OFFICIALDOCUMENTS

THE WORLD BANKIBRO * IDA I WORLD BANKGROUP

Dr. Rajan KhanalSecretaryMinistry of FinanceGovernment of NepalSingha Durbar, Kathmandu.

Dear Dr. Khanal:

Re: IDA Financing 6317-NPSecond Bridge Improvement and Maintenance Operation

Additional Instructions: Disbursement and Financial Information Letter.

I refer to the Financing Agreement between Nepal ("Recipient") and the International DevelopmentAssociation (the "Association") for the above-referenced Operation. The General Conditions, as defined inthe Financing Agreement, provide that the Recipient may from time to time request withdrawals of Creditamounts from the Credit Account in accordance with the Disbursement and Financial Information Letter,and such additional instructions as the Association may specify from time to time by notice to the Recipient.The General Conditions also provide that the Disbursement and Financial Information Letter may set outProgram specific financial reporting requirements. This letter constitutes such Disbursement and FinancialInformation Letter ("DFIL"), and may be revised from time to time.

A. Disbursement Arrangements, Withdrawal of Credit Funds, and Reporting of Uses of Credit Funds

I. Disbursement Arrangements, Withdrawal of Credit Funds, and Reporting of Uses of CreditFunds applicable to the Program part and the Project part of IDA 6317-NP.

(i) Electronic Delivery. Section 11.01 (c) of the General Conditions.

The Association may permit the Recipient to electronically submit applications (with supportingdocuments) through the Association's web-based portal (https://clientconnection.worldbank.or ) "ClientConnection". This option may be effected if the officials designated in writing by the Recipient who areauthorized to sign and deliver Applications have registered as users of "Client Connection". The designatedofficials may deliver Applications electronically by completing the Form 2380, which is accessible through-Client Connection". By signing the Authorized Signatory Letter, the Recipient confirms that it isauthorizing such persons to accept Secure Identification Credentials (SIDC) and to deliver the Applicationsand supporting documents to the Association by electronic means. The Recipient may continue to exercisethe option of preparing and delivering Applications in paper form.

The Association reserves the right and may, in its sole discretion, temporarily or permanently disallow theelectronic delivery of Applications by the Recipient. By designating officials to use SIDC and by choosingto deliver the Applications electronically, the Recipient confirms through the authorized signatory letter itsagreement to: (a) abide by the Terms and Conditions of Use of Secure Identification Credentials inconnection with Use of Electronic Means to Process Applications and Supporting Documentation, availablein the Association's public website at https://worldbank.org and "Client Connection"; and (b) to cause suchofficial to abide by those terms and conditions.

Nepal Country Office, Yak Et Yeti Hotel Complex, Durbar Marg, Kathmandu, NepalP.O. Box 798, Phone: +977 1 4236000/4226792/4439571 Fax: +977 1 4225112

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II. Disbursement Arrangements, Withdrawal of Credit Funds, and Reporting of Uses of CreditFunds applicable to the Program part of IDA 6317-NP.

(i) Schedule 1. The table in Schedule I sets out the disbursement methods which may be used by theRecipient, information on registration of authorized signatures, processing of withdrawal applications.

(ii)Withdrawal Applications. Applications for withdrawal from the Credit Account ("WithdrawalApplications") of amounts of the Credit allocated to individual Disbursement Linked Results ("DLR") may,pursuant to the provisions of Section IV.A. 1 of Schedule 2 of the Financing Agreement, be sent to theAssociation at any time after the Association has notified the Recipient in writing that it has acceptedevidence of achievement of the specific DLR.

(iii) WithdrawalAmount. The Withdrawal Application may be for an amount not to exceed the amount ofthe Credit confirmed by the Association for the specific DLR in respect of which the withdrawal isrequested, as specified in the Association's notice to the Recipient.

(iv) Advances and Recovery of Advances. The Recipient may, in accordance with provisions of theFinancing Agreement, request advances of amounts of the Credit allocated to DLI Targets that have not yetbeen achieved using the Form attached (Attachment 2). The aggregated amount of all such advances madein respect of amounts allocated to DLI Targets may not exceed the equivalent of SDR 22,960,000.

The Association records an amount of the advance as disbursed for an achieved DLI Target ("recovered")after it has notified the Recipient of its acceptance of the evidence of achievement of the DLI Target forwhich the advance was provided. The amount so reclassified becomes available for further advances inaccordance with the preceding paragraph.

III. Disbursement Arrangements, Withdrawal of Credit Funds, and Reporting of Uses of CreditFunds applicable to the Project part of IDA 6317-NP.

* Disbursement Guidelines. The Disbursement Guidelines for Investment Project Financing datedFebruary 2017, ("Disbursement Guidelines") are available in the Association's public website athttps://wwv.worldbank.orm and its secure website "Client Connection" athttps://clientconnection.worldbank.ore. The Disbursement Guidelines are an integral part of thisDisbursement and Financial Reporting Letter for the Project part, and the manner in which theprovisions in the guidelines apply to the Financing is specified below.

* General Provisions (Schedule 2). The table in Schedule 2 sets out the disbursement methods whichmay be used by the Recipient, information on registration of authorized signatures, processing ofwithdrawal applications (including minimum value of applications), instructions on supportingdocumentation.

B. Financial Reports and Audits.

(i) Financial Reports. The Recipient shall prepare and furnish to the Association not later than forty five(45) days after the end of each Fiscal Quadrimester, interim unaudited financial reports (IUFR) for theProject part covering the Fiscal Quadrimester.

(ii) Audits. Each audit of the Financial Statements shall cover the period of one fiscal year of the Recipient,commencing with the fiscal year in which the first withdrawal was made. The audited Financial Statementsfor each such period shall be furnished to the Association not later than nine (9) months after the end ofsuch period for the Program part and the Project part.

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C. Other Important Information.

For additional information on disbursement arrangements, please refer to the Loan Handbookavailable on the Association website (http://www.worldbank.org/) and "Client Connection". TheAssociation recommends that you register as a user of "Client Connection". From this website you will beable to prepare and deliver Applications, monitor the near real-time status of the Credit, and retrieve relatedpolicy, financial, and procurement information. For more information about the website and registrationarrangements, please contact the Association by email at clientconnection')worldbank.org.

If you have any queries in relation to the above, please contact Mr. Satish Kumar Shivakumar,Finance Officer at satishkumarl @worldbank.org, using the above reference.

Yo s sincerely,

Country Dir tor

Attachments

1. Form of Authorized Signatory Letter2. Sample form for Advances for the Program part3. Interim Unaudited Financial Report format for Project part

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Schedule 1: Disbursement Provisions

Country Nepal Closing Date Section IV.D of Schedule 2 to

Recipient Nepal the Financing Agreement.Cumredit A Name of the Second Bridge Improvement and Disbursement Six months after the closing

Number 6317-NP Program Maintenance Operation Deadline Date date.

Disbursement Methods Methods Supporting Documentation

Reimbursement (financing Yes Confirmation issued by the Associationof achieved results)Advance Yes Form of Advances (Attachment 2)

we 4 tNAe .~ $bt4 MIof this letter

-uthorized Signarories Letter: %inhdrawal and Documentaion %pplicaiion%:The World Bank The World BankNepal Country Office, No. 11, Taramani Main RoadYak & Yeti Complex, Taramani, Chennai - 600 113Durbar Marg, IndiaKathmandu, Nepal Attention: Team Lead, WFACSAttention: Country Manager, Nepal

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Schedule 2: Disbursement Provisions

Basic InformationCountry Nepal Closing Date Section IV.D of Schedule 2 to theRecipient Nepal Financing Agreement.

Financing IDA 6317- Name of the Project Second Bridge Improvement and Disbursement Four months after the closing date.Number NP Maintenance Operation Deadline Date

Subsection 3.7**

Disbursement Methods and Supporting Documentation

Methods AvailableDisbursement Methods Supporting Documentation

Section 2* Subsections 4.3 and 4.4

Direct Payment Yes Copy of Records

Reimbursement Yes Interim Unaudited Financial Report ("IUFR") (Attachment 3 of the DFIL)Copy of Letter of Credit.

Special Commitments Yes Proforma Invoice if cited in the Letter of Credit

Minimum Value of Applications (subsection 3.5)

The minimum value of applications for Reimbursement, Direct Payment and Special Commitment is USD 10,000 equivalent.

Authorized Signatures (Subsection 3.1 and 3.2 **) The form for Authorized Signatories Letter is provided in Attachment 1 of this letterWithdrawal and Documentation Applications (Subsection 3.3 and 3.4 **)

Authorized Signatories Letter: Withdrawal and Documentation Applications:The World Bank The World BankNepal Country Office, No. I1, Taramani Main RoadYak & Yeti Complex, Taramani, Chennai- 600 113Durbar Marg, IndiaKathmandu, Nepal Attention: Team Lead, WFACSAttention: Country Manager, Nepal

*Sections and subsections indicated relate to the Disbursement Guidelines for Investment Project dated Financing 2017.

Attachment I - Form of Authorized Signatory Letter

[LetterheadiMinistry of Finance

[Street address](Cityl [Country]

[DATE]

The World BankNepal Country Office,Yak & Yeti Complex,Durbar Marg,Kathmandu, NepalAttention: Country Manager, Nepal

Re: IDA Financing 6317-NP (Second Bridge Improvement and Maintenance Operation)

I refer to the Financing Agreement ("Agreement") between the International DevelopmentAssociation (the "Association") and [name of Recipient] (the "Recipient"), dated _ , providing theabove Financing. For the purposes of Section 2.03 of the Project General Conditions and Section 2.02 ofthe Program General Conditions as defined in the Agreement, any '[one] of the persons whoseauthenticated specimen signatures appear below is authorized on behalf of the Recipient to signapplications for withdrawal and applications for a special commitment under this Financing.

For the purpose of delivering Applications to the Association, 2[each] of the persons whoseauthenticated specimen signatures appears below is authorized on behalf of the Recipient, acting'[individually] '[jOintly], to deliver Applications, and evidence in support thereof on the terms andconditions specified by the Association.

'[This confirms that the Recipient is authorizing such persons to accept Secure IdentificationCredentials (SIDC) and to deliver the Applications and supporting documents to the Association by

Instruction to the Recipient: Stipulate if more than one person needs to sign Applications, and how many or whichpositions, and if any thresholds apply. Please delete this footnote in final letter that is sent to the Association.

2 Instruction to the Recipient: Stipulate if more than one person needs to jointly sign Applications, if so, pleaseindicate the actual number. Please delete this footnote in final letter that is sent to the Association.

Instruction to the Recipient: Use this bracket if any one of the authorized persons may sign; if this is notapplicable, please delete. Please delete this footnote in final letter that is sent to the Association.

4 Instruction to the Recipient: Use this bracket only if several individuals must jointly sign each Application; if thisis not applicable, please delete. Please delete this footnote in final letter that is sent to the Association.

5 Instruction to the Recipient: Add this paragraph if the Recipient wishes to authorize the listed persons to acceptSecure Identification Credentials and to deliver Applications by electronic means; if this is not applicable, pleasedelete the paragraph. Please delete this footnote in final letter that is sent to the Association.

electronic means. In full recognition that the Association shall rely upon such representations andwarranties, including without limitation, the representations and warranties contained in the Terms andConditions of Use ofSecure Identification Credentials in connection with Use ofElectronic Means toProcess Applications and Supporting Documentation ("Terms and Conditions of Use of SIDC"), theRecipient represents and warrants to the Association that it will cause such persons to abide by thoseterms and conditions.]

This Authorization replaces and supersedes any Authorization currently in the Associationrecords with respect to this Agreement.

[Name], [position] Specimen Signature:

[Name], [position] Specimen Signature:

[Name], [position] Specimen Signature:

Yours truly,

/signed /

[Position]

Attachment 2Sample Form for Advances

[Ministry/Implementing Agency Letterhead]

[Date]

The World BankNo. 11, Taramani Main RoadTaramani, Chennai - 600 113IndiaAttention: Team Lead, WFACS

Subject: Re: IDA Financing 6317-NP (Second Bridge Improvement and MaintenanceOperation) -Request for Advance

Dear Sir/Madam,

We refer to the Financing Agreement between the International Development Association("Association") and Nepal ("Recipient") dated [insert date] providing for the above Financing.

In accordance with the provisions of the Disbursement and Financial Infonnation Letter andSchedule 2, Section IV.B.2 of the Financing Agreement, to support the implementation of the aboveProgram and to facilitate the achievement of the planned results, we request an Advance in the amount of[insert amount]'.

[We request that the Advance be disbursed in [currency requested for disbursement] equivalent tothe Total Advance Requested above.]f We acknowledge that the amount disbursed will be charged to theFinancing Account in the currency of the Financing at the rate of exchange in effect at the time ofdisbursement.

Sincerely,

[insert Name, and Position]8

6 The Proposed Advance should be in the currency of the DLI/DLI Target as set out in the disbursement table in theFinancing Agreement, and in accordance with provisions in the Disbursement and Financial Information Letter.Normally, this is the currency of commitment of the [Grant] [Credit].' Use this text to designate the currency of the Advance if it should be different from the currency set out in thedisbursement table in the Financing Agreement.8 To be signed by a representative of the implementing/coordinating agency of the Recipient, OR by the person(s)authorized on behalf of the Recipient to sign applications for withdrawal under the Credit as set out in the applicableAuthorized Signatory Letter.

Attachment 3 - Format of Interim Unaudited Financial Report for Project part

. Trimester FMRReport 1

Summary of Sources and Uses of FundsAmount in NPR

Notes to Cumulative up to Current Fiscal Year Cumulative toDescription Previous FiscalAccount Year 1st Trimester 2nd Trimester 3rd Trimester Year-to-Date Date

Budget AllocationApproved Allocation

A Opening Cash/Bank BalanceCash/Bank balance of previous period

B. Sources of Funds

GoN Fund

GoN Reimbursable Fund

IDA Funds

Total (A+B)

C. Uses of Funds by Category/ Component

Total

D Closing Balance

Total (C+D)_ IDesignated Account Statement

1 Opening Balance

2 Fund Received from IDA3 Less: Transfer to GoN Treasury Account

4 Less: Direct Payment from Designated Account

5 Foreign Exchange Gain/Loss (+/-) as NRB adl.

6. Closing Balance (3-4-5+6) 1 1 1

. ..... . Trimester FMR

Report 3

Statement of ExpenditureAmount In NPR

Line Cumulative Expenditure Balance Budget

Item Category Description/ Component Total Project Cost Expenditure upto Annualat CumulativeNo No Previous FY tst Tnmester 2nd Tnmester 3rd Tnmester Year-to-Date % Amount % Expenditure to

Date

1 3 4 5 6 7 8 9 10= (7+8-9) 11 12 (10-5) 13 14(4+10)

Grand Total

............... Trimester FM RNote 1

GoN and GoN Reimbursable Funds

Amount in NPRCumulative up to Current Fiscal Year

Description Previous Fiscal Cumulative to DateYear 1st Trimester 2nd Trimester 3rd Trimester Year to date

GoN Fund Released

A GoN Reimbursable Fund Released

Total Funds Released

B Transfer to GoN Treasury

Total

C Total Funds used from GoN Treasury (A-B)

GoN Fund Expenditure

D Less: Source to be changed to IDA source

Net GoN Expenditure

GoN Reimbursable Funds:

GoN Reimbursable Fund Expenditure

E Source to be changed from GoN source

Less: Reimbursement Received

Net GoN Reimbursable Funds

F Total (D+E)

WORLD BANK Credit NO.........

DESIGNATED ACCOUNT EXPENDITURE FOR CONTRACTS SUBJECT TO PRIOR REVIEWFOR THE QUARTER ENDED ......................

Disbursement Name & Address Contract Currency Invoiced % Financed by Eligible for Total Amount Remarks, if anyCat./Subcat. of Contractor/Supplier/Service provider WB Contract Ref No & Value Amounts by IDA Bank's Financing in Paid

Contract Reference/Signing Date Currency Contract's Currency(col. 1) (col. 2) (col. 3) (col. 4) (col. 5) (col. 6)=(col.4)*(col.5) (col. 7) (col. 8)

Disbursementcategories asstipulated in theFinancingAgreement