January 9, 2001
Her Excellency
Evdokia Maneva
Minister of Environment and Waters
Sofia, Republic of Bulgaria
Dear Madam Minister:
Re:
Grant Agreement for Preparation of Wetland Restoration
and Pollution Reduction Project GEF-PPG TF024837
I am writing on behalf of the International Bank for Reconstruction and
Development (the Bank) acting as an Implementing Agency of the Global Environment
Facility (GEF) to indicate the Bank's agreement to grant to the Republic of Bulgaria
(the Recipient) a Grant in an amount not exceeding three hundred and fifty thousand
Dollars (US$350,000) (the Grant). The Grant is made in response to the Recipient's
request for financial assistance and for the purposes and on the terms and conditions
set forth in the Annex to this Letter Agreement. The Recipient represents, by
confirming its agreement below, that it is authorized to contract and withdraw the
Grant for the said purposes and on the said terms and conditions.
The award of the Grant does not constitute or imply any commitment on the part
of the Bank, either as a GEF Implementing Agency, or in its own capacity, or the
International Development Association, to assist in financing any project which will
result from the activities financed by the Grant.
The Recipient by confirming its agreement hereunder, confirms its commitment to
the objectives of the activities to be financed by the Grant, and to this end, hereby
undertakes to take all action necessary or appropriate to carry out its obligations
set forth in this letter and the Attachment hereto.
Please confirm your agreement with the foregoing, on behalf of the Recipient, by
signing, dating, and returning to us the enclosed copy of this Letter Agreement. Upon
receipt by the Bank
of the copy of this Letter Agreement countersigned by you, this Letter Agreement will
become effective as of the date of the countersignature.
Very truly yours,
INTERNATIONAL BANK FOR RECONSTRUCTION
AND DEVELOPMENT
acting as an Implementing Agency
of the Global Environment Facility
By /s/ Thomas O'Brian
Resident Representative
Republic of Bulgaria
South Central Europe Country Unit
Europe and Central Asia Region
AGREED:
REPUBLIC OF BULGARIA
By /s/ Evdokia Maneva
Authorized Representative
Date:
January 9, 2001

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ANNEX
Purposes, Terms, and Conditions of the Grant
1.
Purposes and Activities
1.1.
The purposes of the Grant are to assist in the preparation of the Wetland
Restoration and Pollution Reduction Project (the Project), which has as main objective
to assist the Recipient to reduce trans-boundary nutrient loads and to conserve
biodiversity in the Danube and Black Sea Basins. The activities (the Activities) for
which the Grant is given are as follows:
(i)
Preparation of Wetland Restoration and Management programs,
including studies on: riverbed hydrology and
hydraulics; wetland
restoration design; nutrient cycling; water quality and water quality monitoring
systems; and the economic analysis of alternative methods
for nutrient reduction.
(ii)
Preparation of Protected Area Management programs, including
protected area management planning; design and
implementation of
biodiversity baseline information and monitoring systems.
(iii)
Carrying out market feasibility studies on alternative income
development in Belene and Kalimok wetlands
communities sites.
(iv)
Design of a public awareness strategy and carrying out portions of
this plan through workshops, public
meetings and provision of
educational materials.
(v)
Preparation of a social and environmental assessment on the
potential effects of project implementation on
the local
environment and communities.
(vi)
Provision of funding for Project preparation and coordination,
including training for project management
and financial auditing.
2.
Implementation Generally
2.1.
The Recipient shall: (a) carry out the Activities with due diligence and
efficiency; (b) promptly provide the funds, facilities, services and other resources
required for that purpose; (c) furnish all information covering the Activities and the
use of the proceeds of the Grant as the Bank shall reasonably request; (d) from time
to time exchange views with the Bank's representatives on the progress and results of
the Activities; and (e) take all necessary measures required to enable the Bank to
visit the territory of the Recipient for the purposes related to the Grant. Without
limitation on the foregoing, the Recipient shall, if the Bank shall so request,
prepare and furnish to the Bank promptly upon completion of the Activities a report,
in form and substance satisfactory to the Bank, on the results and impact of the
Activities.
3.
Procurement
3.1
Except as the Bank shall otherwise agree, procurement of the consultants'
services and goods required for the carrying out of the Activities and to be financed
out of the proceeds of the Grant shall be governed by the provisions of Attachment I
to this Annex.
3.2.
The Recipient shall ensure that all imported goods to be financed out of the
proceeds of the Grant shall be insured against hazards incident to the acquisition,
transportation and delivery thereof to the place of use or installation, and that any
indemnity for such insurance is payable in a freely usable currency to replace or
repair such goods. The Recipient shall ensure that any facilities relevant to the
Activities are at all times operated and maintained in accordance with appropriate
practices and that any repairs or renewals of such facilities are promptly made as
needed.

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4.
Withdrawal of Grant Proceeds
4.1.
The amount of the Grant shall be credited to an account opened by the Bank on
its books in the name of the Recipient (the Grant Account), and may be withdrawn
therefrom by the Recipient in accordance with the provisions of this Section 4, for
expenditures in respect of the reasonable cost of goods and services required for the
Activities and to be financed out of the proceeds of the Grant.
4.2.
The expenditures for the following items may be financed out of the proceeds of
the Grant and shall be used exclusively in the carrying out of the Activities:
% of
Amount of the Grant
Expenditures to
Item
Allocated (in Dollars)
be Financed
(1)
Consultants'
279,000
100%
Services and Training
(2)
Goods
9,000
100% of foreign
expenditures, 100% of
local (ex-
factory) expenditures, and
80%
of other local
expenditures
(3)
Incremental operating
28,000
100%
costs
(4)
Unallocated
34,000
TOTAL
350,000
For purposes of this paragraph:
(a)
the term "foreign expenditures" means expenditures in the currency of any
country other than that of the Recipient for goods or services supplied from the
territory of any country other than that of the Recipient;
(b)
the term "local expenditures" means any expenditures that are not foreign
expenditures;
(c)
the term "training" means expenditures incurred by the Recipient in
connection with the carrying out of training activities under the Activities,
including travel costs and per diem of the trainees, rental of facilities and
equipment, workshops and training materials; and
(d)
the term "incremental operating costs" means expenditures incurred by the
Recipient in operational maintenance, including maintenance of vehicles and fuel for
these vehicles, materials for public relations, office supplies, minor office
refurbishment, telecommunications, publications related to the Project, travel
expenses of project staff, and administrative costs.
4.3.
Notwithstanding the provisions of paragraph 4.2 above: (a) no withdrawals shall
be made: (i) for payments made for expenditures prior to the date of this Letter
Agreement; (ii) on account of payments for any taxes levied by or in the territory of
the Recipient; (iii) on account of expenditures in the territories of any country
which is not a member of the Bank or for goods produced in or services supplied from
such territories; (iv) for the purpose of any payment to persons or entities, or for
any import of goods, if such payment or import, to the Bank's knowledge, is prohibited
by a decision of the United Nations Security Council taken under Chapter VII of the
Charter of the United Nations; or (v) after June 30, 2002 or such later date as the
Bank shall establish by written notice to the Recipient (the Closing Date), except
that withdrawals may be made for expenditures incurred prior to the Closing Date and
received by the Bank within four months after the Closing Date, after which time any

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amount of the Grant remaining unwithdrawn from the Grant Account shall be canceled;
and (b) if, in the Bank's opinion, an amount of the Grant allocated to any of the
items in the table in paragraph 4.2 above will be insufficient to finance the
expenditures for such item, it may, by written notice to the Recipient, reallocate to
such item an amount of the Grant then allocated to another item which in its opinion
will not be necessary to meet other expenditures.
4.4
When the Recipient shall desire to withdraw any amount from the Grant Account,
it shall deliver to the Bank a written application for withdrawal of such amount in
the form specified by the Bank. Withdrawal applications shall be: (a) signed on
behalf of the Recipient by the Minister of Environment and Waters or such other person
as he or she shall have authorized in writing; and (b) be accompanied by such evidence
in support of the application as the Bank shall reasonably request. Authenticated
specimen signatures of the person authorized to sign withdrawal applications shall be
provided with the first application bearing his or her signature. Each withdrawal
application for an amount of the Grant and its supporting evidence must be sufficient
in form and substance to satisfy the Bank that the Recipient is entitled to withdraw
such amount from the Grant Account and that such amount is to be used in the carrying
out of the Activities. The Bank shall pay the amounts withdrawn by the Recipient from
the Grant Account only to or on the order of the Recipient.
4.5
The Bank may require withdrawals from the Grant Account to be made on the basis
of statements of expenditure for expenditures for: (a) services of individual
consultants costing less than US$10,000 equivalent; (b) services of consulting firms
costing less than US$40,000
equivalent; (c) goods; (d) training services; and (e) incremental operating costs, all
under such terms and conditions as the Bank shall specify by notice to the Recipient.
4.6.
Withdrawals of the proceeds of the Grant shall be made in the currency of the
Grant. The Bank, at the Recipient's request and acting as an agent of the Recipient,
shall purchase with the currency of the Grant withdrawn from the Grant Account such
currencies as shall be required to pay for expenditures to be financed out of the
proceeds of the Grant. Whenever it shall be necessary, for the purposes of this
Letter Agreement, to determine the value of one currency in terms of another, such
value shall be as reasonably determined by the Bank.
4.7.
To facilitate the carrying out of the Activities, the Recipient may open and
maintain in Dollars a special deposit account (the Special Account) in a commercial
bank on terms and conditions satisfactory to the Bank, including appropriate
protection against set-off, seizure or attachment. Deposits into, and payments out
of, the Special Account shall be made in accordance with the provisions of the
Attachment II to this Annex.
5.
Accounts and Audits
5.1.
(a)
The Recipient shall maintain or cause to be maintained a financial
management system, including records and accounts, and prepare financial statements in
a format acceptable to the Bank, adequate to reflect in accordance with sound
accounting practices the operations, resources and expenditures related to the
Activities .
(b)
The Recipient shall: (i) have the records, accounts and financial
statements referred to in subparagraph (a) above and the records and accounts for the
Special Account for each fiscal year audited, in accordance with auditing standards
acceptable to the Bank, consistently applied, by independent auditors with
qualifications, experience and terms of reference acceptable to the Bank; (ii) furnish
to the Bank as soon as available, but in any case not later than six months after the
end of each such year, (A) certified copies of the financial statements referred to in
paragraph (a) of this Section for such year as so audited, and (b) an opinion on such
statements, records and accounts and the report of such audit by said auditors, of
such scope and in such detail as the Bank shall have reasonably requested; and (iii)
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 Grant
Account were made on the basis of statements of expenditure, the Recipient shall: (i)

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maintain or cause to be maintained, in accordance with subparagraph (a) above, records
and accounts reflecting such expenditures; (ii) retain, until at least after one year
after the Bank has received the audit report for the fiscal year in which the last
withdrawal from the Grant Account was made, all records (contracts, orders, invoices,
bills, receipts and other documents) evidencing such expenditures; (iii) enable the
Bank's representatives to examine such records; and (iv) ensure that such records and
accounts are included in the annual audit referred to in subparagraph (b) above and
that the report of such audit contains a separate opinion by said auditors as to
whether the statements of expenditure submitted during such fiscal year, together with
the procedures and internal controls involved in their preparation, can be relied upon
to support the related withdrawals.
6.
Suspension and Cancellation
6.1.
The Bank may at any time, by notice to the Recipient, suspend the right of the
Recipient to make further withdrawals from the Grant Account if any of the following
events has occurred and is continuing: (a) the Recipient has failed to comply with
any of its obligations therein specified; or (b) the right of the Recipient, or any
other entity to which the Bank has made a loan with the guarantee of the Recipient, to
make withdrawals under any loan agreement with the Bank or any development credit
agreement with the International Development Association shall have been suspended.
6.2.
The Bank may, by written notice to the Recipient, terminate the right of the
Recipient to make further withdrawals from the Grant Account: (a) at any time after
the right of the Recipient to make withdrawals from the Grant Account shall have been
suspended pursuant to the provisions of paragraph 6.1 above; or (b) if the Recipient
shall have failed to take action, satisfactory to the Bank, within 90 days after the
effective date hereof, to carry out the Activities; or (c) if the Bank has decided, at
any time after consultation with the Recipient, to withdraw its support to the
Project; or (d) if the Recipient has withdrawn its request for the Bank's assistance
in financing the Project.
Attachment I
Procurement
Section I.
Consultants' Services
Part A:
General
Consultants' services shall be procured in accordance with 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), and the
following provisions of this Section I.
Part B:
Quality- and Cost-based Selection
Except as otherwise provided in Part C of this Section, consultants' services
shall be procured under contracts awarded in accordance with the provisions of Section
II of the Consultant Guidelines, paragraph 3 of Appendix 1 thereto, Appendix 2
thereto, and the provisions of paragraphs 3.13 through 3.18 thereof applicable to
quality- and cost-based selection of consultants.
Part C:
Other Procedures for the Selection of Consultants
1.
Selection Based on Consultants' Qualifications
Services estimated to cost less than US$100,000 equivalent per contract may be
procured under contracts awarded in accordance with the provisions of paragraphs 3.1
and 3.7 of the Consultant Guidelines.
2.
Individual Consultants
Services for project preparation coordination, financial management and
procurement tasks that meet the requirements set forth in paragraph 5.1 of the
Consultant Guidelines shall be procured under contracts awarded to individual

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consultants in accordance with the provisions of paragraphs 5.1 through 5.3 of the
Consultant Guidelines.
Part D:
Review by the Bank of the Selection of Consultants
1.
Selection Planning
Prior to the issuance to consultants of any requests for proposals, the proposed
plan for the selection of consultants under the Activities 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 plan as shall have been approved by
the Bank, and with the provisions of said paragraph
2.
Prior Review
(a)
With respect to each contract for the employment of consulting firms
estimated to cost the equivalent of US$40,000 or more, the procedures set forth in
paragraphs 1, 2 (other than the second subparagraph of paragraph 2 (a)) and 5 of
Appendix 1 to the Consultant Guidelines shall apply.
(b)
With respect to each contract for the employment of individual
consultants estimated to cost the equivalent of US$10,000 or more, the qualifications,
experience, terms of reference and terms of employment of the consultants shall be
furnished to the Bank for its prior review and approval. The contract shall be
awarded only after said approval shall have been given.
3.
Post Review
With respect to each contract not governed by paragraph 2 of this Part, the
procedures set forth in paragraph 4 of Appendix 1 to the Consultant Guidelines shall
apply.
Section II.
Procurement of Goods
Goods shall be procured: (a) in accordance with 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); and (b) under contracts awarded on the basis of
shopping procedures in accordance with the provisions of paragraphs 3.5 and 3.6 of the
Guidelines. The review procedures set forth in paragraph 4 of Appendix 1 to the
Guidelines shall apply to such contracts, provided that the word "bids", in such
paragraph 4, shall be read as "quotations".
Attachment II
Special Account
1.
For the purposes of this Attachment:
(a)
the term "eligible item(s)" means the item(s) set forth in the table in
paragraph 4.2 of the Annex to this Letter Agreement;
(b)
the term "eligible expenditures" means expenditures in respect of the
reasonable cost of goods and services required for the Activities and to be financed
out of the proceeds of the Grant; and
(c)
the term "Authorized Allocation" means an amount equivalent to US$25,000
to be withdrawn from the Grant Account and deposited into the Special Account pursuant
to paragraph 3 (a) of this Attachment.
2.
Payments out of the Special Account shall be made exclusively for eligible
expenditures in accordance with the provisions of this Attachment.
3.
After the Bank has received evidence satisfactory to it that the Special Account
has been duly opened, withdrawals of the Authorized Allocation and subsequent

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withdrawals to replenish the Special Account shall be made as follows:
(a)
the Recipient shall furnish to the Bank a request or requests for a
deposit into the Special Account of an amount or amounts which do not exceed the
aggregate amount of the Authorized Allocation. On the basis of such request or
requests, the Bank shall, on behalf of the Recipient, withdraw from the Grant Account
and deposit into the Special Account such amount or amounts as the Recipient shall
have requested.
(b)
(i)
For replenishment of the Special Account, the Recipient shall
furnish to
the Bank requests for deposits
into the Special Account
at such intervals as the Bank shall specify.
(ii)
Prior to or at the time of each such request, the Recipient shall
furnish to the Bank the documents and
other evidence required
pursuant to paragraph 4 of this Attachment for the payment or payments in
respect
of which replenishment is requested. All such deposits
shall be withdrawn by the Bank from the Grant
Account under
the eligible item(s), and in the respective equivalent amounts, as shall
have been justified
by said documents and other evidence.
4.
For each payment made by the Recipient out of the Special Account, the Recipient
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.
5.
Notwithstanding the provisions of paragraph 3 of this Attachment, the Bank shall
not be required to make further deposits into the Special Account.
(a)
if, at any time, the Bank shall have determined that all further
withdrawals should be made by the Recipient directly from the Grant;
(b)
if the Recipient shall have failed to furnish to the Bank, within the
period of time specified in paragraph 5.1 (b) (ii) of the Annex of this Letter
Agreement, any of the audit reports required to be furnished to the Bank pursuant to
said paragraph in respect of the audit of the records and accounts for the Special
Account;
(c)
if, at any time, the Bank shall have notified the Recipient of its
intention to suspend in whole or in part the right of the Recipient to make
withdrawals from the Grant Account pursuant to the provisions of paragraph 6.1 of the
Annex to this Letter Agreement; or
(d)
once the total withdrawn amount of the Grant shall equal the equivalent
of twice the amount of the Authorized Allocation.
Thereafter, withdrawals from the Grant Account of the remaining unwithdrawn amount of
the Grant shall follow such procedures as the Bank shall specify by notice to the
Recipient. Such further withdrawals shall be made only after and to the extent that
the Bank shall have been satisfied that all such amounts remaining on deposit in the
Special Account as of the date of such notice will be utilized in making payments for
eligible expenditures.
6.
(a)
If the Bank shall have determined at any time that any payment out of the
Special Account: (i) was made for an expenditure or an amount not eligible pursuant to
paragraph 2 of this Attachment; or (ii) was not justified by the evidence furnished to
the Bank, the Recipient shall, promptly upon notice from the Bank: (A) provide such
additional evidence as the Bank may request; or (B) deposit into the Special Account
(or, if the Bank shall so request, refund to the Bank) an amount equal to the amount
of such payment or the portion thereof not so eligible or justified. Unless the Bank
shall otherwise agree, no further deposit by the Bank into the Special Account shall
be made until the Recipient has provided such evidence or made such deposit or refund,
as the case may be.
(b)
If the Bank shall have determined at any time that any amount outstanding
in the Special Account will not be required to cover further payments for eligible
expenditures, the Recipient shall, promptly upon notice from the Bank, refund to the

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Bank such outstanding amount.

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