 1550 Manila, Philippines Facsimile Numbers: (632) 636-2444 (632) 636-2231.

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SCHEDULE 1

Description of the Project 1. The expected impact of the Project is enhanced food security and economic growth. The expected outcome of the Project is more efficient and sustainable irrigation systems in the Project Area. 2. The Project comprises the following Parts:

Part 1 - Strengthening Provincial and District Level Administrative Capacity

Provide specific capacity building and strengthening of PDWRAMs and district offices in provinces and districts targeted for investment activities.

Part 2 - Rehabilitation and Improvement of Irrigation Infrastructure

Rehabilitate and develop approximately fifteen thousand (15,000) hectares of existing small-scale and medium-scale irrigation schemes within the provinces of Kampong Thom, Banteay Meanchey, and Siem Reap.

Part 3 - Enhancing Technical Skills, Livelihood Opportunities and Capacity for FWUCs and Farmers

Provide capacity building for irrigation O&M and financial management and improve irrigation land management and titling, and agricultural extension services to irrigated farmers.

Part 4 - Project Management Support

Provide Project management support to MOWRAM, PDWRAMs, PDAs and FWUCs to manage investment activities effectively and efficiently at national, provincial, district and Project levels.

3. The Project shall include provision of consulting services. The Project is expected to be completed by 31 December 2017.

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SCHEDULE 2

Amortization Schedule

(Water Resources Management Sector Development Project)

Date Payment Due Payment of Principal (expressed in Special Drawing Rights)*

Date Amount 15-Mar-2019 137,563.00 15-Sep-2019 137,563.00 15-Mar-2020 137,563.00 15-Sep-2020 137,563.00 15-Mar-2021 137,563.00 15-Sep-2021 137,563.00 15-Mar-2022 137,563.00 15-Sep-2022 137,563.00 15-Mar-2023 137,563.00 15-Sep-2023 137,563.00 15-Mar-2024 137,563.00 15-Sep-2024 137,563.00 15-Mar-2025 137,563.00 15-Sep-2025 137,563.00 15-Mar-2026 137,563.00 15-Sep-2026 137,563.00 15-Mar-2027 137,563.00 15-Sep-2027 137,563.00 15-Mar-2028 137,563.00 15-Sep-2028 137,563.00 15-Mar-2029 137,563.00 15-Sep-2029 137,563.00 15-Mar-2030 137,563.00 15-Sep-2030 137,563.00 15-Mar-2031 137,563.00 15-Sep-2031 137,563.00 15-Mar-2032 137,563.00 15-Sep-2032 137,563.00 15-Mar-2033 137,563.00 15-Sep-2033 137,563.00 15-Mar-2034 137,563.00 15-Sep-2034 137,563.00 15-Mar-2035 137,563.00 15-Sep-2035 137,563.00 15-Mar-2036 137,563.00 15-Sep-2036 137,563.00 15-Mar-2037 137,563.00 15-Sep-2037 137,563.00 15-Mar-2038 137,563.00

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Schedule 2

* The figures in this column represent SDR equivalents determined as of the respective dates of withdrawal. The arrangements for payment of each maturity are subject to the provisions of Sections 3.04 and 4.03 of the Loan Regulations.

15-Sep-2038 137,563.00 15-Mar-2039 137,563.00 15-Sep-2039 137,563.00 15-Mar-2040 137,563.00 15-Sep-2040 137,563.00 15-Mar-2041 137,563.00 15-Sep-2041 137,563.00 15-Mar-2042 137,563.00 15-Sep-2042 137,539.00

Total 6,603,000.00

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SCHEDULE 3A

Allocation and Withdrawal of Loan Proceeds General 1. The table attached to this Schedule sets forth the Categories of items of expenditure to be financed out of the proceeds of the Loan and the allocation of amounts of the Loan to each such Category (“Table”). Percentages of ADB Financing 2. Except as ADB may otherwise agree, each item of expenditure shall be financed out of the proceeds of the Loan on the basis of the percentages set forth in the Table. Interest Charge 3. The amount allocated to Category 8 is for financing the interest charge on the Loan during the implementation period of the Project. Reallocation 4. Notwithstanding the allocation of Loan proceeds and the withdrawal percentages set forth in the Table, (a) if the amount of the Loan allocated to any Category appears to be insufficient to finance all agreed expenditures in that Category, ADB may, by notice to the Beneficiary, (i) reallocate to such Category, to the extent required to meet the estimated shortfall, amounts of the Loan which have been allocated to another Category but, in the opinion of ADB, are not needed to meet other expenditures, and (ii) if such reallocation cannot fully meet the estimated shortfall, reduce the withdrawal percentage applicable to such expenditures in order that further withdrawals under such Category may continue until all expenditures thereunder shall have been made; and (b) if the amount of the Loan allocated to any Category appears to exceed all agreed expenditures in that Category, ADB may, by notice to the Beneficiary, reallocate such excess amount to any other Category. Disbursement Procedures 5. Except as ADB may otherwise agree, the Loan proceeds shall be disbursed in accordance with the Loan Disbursement Handbook.

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Schedule 3A

Imprest Accounts and Statement of Expenditures 6. (a) Except as ADB may otherwise agree, the Beneficiary shall establish, and cause to be established, immediately after the Effective Date, (i) one (1) first generation imprest account at either NBC or a commercial bank acceptable to ADB to be managed by MOWRAM, and (ii) three (3) second generation imprest accounts, to be managed by each of the PIUs located within the provinces of Kampong Thom, Banteay Meanchey, and Siem Reap, at a commercial bank acceptable to ADB (collectively, the “imprest accounts”). The imprest accounts shall be established, managed, replenished and liquidated in accordance with ADB's Loan Disbursement Handbook, and detailed arrangements agreed upon between the Beneficiary and ADB. The currency of the imprest accounts shall be the Dollar. The initial amount to be deposited into the first generation imprest account shall not exceed the lower of (i) the estimated expenditure to be financed from the first generation imprest account for the first six (6) months of Project implementation, or (ii) the equivalent of ten percent (10%) of the Loan amount. The initial amount to be deposited into each second generation imprest account shall not exceed the lower of (i) the estimated expenditure to be financed from each second generation imprest account for the first six (6) months of Project implementation, or (ii) fifty thousand Dollars ($50,000). (b) The statement of expenditures procedure may be used for reimbursement of eligible expenditures and to liquidate advances provided into the imprest accounts, in accordance with the Loan Disbursement Handbook and detailed arrangements agreed upon between the Beneficiary and ADB. Any individual payment to be reimbursed or liquidated under the statement of expenditures procedure shall not exceed the equivalent of fifty thousand Dollars ($50,000). Conditions of Withdrawal from the Loan Account 7. Notwithstanding any other provision of this Financing Agreement, no withdrawals shall be made from the Loan Account until the Beneficiary shall have established the (a) PSC; (b) PMO; (c) Support Units; and (d) PIUs located within the provinces of Kampong Thom, Banteay Meanchey, and Siem Reap, to the satisfaction of ADB.

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Attachment to Schedule 3A

TABLE

ALLOCATION AND WITHDRAWAL OF LOAN PROCEEDS

(Water Resources Management Sector Development Project)

CATEGORY ADB FINANCING

Amount Allocated Percentage and

Basis for Withdrawal from the Loan Account

(SDR)

Number Item Category Subcategory

1 Works 1,374,000 13.3 percent of total expenditure

2 Equipment 491,000 100 percent of total expenditure

3 Consulting Services 1,661,000

3A

Construction Supervision 61,000

100 percent of total expenditure

3B Project Management 1,600,000 100 percent of total expenditure

4 Institutional Development and Strengthening

1,818,000

4A PDWRAM Staff Training

363,000 100 percent of total expenditure

4B FWUC Capacity Building and Agricultural Support

1,455,000 100 percent of total expenditure

5 Survey, Investigation, Design and Mapping

581,000 100 percent of total expenditure

6 Vehicle operation and maintenance

366,000 100 percent of total expenditure

7 Benefit Monitoring and Evaluation

20,000 100 percent of total expenditure

8 Interest Charge 292,000 100 percent of amount due

Total 6,603,000

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SCHEDULE 3B

Allocation and Withdrawal of Grant Proceeds

General 1. The table attached to this Schedule sets forth the Categories of items of expenditure to be financed out of the proceeds of the Grant and the allocation of amounts of the Grant to each such Category (“Table”). (Reference to “Category” in this Schedule is to a Category or Categories of the Table.) Percentages of ADB Financing 2. Except as ADB may otherwise agree, each item of expenditure shall be financed out of the proceeds of the Grant on the basis of the percentages set forth in the Table. Reallocation 3. Notwithstanding the allocation of Grant proceeds and the withdrawal percentages set forth in the Table, (a) if the amount of the Grant allocated to any Category appears to be insufficient to finance all agreed expenditures in that Category, ADB may, by notice to the Beneficiary, (i) reallocate to such Category, to the extent required to meet the estimated shortfall, amounts of the Grant which have been allocated to another Category but, in the opinion of ADB, are not needed to meet other expenditures, and (ii) if such reallocation cannot fully meet the estimated shortfall, reduce the withdrawal percentage applicable to such expenditures in order that further withdrawals under such Category may continue until all expenditures thereunder shall have been made; and (b) if the amount of the Grant allocated to any Category appears to exceed all agreed expenditures in that Category, ADB may, by notice to the Beneficiary, reallocate such excess amount to any other Category. Disbursement Procedures 4. Except as ADB may otherwise agree, the Grant proceeds shall be disbursed in accordance with the Loan Disbursement Handbook. Imprest Accounts and Statement of Expenditures 5. (a) Except as ADB may otherwise agree, the Beneficiary shall establish, and cause to be established, immediately after the Effective Date, (i) one (1) first generation imprest account at either NBC or a commercial bank acceptable to ADB to be managed by MOWRAM, and (ii) three (3) second generation imprest accounts, to be managed by each of the PIUs located within the provinces of Kampong Thom, Banteay Meanchey, and Siem Reap, at a commercial bank acceptable to ADB (collectively, the “imprest accounts”). The imprest accounts shall be established, managed, replenished and liquidated in accordance

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Schedule 3B

with ADB's Loan Disbursement Handbook, and detailed arrangements agreed upon between the Beneficiary and ADB. The currency of the imprest accounts shall be the Dollar. The initial amount to be deposited into the first generation imprest account shall not exceed the lower of (i) the estimated expenditure to be financed from the first generation imprest account for the first six (6) months of Project implementation, or (ii) the equivalent of ten percent (10%) of the Grant amount. The initial amount to be deposited into each second generation imprest account shall not exceed the lower of (i) the estimated expenditure to be financed from each second generation imprest account for the first six (6) months of Project implementation, or (ii) fifty thousand Dollars ($50,000). (b) The statement of expenditures procedure may be used for reimbursement of eligible expenditures and to liquidate advances provided into the imprest accounts, in accordance with the Loan Disbursement Handbook and detailed arrangements agreed upon between the Beneficiary and ADB. Any individual payment to be reimbursed or liquidated under the statement of expenditures procedure shall not exceed the equivalent of fifty thousand Dollars ($50,000). Conditions of Withdrawal from the Grant Account 6. Notwithstanding any other provision of this Financing Agreement, no withdrawals shall be made from the Grant Account until the Beneficiary shall have established the (a) PSC; (b) PMO; (c) Support Units; and (d) the PIUs located within the provinces of Kampong Thom, Banteay Meanchey, and Siem Reap, to the satisfaction of ADB.

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Attachment to Schedule 3B

TABLE

ALLOCATION AND WITHDRAWAL OF GRANT PROCEEDS

(Water Resources Management Sector Development Project)

CATEGORY ADB FINANCING

Amount Allocated

($)

Percentage and

Basis for Withdrawal from the Loan Account

Number Item Category

1 Consulting Services (FWUC and Agricultural Support)

914,000 100 percent of total expenditure

2 Institutional Development and Strengthening (FWUC Capacity Building and Agricultural Support)

1,886,000

100 percent of total expenditure

Total 2,800,000

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SCHEDULE 4

Procurement of Goods, Works and Consulting Services

A. General 1. All Goods, Works and Consulting Services to be financed out of the proceeds of the Loan and Grant shall be subject to and governed by the Procurement Guidelines, and the Consulting Guidelines, respectively. 2. All terms used and not otherwise defined in this Financing Agreement have the meanings provided in the Procurement Guidelines and/or the Consulting Guidelines, as applicable. B. Procurement for Goods and Works 3. Except as ADB may otherwise agree, Goods and Works shall only be procured on the basis of the methods of procurement set forth below:

International Competitive Bidding National Competitive Bidding Shopping

The methods of procurement are subject to, among other things, the detailed arrangements and threshold values set forth in the Procurement Plan. The Beneficiary may only modify the methods of procurement or threshold values with the prior agreement of ADB, and modifications must be set out in updates to the Procurement Plan. 4. National Competitive Bidding. The Beneficiary and ADB shall ensure that, prior to the commencement of any procurement activity under national competitive bidding, the Beneficiary's national competitive bidding procedures are consistent with the Procurement Guidelines. Any modifications or clarifications to such procedures agreed between the Beneficiary and ADB shall be set out in the Procurement Plan. Any subsequent change to the agreed modifications and clarifications shall become effective only after written approval of such change by the Beneficiary and ADB. C. Conditions for Award of Contract 5. The Beneficiary shall not award any Works contract financed under the Loan and Grant until (a) the relevant IEE document has been endorsed by the competent authority of the Beneficiary, and (b) the relevant resettlement plan has been finalized based on the final detailed design and endorsed by ADB. D. Selection of Consulting Services 6. Quality- and Cost-Based Selection. Except as ADB may otherwise agree, and except as set forth in the paragraph below, the Beneficiary shall apply quality- and cost-based selection for selecting and engaging Consulting Services.

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Schedule 4

7. The Beneficiary shall apply the following method for selecting and engaging the specified consulting services, in accordance with, among other things, the procedures set forth in the Procurement Plan:

Least Cost Selection for on-site construction supervision. 8. The Beneficiary shall recruit the individual consultants for Project management and design with procedures acceptable to ADB for recruiting individual consultants. E. Industrial or Intellectual Property Rights 9. (a) The Beneficiary shall ensure that all Goods and Works procured (including without limitation all computer hardware, software and systems, whether separately procured or incorporated within other goods and services procured) do not violate or infringe any industrial property or intellectual property right or claim of any third party. (b) The Beneficiary shall ensure that all contracts for the procurement of Goods and Works contain appropriate representations, warranties and, if appropriate, indemnities from the contractor or supplier with respect to the matters referred to in subparagraph (a) of this paragraph. 10. The Beneficiary shall ensure that all ADB-financed contracts with consultants contain appropriate representations, warranties and, if appropriate, indemnities from the consultants to ensure that the Consulting Services provided do not violate or infringe any industrial property or intellectual property right or claim of any third party. F. ADB’s Review of Procurement Decisions 11. All contracts procured under international competitive bidding procedures and contracts for Consulting Services shall be subject to prior review by ADB, unless otherwise agreed between the Beneficiary and ADB and set forth in the Procurement Plan.

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SCHEDULE 5

Execution of Project and Operation of Project Facilities; Financial Matters

Implementation Arrangements 1. The Beneficiary and the Project Executing Agency shall ensure that the Project is implemented in accordance with the detailed arrangements set forth in the PAM. Any subsequent change to the PAM shall become effective only after approval of such change by the Beneficiary and ADB. In the event of any discrepancy between the PAM and this Financing Agreement, the provisions of this Financing Agreement shall prevail. Subproject Selection Criteria 2. The Beneficiary through MOWRAM and the respective PDWRAM shall select a subproject based on the following criteria: (a) the subproject shall have been considered as a priority project under the

provincial, district and commune planning process; (b) the subproject profile shall have been prepared through participatory rapid

appraisal and, as required, special studies and/or detailed surveys shall have been undertaken;

(c) the soils in the location for the subproject shall be well-suited to irrigated agriculture;

(d) the subproject shall have adequate basin level water availability without compromising other water uses within the basin, including non–agricultural water use, and environmental flow;

(e) the subproject shall have adequate water resources to meet crop water requirements for at least four (4) out of five (5) years;

(f) the subproject shall be located outside designated wildlife and forest reserves, the protected area of the Tonle Sap biosphere reserve and buffer zone;

(g) the subproject within an area of high incidence of poverty shall be prioritized; (h) the subproject shall be located in an area cleared of land-mines; (i) the subproject shall not have significant adverse environmental impacts that

are irreversible, diverse or unprecedented; (j) the subproject with involuntary resettlement impact shall have appropriate

mitigation measures included in the approved resettlement plan; (k) the subproject shall have existing structures and does not require investment

beyond one thousand Dollars ($1,000) per hectare; and (l) the subproject shall result in economic internal rate of return of more than

twelve percent (12%). In the event the estimated construction costs shall have increased by twenty percent (20%) or the command area shall have reduced by twenty percent (20%) between the completion of the subproject profile and the final detailed design, then the economic internal rate of return shall be recomputed to ensure that it remains greater than twelve percent (12%).

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The Subproject Selection Process 3. The Beneficiary through the PSC shall endorse the selection of the subprojects to be included under the Project, which shall then be submitted to ADB for concurrence. 4. The Beneficiary shall cause (a) the relevant PDWRAM to be responsible for conducting the detailed design and procurement for the subprojects that cover an area of less than two hundred (200) hectares; and (b) MOWRAM to be responsible for conducting the detailed design and procurement for the other subprojects. PDWRAM shall undertake construction supervision of the subprojects with appropriate support from MOWRAM. 5. The Beneficiary shall issue notice to proceed under the Works contract upon the fulfillment of the following conditions: (a) the payment of compensation and other entitlements to the affected people for

the subproject shall have been satisfactorily completed, with the exception of the long-term income restoration program, in accordance to the approved resettlement plan for the subproject;

(b) the construction area for the subproject shall have been cleared from any lien and encumbrances;

(c) the scheme layout and proposed beneficiaries' contribution to the O&M costs for the subproject shall have been approved by at least two-thirds (⅔) of the potential Project stakeholders;

(d) the land title shall have been issued by the MLMUPC to the relevant subproject stakeholders that do not have land title;

(e) in the event that a land within the irrigated command area does not have land title, the time bound contract for the delivery of the land-titles related to the subproject shall have been executed between MOWRAM and MLMUPC;

(f) the FWUC for the subproject shall have been established and registered with the Department of FWUC and the relevant FWUC management committee shall have commenced relevant training offered by either the TSC or the Department of FWUC; and

(g) the time bound contract between MOWRAM and MAFF for the delivery of the irrigated agricultural extension services related to the subproject shall have been executed.

Involuntary Resettlement 6. The Beneficiary through MOWRAM shall ensure that all land acquisition and resettlement activities under the Project shall be conducted in accordance with (a) the Resettlement Framework agreed by the Beneficiary and ADB; (b) the relevant laws, regulations, and procedures of the Beneficiary; and (c) ADB’s Safeguard Policy Statement (2009). In case of differences between the laws, regulations, and procedures of the Beneficiary with ADB's Safeguard Policy Statement, then the ADB's Safeguard Policy Statement shall apply. The Beneficiary through MOWRAM should minimize any land acquisition activities under the Project. In the event that land acquisition is unavoidable, then the consequences thereof should be mitigated by preparing and implementing the Resettlement Plan in accordance with (a) ADB's Safeguard Policy Statement; and (b) the Resettlement Framework.

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7. Notwithstanding the generality of the above paragraph, the Beneficiary through MOWRAM shall ensure that the affected people who are required under the Project to change their cropping schedule shall be provided on timely basis with compensation and other entitlements stipulated in the Resettlement Framework to assist in the restoration of their livelihood. The Beneficiary through MEF and MOWRAM shall ensure that adequate funds for this purpose shall be made available in a timely manner. Environment 8. The Beneficiary through MOWRAM shall ensure that all the Project facilities shall be constructed, operated, maintained and monitored in accordance with (a) all applicable environmental laws and regulations, policies, procedures and guidelines of the Beneficiary, and (b) ADB's Safeguard Policy Statement. If there is any discrepancy between the Beneficiary's environmental laws and regulations and ADB's Safeguard Policy Statement, then ADB's Safeguard Policy Statement shall prevail. 9. The Beneficiary through MOWRAM shall ensure that (a) PDWRAM shall prepare the IEE for each subproject in accordance with the EARF; (b) PDWRAMs shall adequately supervise the construction works carried out by contractors to ensure compliance with the mitigation measures and monitoring set forth in the IEEs; and (c) all bidding documents and Works contracts contain provisions that require contractors to comply with the monitoring and mitigation measures set forth in the IEEs and to allocate a budget for all such environmental mitigation and monitoring measures. The Beneficiary through MOWRAM shall submit to ADB on semi-annual basis an environmental monitoring report on the implementation of the subproject environmental management plans. 10. The Beneficiary through MOWRAM shall ensure that as part of the environmental assessment, PDWRAMs shall (a) carry out public consultation to ensure that the subproject communities' views and concerns are taken into consideration in the design, construction and operation of the subproject and adequate mitigation and monitoring measures are incorporated; and (b) consult with and obtain the approval from the Fisheries Administration prior to finalization of IEEs to adequately assess likely impacts on fish movement. Gender Action Plan 11. The Beneficiary through MOWRAM shall provide sufficient resources to implement the Gender Action Plan within MOWRAM, provincial departments, district offices and FWUCs in order to enhance opportunities for participation by women under the Project. In particular, the Beneficiary shall (a) ensure that by 2015 at least twenty five percent (25%) of annual intake of the students for IWRM training program offered by ITC shall be women; (b) ensure that at least thirty percent (30%) of the participants of the management and technical training within PDWRAMs and district offices shall be women; (c) facilitate and advocate the recruitment of women in MOWRAM, PDWRAMs and district offices and provide equal opportunities for promotion between women and men; (d) ensure that at least thirty percent (30%) of those employed for rehabilitation work are women and ensure that women and men are treated equally in labor contracting and wages by contractors; (e) ensure that by the end of Project implementation, thirty percent (30%) of FWUCs management and board members shall be women; and (f) ensure that at least thirty percent (30%) of the women FWUC members shall be given the opportunity to attend vocational training in

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Schedule 5

irrigation water management and system operations as well as improved agricultural extention. Counterpart Funds 12. The Beneficiary shall ensure that (a) adequate counterpart funds required during Project implementation period are provided on timely basis to the relevant agencies of the Beneficiary; (b) annual budgetary appropriation requests are submitted in a timely manner; and (c) appropriated funds are disbursed promptly when needed for Project implementation purposes. Good Governance 13. The Beneficiary through MOWRAM shall ensure that Project implementation at the subnational level is aligned with its decentralization and deconcentration systems and procedures and that the associated fiduciary risks related to this are appropriately managed. Capacity Support to Implement O&M Programs 14. Upon completion of a subproject, the Beneficiary (a) through the TSC shall provide relevant PDWRAM and PDA staff as well as the FWUC management committee with continuing training; and (b) through MOWRAM shall provide necessary operational support and resources to PDWRAM, PDA and FWUC to implement the required O&M under the subproject. 15. The Beneficiary through MOWRAM shall ensure the establishment of partnerships between PDWRAMs and PDAs to strengthen linkages between agronomy and irrigation water management. Anticorruption 16. The Beneficiary shall: (a) undertake necessary measures to create and sustain a corruption-free environment for activities under the Project; (b) institute, maintain and ensure compliance with internal procedures and controls for activities under the Project, following international best practice standards for the purpose of preventing corruption, money laundering activities, and the financing of terrorists, and shall require all relevant ministries and agencies to refrain from engaging in any such activities; (c) comply with requirements of ADB’s Anticorruption Policy (1998, as amended to date); (d) where appropriate, ensure that relevant provisions of ADB’s Anticorruption Policy are included in all bidding documents for the Project; and (e) ensure that the Good Governance Framework is implemented in a timely manner. 17. The Beneficiary acknowledges that in accordance with ADB's Anticorruption Policy, ADB will assess allegations of any alleged corrupt, fraudulent, collusive and coercive practices relating to the Project, and where appropriate, recommend administrative action for ADB to take to address such allegations. The Beneficiary shall facilitate ADB's request to conduct any such investigation and will undertake the investigation with ADB, in accordance with procedures to be agreed between the Beneficiary and ADB.

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Schedule 5

18. The Beneficiary through MOWRAM shall, within nine (9) months of the Effective Date, ensure that (a) a Project website is established to disclose Project information including procurement contracts, bidding procedures, list of goods and services procured, and grievance redress procedures; (b) the existing system of notice board display of information at the commune council offices, including display of information on contracts, list of participating bidders, name of the winning bidder, basic details on bidding procedures, contract award, and list of goods and services procured, is used or new similar system is developed for the Project; (c) the communities are adequately informed about the date and location of selected events in the procurement process; and (d) grievance redresses mechanism is established at the PMO and PIUs to (i) review and address grievances of Project stakeholders, in relation to either the Project, any of the service providers, or any person responsible for carrying out the Project, and (ii) set the threshold criteria and procedures for handling such grievances, for proactively responding to them, and for providing the stakeholders with notice of the chosen mechanism/action. MOWRAM shall further ensure that the PMO or a PIU provides a formal reply, to any complaint, within twenty (20) working days of its receipt, and report such grievances in their progress reports to the PSC and ADB.