WIIA

CREDIT NUMBER 4926-KECREDIT NUMBER 5410-KE

Financing Agreement(Amending and Restating Financing Agreement)

(Kenya Transport Sector Support Project)

between

REPUBLIC OF KENYA

and

INTERNATIONAL DEVELOPMENT ASSOCIATION

Dated I3 1 ,2014

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CREDIT NUMBER 4926-KECREDIT NUMBER 5410-KE

FINANCING AGREEMENT

(Amending and Restating Financing Agreement)

AGREEMENT dated YI cCk \? , 2014, entered into betweenREPUBLIC OF KENYA ("Recipient") and INTERNATIONAL DEVELOPMENTASSOCIATION ("Association").

WHEREAS (A) under an agreement dated May 23, 2011, between theAssociation and the Recipient ("Original Financing Agreement"), the Association agreedto provide the Recipient with a credit ("Original Credit") in an amount in variouscurrencies equivalent to one hundred ninety million eight hundred thousand SpecialDrawing Rights (SDR 190,800,000) to assist in financing the Kenya Transport SectorSupport Project described in Schedule 1 to the Original Financing Agreement ("OriginalProject");

(B) the Recipient has requested the Association to provide additionalfinancial assistance in support of additional activities related to the Original Project byfurther making available to the Recipient an additional credit in an amount in variouscurrencies equivalent to one hundred thirty-two million six hundred thousand SpecialDrawing Rights (SDR 132,600,000) ("Additional Credit");

(C) the Agence Francaise de Development (AFD) has approved inDecember 2013, a loan to Kenya Airports Authority, in an amount of US$66 millionequivalent (AFD Loan) to assist in financing Part C of the Project on the terms andconditions to be set forth in an agreement to be entered into between the Kenya AirportsAuthority and AFD (the Co-financing Agreement); and

WHEREAS the Association has agreed, on the basis, inter alia, of the foregoingto extend such additional assistance to the Recipient upon the terms and conditions setforth in this Agreement.

NOW THEREFORE the Recipient and the Association hereby agree to amendand restate the agreements referred to in Recital (A) with effect as of the Effective Dateof this Agreement, to read as follows:

ARTICLE I - GENERAL CONDITIONS; DEFINITIONS

1.01. The General Conditions (as defined in the Appendix to this Agreement)constitute an integral part of this Agreement.

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1.02. Unless the context requires otherwise, the capitalized terms used in thisAgreement have the meanings ascribed to them in the General Conditions or inthe Preamble and the Appendix to this Agreement.

ARTICLE II- FINANCING

2.01. The Association agrees to extend to the Recipient, on the terms and conditionsset forth or referred to in this Agreement, a credit in an amount in variouscurrencies equivalent to three hundred twenty-three million four hundredthousand Special Drawing Rights (SDR 323,400,000) (variously referred to as"Credit" and "Financing") which consists of: (a) the Original Credit in variouscurrencies equivalent to one hundred ninety million eight hundred thousandSpecial Drawing Rights (SDR 190,800,000); and (b) the Additional Credit invarious currencies equivalent to one hundred thirty-two million six hundredthousand Special Drawing Rights (SDR 132,600,000); to assist in financing theproject described in Schedule 1 to this Agreement ("Project").

2.02. The Recipient may withdraw the proceeds of the Financing in accordance withSection IV of Schedule 2 to this Agreement.

2.03. The Maximum Commitment Charge Rate payable by the Recipient on theUnwithdrawn Financing Balance shall be one-half of one percent (1/2 of 1%) perannum.

2.04. The Service Charge payable by the Recipient on the Withdrawn Credit Balanceshall be equal to three-fourths of one percent (3/4 of 1%) per annum.

2.05. The Payment Dates are February 15 and August 15, and February 1 and August 1in each year in respect of each of the Original Credit, and the Additional Credit.

2.06. The principal amount of the Original Credit and the Additional Credit shall berepaid in accordance with the repayment schedule set forth in Schedule 3 to thisAgreement.

2.07. The Payment Currency is the Dollar.

ARTICLE III - PROJECT

3.01. The Recipient declares its commitment to the objectives of the Project. To thisend, the Recipient shall:

(a) carry out Part B of the Project through the Ministry of Transport andInfrastructure (MoTI); and

(b) cause Part A of the Project to be carried out by the Kenya NationalHighways Authority (KeNHA), Part C of the Project by the Kenya

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Airports Authority (KAA), and Part D of the Project by the Kenya CivilAviation Authority (KCAA) (collectively "the Project ImplementingEntities") in accordance with the provisions of Article IV of the GeneralConditions.

3.02. Without limitation upon the provisions of Section 3.01 of this Agreement, andexcept as the Recipient and the Association shall otherwise agree, the Recipientshall ensure that the Project is carried out in accordance with the provisions ofSchedule 2 to this Agreement.

3.03. Except as the Recipient and the Association shall otherwise agree, the Recipientshall:

(a) maintain, for the duration of the Project, an account in Kenya Shillings("Project Account") for Part A of the Project, in a commercial bank onterms and conditions satisfactory to the Association into which it shalldeposit its counterpart contribution to the cost of Part A of the Project;

(b) thereafter replenish the Project Account at quarterly intervals duringProject implementation, by depositing therein an amount as may beagreed from time to time between the Recipient and the Association; and

(c) ensure that funds deposited into the Project Account in accordance withparagraph (b) of this Section shall be used exclusively to financeexpenditures under Part A of the Project.

ARTICLE IV - REMEDIES OF THE ASSOCIATION

4.01. The Additional Event of Suspension consists of the following, namely that any ofthe Project Implementing Entities' Legislation has been amended, suspended,abrogated, repealed or waived so as to affect materially and adversely the abilityof the Project Implementing Entity to perform any of its obligations under theFinancing Agreement.

4.02. The Additional Event of Acceleration consists of the following, namely that theevent specified in Section 4.01 of this Agreement occurs.

ARTICLE V - EFFECTIVENESS; TERMINATION

5.01. The Additional Condition of Effectiveness consists of the following, namely thatthe Subsidiary Agreements, as revised, have been executed on behalf of theRecipient and the Project Implementing Entities.

5.02. The Additional Legal Matter consists of the following namely that the SubsidiaryAgreements, as revised, have been duly authorized or ratified by the Recipient

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and the Project Implementing Entities and are legally binding upon the Recipientand the Project Implementing Entities in accordance with their terms.

5.03. The Effectiveness Deadline is the date ninety (90) days after the date of thisAgreement.

5.04. For purposes of Section 8.05 (b) of the General Conditions, the date on which theobligations of the Recipient under this Agreement (other than those providing forpayment obligations) shall terminate is twenty years after the date of thisAgreement.

ARTICLE VI- REPRESENTATIVE; ADDRESSES

6.01. The Recipient's Representative is its Cabinet Secretary at the time responsiblefor Finance.

6.02. The Recipient's Address is:

The National TreasuryTreasury BuildingP.0 Box 30007-00100Nairobi, Kenya

Facsimile:254 20 330426; 254 20 218475

6.03. The Association's Address is:

International Development Association1818 H Street, N.W.Washington, D.C. 20433United States of America

Cable: Telex: Facsimile:

INDEVAS 248423 (MCI) 1-202-477-6391Washington, D.C.

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AGREED at Nairobi, Kenya as of the day and year first above written.

REPUBLIC OF KENYA

By

uthorizedyepresentative

Name: ~ \/ ot*

Title: eqt2~1 9&k t---

INTERNATIONAL DEVELOPMENT ASSOCIATION

By

Authorized Representative

Name: b aJT)pc) &.1l

Title: CW NT I Z1EiC10

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SCHEDULE 1

Project Description

The objectives of the Project are to: (a) increase the efficiency of road transportalong the Northern Corridor and the Tanzania-Kenya-Sudan road corridor; (b) enhanceaviation safety and security to meet international standards; (c) improve the institutionalarrangements and capacity in the transport sector; (d) restore the capacity of theinternational passenger terminal destroyed in a fire at Jomo Kenyata InternationalAirport; and (e) strengthen the capacity of KAA in disaster preparedness andresponsiveness at Kenyan airports.

The Project consists of the following parts:

Part A: Support to KeNHA to Rehabilitate and improve roads, roadside facilities androad safety interventions and for Institutional Strengthening

1. Rehabilitating the Kisumu - Kakamega - Kitale section on the Tanzania-Kenya -South Sudan road corridor including widening of the road carriageway; andconstructing service roads, interchanges, and non-motorized traffic facilities atmarket centers to improve road safety, through provision of works and servicesrequired for that purpose.

2. Constructing a second carriageway on the Athi River-Machakos turn off road onthe Northern Corridor and constructing service roads and non-motorizedfacilities.

3. Rehabilitating the Maji ya Chumvi - Bachuma Gate road section on the NorthernCorridor including strengthening and widening of the existing road carriageway,and construction of service roads and non-motorized traffic facilities to improveroad safety, through provision of works and services required for that purpose.

4. Constructing four interchanges to improve road safety and flow of traffic atNakuru-Nyahururu turnoff; Nakuru-Njoro turnoff; Mau Summit-Kisumu turnoffand Ahero-Kisii Turnoff.

5. Constructing access roads to the East Africa School of Aviation and the proposedoffice block for KCAA and road sub-sector entities including associated non-motorized facilities, street lighting, and drainage.

6. Supervising the related construction works.

7. Strengthening the capacity of various institutions and technical assistancethrough the provision of goods, works and services required to:

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(a) provide training and acquisition of relevant equipment, vehicles softwareand systems for KeNHA, KURA, KeRRA, State Law Office andExternal Resources Department to promote their effectiveness ininformation management systems, financial planning, contractmanagement and service delivery;

(b) carry out feasibility and detailed engineering designs studies for thedevelopment and management of the road network;

(c) mark the boundaries for the right of way to secure KeNHA's road assets;and

(d) construct an office building for the road sector entities.

Part B: Support to the Ministry of Transport and Infrastructure

1 . Strengthening the capacity of the Recipient's State Department of Infrastructurethrough:

(a) supporting MoTI in realigning its functions with the new constitution;

(b) preparing an inventory of the unclassified roads and recommendationsfor their improvement;

(c) provision of technical advisory services, and acquisition of goods,relevant software and systems for the National Construction Authority,MoTI, Engineers Board of Kenya, Materials and Research Department,and Kenya Institute of Highways and Building Technology, to enhancetheir operational capacity;

(d) training; and

(e) monitoring and evaluating the performance of the Project.

2. Strengthening the capacity of the Recipient's State Department of Transport to:

(a) implement the Integrated National Transport Sector Policy through:(i) setting up the National Transport and Safety Authority and NairobiMetropolitan Transport Authority; (ii) enhancing the capacity of KenyaMaritime Authority in coordinating maritime search and rescue; and(iii) developing the regulatory framework for the land transport, throughprovision of goods and technical assistance;

(b) improve its oversight functions in the maritime sub-sector through:(i) provision of technical advisory services and goods to develop thenavigation charts for the Kenyan coastline and to improve its search andrescue capacity on Lake Victoria, other inland waters and along thecoastline; and (ii) strengthening the capacity of the maritime training

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facilities at the Port of Kisumu, through provision of technical advisoryservices, training, goods and works required for that purpose;

(c) carry out transport sector studies on: (i) developing a strategy onaddressing the urban transport challenges; (ii) aviation sub-sector; and(iii) developing an integrated maritime policy;

(d) provide training to staff; and

(e) enhance its air accident investigations capacity by constructing a hangarat JKIA through provision of technical assistance, goods and worksrequired for that purpose.

Part C: Support to the Kenya Airports Authority

1 . Carrying out activities pertaining to: (a) Upgrading Moi International Airportthrough: (i) rehabilitating the runway, apron and taxiways; (ii) supplying andinstalling the ground lighting; (iii) expanding the existing power supply stationthrough construction of the civil and electrical works; (iv) installing thenecessary equipment and connecting it to KCAA facilities; (v) constructing awater supply line and associated services; and (vi) supervising the relevantconstruction works; (b) constructing a water supply line for Jomo KenyataInternational Airport, all through provision of the necessary services, works andgoods required for that purpose; and (c) building the capacity of KAA staff insafety, security and airports management through training and provision oftechnical advisory services.

2. Emergency Activities to install international passenger temporary and permanentterminal facilities at JKIA, through the provision of goods, works and servicesfor that purpose.

Part D: Support to the Kenya Civil Aviation Authority

1 . Providing technical assistance to strengthen KCAA's aviation safety and securityoversight capacity and to separate its regulatory responsibilities from its serviceprovision functions.

2. Building the capacity of the KCAA staff in safety, security and oversight of thecivil aviation industry through training, technical advisory services and provisionof goods required for that purpose.

3. Constructing an office block for KCAA headquarters and supervising the relatedconstruction works.

4. Supplying and installing equipment to upgrade and modernize KCAA's airnavigation systems and upgrading its information communication technology.

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SCHEDULE 2

Project Execution

Section I. Implementation Arrangements

A. Institutional Arrangements

1. To promote effective implementation and oversight of the Project, the Recipientshall maintain, until the completion of the Project, a Project Coordinator withqualifications and experience under terms of reference satisfactory to theAssociation, to be responsible for the overall coordination of and reporting on theProject, including strategic oversight, preparation of Project reports and acting asthe secretary for the Project Oversight Committee.

Project Oversight Committee

2. The Recipient shall maintain at all times during the implementation of theProject, a Project Oversight Committee, to be chaired by the Principal Secretary,Infrastructure (MoTI), and co-chaired by the Principal Secretary, Transport(MoTI), and include a representative from The National Treasury, the ManagingDirector of KAA, the Director General of KCAA, the Director General ofKeNHA and the Project Coordinator. The Project Oversight Committee shall,inter alia: (a) provide strategic guidance for Project implementation; (b) reviewand approve annual work plans for the Project; (c) review Project financialreports; and (d) monitor Project implementation progress.

Project Implementation Teams

3. The Recipient shall: (a) maintain at all times during the implementation of theProject, a MoTI-PIT to oversee the day-to-day implementation of Part B of theProject, and appoint thereto, staff having qualifications and experiencesatisfactory to the Association, including a team leader, an economist/ monitoringand evaluation specialist, a civil engineer (planning), a procurement specialist, afinancial management specialist; a transport economist, an air accidentinvestigations specialist, a road safety specialist, and a maritime/ports specialist,and (b) notwithstanding its overall reporting obligations to the Project OversightCommittee, the MoTI-PIT team leader shall report to the Principal Secretary ofMoTI, State Department of Infrastructure, on the MoTI-PIT's day-to-dayoperations, including overseeing the special and project accounts and auditedstatements.

4. The Recipient shall: (a) cause KeNHA to maintain at all times during theimplementation of the Project, a KeNHA-PIT to oversee the day-to-dayimplementation of Part A of the Project, and appoint thereto, staff havingqualifications and experience satisfactory to the Association, including a team

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leader, a pavement/materials specialist; a social development specialist; anengineering/design specialist; an environmental specialist; a procurementspecialist; a financial management specialist; and a construction specialist; and(b) notwithstanding its overall reporting obligations to the Project OversightCommittee, the KeNHA-PIT team leader shall report on the KeNHA-PIT day-to-day operations to the Director General of KeNHA.

5. The Recipient shall: (a) cause KAA to maintain at all times during theimplementation of the Project, a KAA-PIT to oversee the day-to-dayimplementation of Part C of the Project, and appoint thereto, staff havingqualifications and experience satisfactory to the Association, including a teamleader, a civil engineer, an electrical engineer, airport operations specialist, anairport security specialist, a procurement specialist, economist, environmentalspecialist and a financial management specialist; and (b) Notwithstanding itsoverall reporting obligations to the Project Oversight Committee, the KAA-PITteam leader shall report to the Managing Director of KAA on the KAA-PIT'sday-to-day operations.

6. The Recipient shall: (a) cause KCAA to maintain at all times during theimplementation of the Project, a KCAA-PIT to oversee the day-to-dayimplementation of Part D of the Project, and appoint thereto, staff havingqualifications and experience satisfactory to the Association, including a teamleader, information technology specialist, a civil engineer, an electronicsengineer, a flight operations specialist, an air navigation specialist, an economist,a procurement specialist and a financial management specialist; and(b) notwithstanding its overall reporting obligations to the Project OversightCommittee, the KCAA-PIT team leader shall report to the Director General ofKCAA on the KCAA-PIT's day-to-day operations.

7. The Recipient shall not amend the composition of the MoTI-PIT, KeNHA-PIT,KAA-PIT and KCAA-PIT without prior consultation with the Association.

B. Subsidiary Agreement

1 . To facilitate the carrying out of the Project Implementing Entities' RespectiveParts of the Project, the Recipient shall make part of the proceeds of theAdditional Financing allocated to Parts A, C and D of the Project to KeNHA,KAA and KCAA under separate grant or loan agreements ("KeNHA SubsidiaryAgreement; KAA Subsidiary Agreement; and KCAA Subsidiary Agreement"),all under terms and conditions approved by the Association, which shall includethe following:

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(a) in the case of the KeNHA Subsidiary Agreement, KAA SubsidiaryAgreement and the KCAA Subsidiary Agreement, the obligation for eachProject Implementing Entity is to:

(i) carry out its Respective Part of the Project with due diligenceand efficiency and in conformity with appropriate administrative,technical, financial, economic, environmental and socialstandards and practices, including the provisions of the Anti-Corruption Guidelines and in accordance with the provisions ofthis Agreement;

(ii) (a) procure all works, goods and services required for itsRespective Part to be financed out of the proceeds of theFinancing in accordance with the provisions of Section III of thisSchedule; and (b) ensure that all such works, goods and servicesare used exclusively for the purposes of its Respective Part of theProject;

(iii) (a) maintain records adequate to record the progress of itsRespective Part (including its cost and the benefits to be derivedfrom it), to identify the works, goods and services financed outof the proceeds of the Financing and disclose their use in theRespective Part; (b) fumish such records and information as maybe requested by the Recipient or the Association; and (c) retainall records evidencing expenditures under its Respective Part forthe period of time specified in the General Conditions;

(iv) (a) maintain policies and procedures adequate to enable it tomonitor and evaluate on an ongoing basis, in accordance withindicators acceptable to the Association, the progress of itsRespective Part of the Project and the achievement of itsobjective; (b) prepare periodic reports, in form and substancesatisfactory to the Association, integrating the results of suchmonitoring and evaluation activities and setting out measuresrecommended to ensure the continued efficient and effectiveexecution of its respective Subproject, and to achieve itsobjectives, each such report to cover every quarter; (c) furnisheach such report to the Recipient within fifteen days after suchperiod to enable the Recipient to incorporate such report in itsProject Report for the same period and to comply with itsreporting obligations under Section II of this Schedule 2; and(d) prepare, and fumish to the Recipient a final report, of suchscope and in such detail as the Association shall reasonablyrequest, on the execution of its Respective Part of the Project,and fumish the same to the Recipient within fifteen days afterthe end of such period to enable the Recipient to incorporate

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such report in its report and comply with its obligations underSection II of this Schedule 2;

(v) (a) maintain a financial management system and preparefinancial statements in accordance with consistently appliedaccounting standards acceptable to the Association, both in amanner adequate to reflect its operations and financial condition,including the operations, resources and expenditures related toits Respective Part; (b) avail the records pertaining to theRespective Part to external and internal auditors for audit; and(c) prepare and submit for each quarter, within fifteen days afterthe end of each quarter, interim unaudited financial reportsrelating to the previous quarter to the MoTI for consolidation andsuch other information concerning such unaudited financialstatements as the Association may from time to time reasonablyrequest;

(vi) (a) maintain a dedicated Project Account, until the completion ofthe Project, in a commercial bank on terms and conditionsacceptable to the Association; and (b) ensure that the fundsdeposited into the Project Account shall be used exclusively tofinance the cost of expenditures related to the Respective Part;and

(vii) KCAA and KAA shall provide in a timely manner their agreedcounter funds contribution for the implementation of the Project.

2. The Recipient shall exercise its rights under the Subsidiary Agreements in such amanner as to protect the interests of the Recipient and the Association and toaccomplish the purposes of the Financing. Except as the Association shallotherwise agree, the Recipient shall not assign, amend, abrogate or waive theSubsidiary Agreements or any of its provisions.

C. Anti-Corruption

The Recipient shall ensure that the Project is carried out in accordance with theprovisions of the Anti-Corruption Guidelines.

D. Environmental and Social Safeguards

1 . The Recipient shall and shall cause the Project Implementing Entities toimplement their Respective Parts of the Project in compliance with the SafeguardInstruments and except as the Association shall otherwise agree in writing, andsubject to compliance with the same consultation and information disclosurerequirements as applied to the adoption of the aforesaid Safeguard Instruments inthe first instance, the Recipient shall not amend or waive any provision of the

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Safeguard Instruments if any such amendment or waiver may, in the opinion ofthe Association, materially or adversely affect the implementation of the Project.

2. The Recipient shall in its progress report include progress made on compliancewith the Safeguards Instruments under the Project, giving details of measurestaken in furtherance of the environmental and social safeguard and anyconditions which interfere or threaten to interfere with the timely implementationof the Safeguards Instruments, and remedial measures taken or required to betaken to address such conditions.

E. Social Accountability

The Recipient shall throughout the implementation of the Project, ensure thatthere are adequate Social Accountability mechanisms to ensure that stakeholdersin the transport sector participate in the monitoring of the use of Projectresources.

F. Other Covenants

To promote effective implementation of the Project, the Recipient shall no laterthan December 31, 2015, or any other date agreed with the Association take allmeasures necessary to restructure the KCAA in accordance with the KCAAStrategic Plan including separating its service provision responsibilities from itsregulatory oversight functions.

Section II. Project Monitoring, Reporting and Evaluation

A. Project Reports

1 . The Recipient shall cause the Project Implementing Entities to monitor andevaluate the progress of the Project and prepare Project Reports in accordancewith the provisions of Section 4.08 of the General Conditions and on the basis ofindicators acceptable to the Association. Each Project Report shall cover theperiod of one calendar quarter, and shall be furnished to the Association not laterthan one month after the end of the period covered by such report.

2. For purposes of Section 4.08(c) of the General Conditions, the report on theexecution of the Project and related plan required pursuant to that Section shallbe furnished to the Association not later than six (6) months after the Closingdate.

B. Financial Management, Financial Reports and Audits

1 . The Recipient shall maintain and cause the Project Implementing Entities tomaintain or cause to be maintained a financial management system in accordancewith the provisions of Section 4.09 of the General Conditions. With respect to the

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Project Implementing Entities Respective Parts of the Project, the Recipient shallprepare financial statements in accordance with consistently applied accountingstandards acceptable to the Association, both in a manner adequate to reflect theoperations and financial condition of the Project Implementing Entities, includingtheir operations, resources and expenditures related to the Project.

2. Without limitation on the provisions of Part A of this Section, the Recipient shallcause the Project Implementing Entities to prepare and furnish to the Associationnot later than one month after the end of each calendar quarter, interim unauditedfinancial reports for the Project covering the quarter, in form and substancesatisfactory to the Association.

3. The Recipient shall cause the Project Implementing Entities to have theirFinancial Statements audited in accordance with the provisions ofSection 4.09(b) of the General Conditions. The audited Financial Statements anda Management Letter for each such period shall be furnished to the Associationnot later than six (6) months after the end of such period.

4. The Recipient shall cause the Project Implementing Entities to ensure that thescope of the annual audit of the Financial Statements includes a ProcurementAudit.

Section III. Procurement

A. General

1 . Goods, Works and Non-Consulting Services. All goods, works and non-consulting services required for the Project and to be financed out of the proceedsof the Financing shall be procured in accordance with the requirements set forthor referred to in Section I of the Procurement Guidelines, and with the provisionsof this Section.

2. Consultants' Services. All consultants' services required for the Project and tobe financed out of the proceeds of the Financing shall be procured in accordancewith the requirements set forth or referred to in Sections I and IV of theConsultant Guidelines, and with the provisions of this Section.

3. Definitions. The capitalized terms used below in this Section to describeparticular procurement methods or methods of review by the Association ofparticular contracts, refer to the corresponding method described in theProcurement Guidelines, or Consultant Guidelines, as the case may be.

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B. Particular Methods of Procurement of Goods and Works

1. International Competitive Bidding. Except as otherwise provided inparagraph 2 below, goods, works and non-consulting services shall be procuredunder contracts awarded on the basis of International Competitive Bidding.

2. Other Methods of Procurement of Goods. The following table specifies themethods of procurement, other than International Competitive Bidding, whichmay be used for goods, works and non-consulting services. The ProcurementPlan shall specify the circumstances under which such methods may be used:

Procurement Method

(a) Limited International Bidding

(b) National Competitive Bidding, subject to the provisions of paragraph 3 of this Section B.

(c) Shopping subject to the provisions of paragraph 4 of this Section B

(d) Direct Contracting

(e) Procurement from the United Nations Agencies

(f) Procurement under Framework Agreements in accordance with procedures which havebeen found acceptable to the Association

(g) Procurement under Public Private Partnership Arrangements in accordance withprocedures which have been found acceptable to the Association

3. The following requirements shall apply to National Competitive Bidding:

(i) the tender submission date shall be set so as to allow a period of at leastthirty (30) days from the later of: (A) the date of advertisement, and(B) the date of availability of the tender documents;

(ii) Recipient-owned enterprises shall be allowed to participate in thetendering only if they can establish that they are legally and financiallyautonomous, operate under commercial law and are independentagencies of the Recipient's government;

(iii) the Recipient shall use, or cause to be used, bidding documents andtender documents containing, inter alia, draft contracts and conditions ofcontracts, including provisions on fraud and corruption, audit andpublication of award in form and substance satisfactory to theAssociation;

(iv) extension of tender validity shall be allowed once only, and for not morethan thirty (30) days, unless otherwise previously agreed in writing bythe Association;

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(v) evaluation tender shall be based on quantifiable criteria expressed inmonetary terms as defined in the tender documents, and not on a meritpoints system;

(vi) no domestic preference shall be used in the evaluation of tenders.Accordingly, contracts shall be awarded to qualified tenderers havingsubmitted the lowest evaluated substantially responsive tender;

(vii) notification of contract award shall constitute formation of the contract.No negotiation shall be carried out prior to contract award; and

(viii) the two envelope bid opening procedure shall not apply.

4. Shopping procedure will apply for each low value contract in lieu of DirectProcurement, except as otherwise previously agreed in writing by theAssociation.

C. Particular Methods of Procurement of Consultants' Services

1 . Quality- and Cost-based Selection. Except as otherwise provided inparagraph 2 below, consultants' services shall be procured under contractsawarded on the basis of Quality- and Cost-based Selection.

2. Other Methods of Procurement of Consultants' Services. The followingtable specifies methods of procurement, other than Quality- and Cost-basedSelection, which may be used for consultants' services. The Procurement Planshall specify the circumstances under which such methods may be used.

Procurement Method

(a) Quality Based Selection

(b) Fixed Budget Selection

(c) Least Cost Selection

(d) Selection based on Consultants' Qualifications

(e) Single-Source Selection of consulting firms

(f) Procedures set forth in paragraph 5.2 and 5.3 of the Consultants Guidelines forthe Selection of Individual Consultants

(g) Selection of consultants under Indefinite Delivery Contract or Price Agreement

(h) Single source procedures for the Selection of Individual Consultants

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D. Review by the Association of Procurement Decisions

The Procurement Plan shall set forth those contracts which shall be subject to theAssociation's Prior Review. All other contracts shall be subject to Post Reviewby the Association.

E. Transitional Provisions in Respect of Procurement

Notwithstanding the terms and conditions of the Original Financing Agreement,and to the extent that the procurement of any goods, works or consultants'services to be financed, at least in part, out of the proceeds of the Original Creditwas, or will be, initiated on or after November 13, 2013, the Recipient herebyacknowledges and agrees that the provisions of this Agreement set forth orreferred to in: (a) Section LC (Anti-Corruption) of this Schedule (including therelated provisions under the General Conditions) shall apply to the proceeds ofthe Original Credit utilized to finance such goods, works, non-consulting servicesand consultants' services, and (b) Section III (Procurement) of this Schedule(including the related provisions under the General Conditions) shall apply to theprocurement of such goods, works, non-consulting services and consultants'services.

Section IV. Withdrawal of the Proceeds of the Financing

A. General

1. The Recipient may withdraw the proceeds of the Financing in accordance withthe provisions of Article II of the General Conditions, this Section, and suchadditional instructions as the Association shall specify by notice to the Recipient(including the "World Bank Disbursement Guidelines for Projects", datedMay 2006, as revised from time to time by the Association and as madeapplicable to this Agreement pursuant to such instructions), to finance EligibleExpenditures as set forth in the table in paragraph 2 below.

2. The following table specifies the categories of Eligible Expenditures that may befinanced out of the proceeds of the Financing ("Category"), the allocations of theamounts of the Financing to each Category, and the percentage of expenditures tobe financed for Eligible Expenditures in each Category:

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Amended and Amount of theRestated Original Additional Credit Percentage of Expenditures to be

Credit Allocated FinancedCategory (Expressed in SDR) (Expressed in SDR) (inclusive of Taxes)

1. Works Such percentage of Eligible(a) Under Part A for KeNH-IA 124,700,000 80,211,000 Expenditures as the Association may(b) Under Part B.2 for MoTI 2,400,000 1,871,000 determine for each Fiscal Year(c) Under Part C for KAA Such percentage of Eligible

(i) KAA under Part C.A1 3,800,000 00 Expenditures as the Association maydetermine for each Fiscal Year

(ii) KAA under Part C.2 00 28,027,000 87%(d) Under Part D for KCAA 5,400,000 1,082,000 Such percentage of Eligible

Expenditures as the Association maydetermine for each Fiscal Year

2. Goods(a) Under Parts A for KeNHA 1,200,000 26,000 Such percentage of Eligible(b) Under Parts B.I for MoT 300,000 1,154,000 Expenditures as the Association may(c) Under Part B.2 for MoTl 3,100,000 117,000 determine for each Fiscal Year

(d) Under Part C 2 for KAA 00 11,713,000 100%(e) Under Part D for KCAA 5,000,000 00 Such percentage of Eligible

Expenditures as the Association maydetermine for each Fiscal Year

3. Consultants Services(a) Under parts A for KeNHA 21,000,000 5,892,000 Such percentage of Eligible(b) Under Parts B.1 for MoTI 4,800,000 721,000 Expenditures as the Association may(c) Under Part B.2 for MoTI 4,800,000 267,000 determine for each Fiscal Year

(d) Under Part C for KAA Such percentage of Eligible(i) KAA under Part C. 1 4,900,000 00 Expenditures as the Association may

determine for each Fiscal Year(ii) KAA under Part C.2 00 1,323,000 100%

(e) Under Part D for KCAA 1,900,000 00 Such percentage of EligibleExpenditures as the Association maydetermine for each Fiscal Year

4. Training(a) Under parts A, KeNHA 1,000,000 196,000 100%(b) Under Parts B.1, MoT4 300,000(c) Under Part B.2, MoT3 600,000(d) Under Part C, KAA 650,000(e) Under Part D, KCAA 650,0005. Unallocated(a) Under Parts A, KeNHA 3,300,000(b) Under Part B.1, MoTI 100,000(c) Under Part B.2, MoTI 300,000(d) Under Part C, KAA 200,000(e) Under Part D, KCAA 400,000TOTAL AMOUNT 190,800,000 132,600,000

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B. Withdrawal Conditions; Withdrawal Period

1. Notwithstanding the provisions of Part A of this Section, no withdrawal shall bemade:

(a) for payments made prior to the date of this Agreement, except forwithdrawals up to an aggregate amount, under the Additional Financing,not to exceed 40,000,000 Dollars equivalent may be made for paymentsmade prior to this date but on or after August 7, 2013, for EligibleExpenditures; and

(b) under category 3(d)(i) unless and until the: (i) Association shall havereceived satisfactory evidence that the Co-financing Agreement betweenAgence Francaise De Development (AFD) and the KAA in connectionwith the Co-financing provided by AFD has been executed and deliveredand all conditions precedent to its effectiveness or to the right of theKAA to make withdrawals under it have been fulfilled; or (ii) Recipienthas identified alternative sources of financing under terms acceptable tothe Association.

2. The Closing Date in respect of the Original Credit and the Additional Credit isDecember 31, 2018.

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SCHEDULE 3

I. Repayment Schedule for the Original Credit

Principal Amount of the Creditrepayable

Date Payment Due (expressed as a percentage)*

On each February 15 and August 15:

commencing August 15, 2021, to and including 1%February 15, 2031

commencing August 15, 2031, to and including 2%February 15, 2051

II. Repayment Schedule for the Additional Credit

Principal Amount of the Creditrepayable

Date Payment Due (expressed as a percentage)*

On each February I and August 1:

commencing August 1, 2024, to and including 1%February 1, 2034

commencing August 1, 2034, to and including 2%February 1, 2054

* The percentages represent the percentage of the principal amount of the Original Credit,and the Additional Credit to be repaid, except as the Association may otherwise specifypursuant to Section 3.03(b) of the General Conditions.

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APPENDIX

Section I. Definitions

1. "Anti-Corruption Guidelines" means the "Guidelines on Preventing andCombating Fraud and Corruption in Projects Financed by IBRD Loans and IDACredits and Grants", dated October 15, 2006, and revised in January 2011.

2. "Category" means a category set forth in the table in Section IV of Schedule 2 tothis Agreement.

3. "Co-financier" or "AFD" means Agence Francaise de Development.

4. "Co-financing" means funds to be provided by AFD for implementing the civilworks in Parts C.I(a) and (b) of the Project; and such additional amounts as otherfinanciers may provide to assist in the financing of the Project.

5. "Co-financing Agreement" means with respect to each Co-financier, theagreement between such Co-financier and the Recipient providing for the amountof the Co-financing to be provided by said Co-financier.

6. "Consultant Guidelines" means the "Guidelines: Selection and Employment ofConsultants under IBRD Loans and IDA Credits & Grants by World BankBorrowers", dated January 2011.

7. "Environmental Impact Assessment" or "EIA" means the study, acceptable to theAssociation, prepared by the Recipient and the Project Implementing Entitiesconsisting of inter alia: (i) a description of the Project activities and ajustification of the said activities, including alternatives considered during theProject design phase; (ii) the potential and actual adverse environmental impactsof the activities referred to under sub-paragraph (i) above; and (iii) anenvironmental management plan setting forth measures to be taken during theimplementation and operation of the Project to mitigate, eliminate or otherwiseoffset adverse environmental impacts, or to reduce them to acceptable levels andto ensure compliance of the Project activities with such measures, as the samemay be amended from time to time with the Association's prior writtenconcurrence; and "EIAs" means, collectively, all or several such studies.

8. "Environmental Management Plan" or "EMP" means the plan, in form andsubstance satisfactory to the Association, prepared or to be prepared by theRecipient, giving details of measures to manage potential environmental risksand mitigate, reduce and/or offset adverse environmental impacts, together withadequate institutional, monitoring and reporting arrangements capable ofensuring proper implementation of, and regular feedback on compliance with, itsterms, as any such plan may be amended and/or supplemented from time to time

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with prior written approval of the Association; and "EMPs" means, collectively,all or several such plans.

9. "Engineers Board of Kenya" or "EBK" means the Board established under theEngineers Act, 2012 (No. 43 of 2011).

10. "External Resources Department" means a Department in the Recipient'sNational Treasury, responsible for the management and coordination of theexternal resources from the development partners.

11. "General Conditions" means the "International Development AssociationGeneral Conditions for Credits and Grants", dated July 3 1, 2010.

12. "Integrated National Transport Policy" means the Recipient's policy on thestrategy for developing the transport sector.

13. "JKIA" means the Recipient's Jomo Kenyata International Airport.

14. "Kenya Airports Authority" or "KAA" means the Recipient's airports authorityestablished and operating pursuant to the Kenya Airports Authority Act, 1991(CAP 395) or its legal successor thereto.

15. "KAA-PIT" means the project implementation team established within KAA.

16. "KAA Subsidiary Agreement" means the agreement entered into between theRecipient and KAA pursuant to Section 1.B of Schedule 2 to this Agreement, asthe same may be amended from time to time, and such term includes allschedules to the Subsidiary Agreement.

17. "Kenya Civil Aviation Authority" or "KCAA" means an institution establishedand operating pursuant to the Kenya Civil Aviation Act, (CAP 394) or its legalsuccessor thereto.

18. "KCAA-PIT" means the project implementation team established within KCAA.

19. "KCAA Subsidiary Agreement" means the agreement entered into between theRecipient and KCAA and referred to Section 1.B of Schedule 2 to thisAgreement, as the same may be amended from time to time, and such termincludes all schedules to the Subsidiary Agreement.

20. "KCAA Strategic Plan 2010-2015" means the plan for implementing KCAA'sdevelopment strategy dated August, 2010.

21. "Kenya National Highways Authority" or "KeNHA" means an institutionestablished by the Recipient pursuant to the Kenya Roads Act, (Act No. 2 of

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2007) for the purpose of managing, developing, rehabilitating and maintainingnational roads in the Recipient's territory, or its legal successor thereto.

22. "KeNHA-PIT" means the project implementation team established withinKeNHA.

23. "KeNHA Subsidiary Agreement" means the agreement entered into between theRecipient and KeNHA and referred to in Section 1.B of Schedule 2 as the samemay be amended from time to time, and such term includes all schedules to theSubsidiary Agreement.

24. "Kenya Rural Roads Authority" or "KeRRA" means an institution establishedand operating pursuant to the Kenya Roads Act, (Act No. 2 of 2007) for thepurpose of managing, developing, rehabilitating and maintaining rural roads inthe Recipient's territory, or its legal successor thereto.

25. "Kenya Roads Board" or "KRB" means a body established and operatingpursuant to the Kenya Roads Board Act, (CAP 408) for the purpose of managingthe roads maintenance levy, or its legal successor thereto.

26. "Kenya Shilling" or "KES" means the currency of the Recipient.

27. "Kenya Urban Roads Authority" or "KURA" means an institution establishedand operating pursuant to the Kenya Roads Act, (Act No. 2 of 2007) for thepurpose of managing, developing, rehabilitating and maintaining urban roads inthe Recipient's territory, or its legal successor thereto.

28. "Kenya Maritime Authority" or "KMA" means a state corporation establishedpursuant to an incorporation order of 2004 and operating under the KenyaMaritime Authority Act (Act No. 5 of 2006) and the Merchants Shipping Act,(Act No. 4 of 2009) to regulate, coordinate and oversee activities in the maritimeindustry in the Recipient's territory, or its legal successor thereto.

29. "Management Letter" means a letter issued by the external auditors as part of theannual audit report setting forth internal control weaknesses identified during theaudit period and referred to in Section II.B(3) of Schedule 2 to this Agreement.

30. "Ministry of Transport and Infrastructure" or "MoTI" means the Recipient'sMinistry responsible for transport and infrastructure, or its legal successorthereto.

31. "MoTI-PIT" means the project implementation team established within MoTI.

32. "NCA" or "National Construction Authority" means a state corporationestablished under National Construction Authority Act No. 41 of 2011 to

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regulate, register contractors and oversee activities in the construction industry inthe Recipient's territory or its legal successor thereto.

33. "Nairobi Metropolitan Transport Authority" means an institution to beestablished by the Recipient for the purpose of managing public transport withinthe Nairobi metropolitan area.

34. "National Transport and Safety Authority" means an institution to be establishedunder the National Transport and Safety Authority Act No. 33 of 2013 by theRecipient for the purpose of carrying out functions related to transport safety.

35. "Northern Corridor" means the transport corridor between the sea port ofMombasa and the Recipient's border with the Republic of Uganda.

36. "Procurement Audit" means an assessment of procurement in the Project forcompliance with the procurement procedures and laws and the mitigatorymeasures to address identified risks.

37. "Procurement Guidelines" means the "Guidelines: Procurement of Goods, Worksand Non-consulting Services under IBRD Loans and IDA Credits and Grants byWorld Bank Borrowers", dated January 2011.

38. "Procurement Plan" means collectively the Recipient's procurement plans for theProject, both dated February 27, 2014, and referred to in paragraph 1.16 of theProcurement Guidelines and paragraph 1.24 of the Consultant Guidelines, as thesame shall be updated from time to time in accordance with the provisions of saidparagraphs.

39. "Project Account" means the account referred to in Section 3.03 of thisAgreement.

40. "Project Implementing Entities" means KCAA, KAA and KeNHA.

41. "Project Implementing Entity's Legislation" means the Kenya Civil AviationAct, (CAP 394), the Kenya Airports Authority Act, (CAP 395) and the KenyaRoads Act, (Act No.2 of 2007).

42. "Resettlement Action Plan" or "RAP" means the plan prepared by the Recipienton the basis of the RPF (as hereinafter defined) as the said document may beamended and/or supplemented from time to time with the prior writtenconcurrence of the Association and subject to the initial consultation anddisclosure requirements carried out on the RAP.

43. "Resettlement Policy Framework" or "RPF" means the framework prepared bythe Recipient for compensation payments to be made under the Project to theDisplaced Persons as the said document may be amended and/or supplemented

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from time to time with the prior written concurrence of the Association andsubject to the initial consultation and disclosure requirements carried out on theRAP.

44. "Respective Part of the Project" means, in respect of each Project ImplementingEntity, all the activities carried out by such Project Implementing Entity, and forwhich it has jurisdiction.

45. "Safeguard Instrument" means: (a) the following Environmental ImpactAssessments, namely the Rehabilitation of Kisumu-Kakamega Road;Rehabilitation of Kakamega-Webuye Road; Rehabilitation of Webuye-KitaleRoad; Rehabilitation of Maji ya Chumvi-Bachuma Gate Road; Rehabilitation ofthe runway at Moi Airport, Mombasa all dated February 9, 2011; Construction oftwo new lanes along Athi River and Machakos Turnoff Road datedFebruary 25, 2011; and Construction of four Interchanges at Nakuru/Nyahururu,Nakuru/Njoro, Mau Summit/Kisumu and Ahero/Kisii junctions datedFebruary 19, 2011; (b) the following Environmental Management Plans, namelyConstruction of a Hangar at JKIA for Air Accident Investigations datedFebruary 22, 2011; Construction of an Office Block at JKIA for KCAAHeadquarters, dated February 12, 2011, Construction at JKIA of an Office Blockfor road sub-sector institutions including KeNHA, dated February 22, 2011, andJKIA Temporary International Passenger Facilities, dated February 27, 2014;(c) the Resettlement Policy Framework dated March 2, 2011; and (d) thefollowing Resettlement Action Plans, namely: Rehabilitation of Kisumu-Kakamega Road; Rehabilitation of Kakamega-Webuye Road; Rehabilitation ofWebuye-Kitale Road; Rehabilitation of Maji ya Chumvi-Bachuma Gate Road, alldated February 19, 2011, and Construction of two new lanes along Athi River-Machakos Turn-Off Road, dated March 2004 (as updated February 25, 2011).

46. "State Law Office" means the Attorney General's office responsible forproviding legal services to the Recipient.

47. "Social Accountability" means the measures taken by the Recipient for periodicdisclosure of information related to the Project and includes information onbudget allocation, allocation of funds, project operational results, projectimplementation progress, audit findings; reports on corruption and fraud; andmechanisms for public complaints and feedback.

48. "Subsidiary Agreements" means the agreements referred to in Section I.B ofSchedule 2 to this Agreement pursuant to which the Recipient shall make part ofthe proceeds of the Financing available to each respective Project ImplementingEntity.

49. "Tanzania-Kenya-Sudan Road Corridor" means the regional road linking north-west Tanzania and the Recipient's border with South Sudan at Nadapal.

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50. "Training" in the table set forth in Section IV.A.2 of Schedule 2 to thisAgreement means the reasonable costs of seminars, workshops and study toursrequired for the Project, including tuition, travel, subsistence allowances fortraining participants, trainers' fees, rental of training facilities, preparation andreproduction of training materials and other activities incidental to thepreparation and implementation of such training activities.