[Federal Register Volume 75, Number 210 (Monday, November 1, 2010)]
[Notices]
[Pages 67122-67142]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-27459]


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MILLENNIUM CHALLENGE CORPORATION

[MCC FR 10-14]


Notice of Entering Into a Compact With the Hashemite Kingdom of 
Jordan

AGENCY: Millennium Challenge Corporation.

ACTION: Notice.

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SUMMARY: In accordance with Section 610(b)(2) of the Millennium 
Challenge Act of 2003 (Pub. L. 108-199, Division D), the Millennium 
Challenge Corporation (MCC) is publishing a summary and the complete 
text of the Millennium Challenge Compact between the United States of 
America, acting through the Millennium Challenge Corporation, and the 
Hashemite Kingdom of Jordan, acting through the Ministry of Water and 
Irrigation. Representatives of the United States Government and the 
Hashemite Kingdom of Jordan executed the Compact documents on October 
25, 2010.

    Dated: October 26, 2010.
Melvin F. Williams, Jr.,
VP/General Counsel and Corporate Secretary, Millennium Challenge 
Corporation.

Summary of Millennium Challenge Compact With the Hashemite Kingdom of 
Jordan

    The five-year Millennium Challenge Compact with the Hashemite 
Kingdom of Jordan (``Compact'') will provide up to $275.1 million to 
reduce poverty and accelerate economic growth. The Compact is intended 
to support: (a) Rehabilitation of the water supply network for 
households and businesses; (b) reinforcement of main sewer lines and 
expansion of the lateral sewers into neighborhoods that lack access to 
a proper wastewater collection network; and (c) expansion of the As-
Samra Wastewater Treatment Plant, in partnership with a private sector 
operator that will mobilize a portion of the total cost of 
construction.

1. Program Overview

    The Compact program consists of three tightly integrated 
infrastructure projects that address critical problems in water 
distribution, wastewater collection and wastewater treatment. The 
projects are focused in Zarqa Governorate, home to the country's second 
and fourth largest cities, Zarqa and Ruseifa, and more than half the 
country's small-scale industry. A history of neglect coupled with rapid 
population growth, particularly an influx of refugees from Iraq over 
the past decade, has strained critical water and wastewater 
infrastructure throughout the area. Residents continuously complain of 
sewer main overflows and water pipes made of cheap, flexible tubing 
that run above ground through city streets, where they are subject to 
considerable wear and tear.
    In combination, the three projects are designed to increase the 
effective supply of water that reaches household and commercial users 
throughout Zarqa Governorate. This increase comes from two sources. 
First, repairs to the reservoirs, pumps, and pipes that make up the 
water delivery network will reduce the physical loss of water during 
transmission and distribution, directly increasing the amount of 
potable water available to end users. Second, greater collection and 
treatment of wastewater will create an increased supply of high-quality 
treated wastewater appropriate for use in irrigated agriculture. This 
treated wastewater is expected to become a substitute for the fresh 
water currently used in agriculture, allowing fresh water to be 
directed to higher value uses in urban areas, including Zarqa, before 
it is collected as wastewater and then treated and reused. This 
arrangement extends the use of each unit of fresh water.

2. Project Descriptions

Water Network Restructuring and Rehabilitation Project (Water Network 
Project) (Estimated $102.57 Million)
    At present, an estimated 57 percent of the potable water supplied 
into the water transmission and distribution network in Zarqa 
Governorate is lost through physical leaks; additional losses are 
attributable to administrative mismanagement. The Water Network Project 
is designed to reduce high rates of water loss through construction and 
repairs to reservoirs, pump stations and up to 67 km of primary, 927 km 
of secondary, and 256 km of tertiary pipes, along with replacement of 
household connections and meters, in the two poorest, most heavily 
populated water service areas of Zarqa Governorate. The project is also 
designed to convert the system from high-pressure, periodic 
distribution to more frequent, gravity-fed distribution that should 
improve customer service, reduce wear and tear on critical 
infrastructure, and extend the lifespan of the network. The project 
includes technical and financial assistance to very poor households to 
improve plumbing, water storage, sewage connections, and general 
awareness of best practices for basic sanitation and efficient water 
use.
Wastewater Network Reinforcement and Expansion Project (Wastewater 
Network Project) (Estimated $58.22 Million)
    Zarqa Governorate is served by an outdated sewer system that limits 
the collection of wastewater and endangers public health. The system 
frequently overflows into city streets and the surrounding environment, 
relies on pump stations that have insufficient capacity, and serves 
only 72 percent of the population. The Wastewater Network Project is 
designed to replace or rehabilitate up to 29 km of undersized trunk 
lines and expand lateral sewers by up to 140 km in the neighborhoods of 
East Zarqa and West Zarqa, both of which lack proper sewer connections. 
The extension of lateral sewer lines is expected to raise coverage 
rates from 72 percent to about 85

[[Page 67123]]

percent of the local population. These new customer connections should 
also generate additional supplies of wastewater to be treated at the 
As-Samra Wastewater Treatment Plant and eventually reused in 
agriculture downstream in the Jordan Valley.
As-Samra Wastewater Treatment Plant Expansion Project (As-Samra 
Expansion Project) (Estimated $93.03 Million)
    Originally built with support from a USAID grant, the As-Samra 
wastewater treatment plant is the primary facility for treating 
wastewater from Amman and Zarqa Governorates. The plant became 
operational in 2008 and was originally designed to meet the region's 
treatment needs through 2015 but is already nearing its capacity. 
Without an expansion to properly handle the region's growing volume of 
wastewater, the plant could become overloaded, its ability to treat 
wastewater could deteriorate, and downstream agricultural areas that 
rely on treated water for irrigation could face serious food safety 
risks and the loss of markets for agricultural products. The As-Samra 
Expansion Project is designed to expand the plant's treatment capacity 
by 97,800 cubic meters per day, an increase of more than one-third, and 
install upgrades to handle higher suspended solid loads. These 
improvements should meet the region's wastewater treatment needs 
through 2025. The proposed expansion will be financed in partnership 
with the Samra Wastewater Treatment Plant Company Limited (``SPC''), a 
private company that built the existing plant and operates it under a 
concession from GOJ. Under this arrangement, an MCC grant would cover a 
portion of the cost of construction, while SPC would mobilize debt and 
equity funding to cover the remaining construction costs, along with 
project development and design, project management, and interest costs. 
In this way, the MCC grant will attract private financing, reduce 
construction costs to MCC, and thereby reduce the role of the public 
sector in financing the project. MCC's involvement will reduce the cost 
of capital, allowing lower water and wastewater tariffs to consumers 
than might otherwise have been necessary. This arrangement may also 
enhance operational sustainability by transferring some risks related 
to financing, construction, and operations to the private sector.

3. Administration

    The Compact also includes program management and oversight costs 
estimated at $18.47 million over a five-year timeframe, including the 
costs of administration, management, auditing, fiscal and procurement 
services, and environmental and social oversight. In addition, the cost 
of monitoring and evaluation of the Compact is budgeted at 
approximately $2.81 million.

4. Economic and Beneficiary Analysis

    The Compact projects are expected to have reliable and demonstrable 
impacts on economic growth and on incomes for residents in Zarqa 
Governorate and Amman through improved efficiencies in the water 
distribution network, as well as for a number of farmers in the lower 
and middle Jordan Valley, who will receive reliable supplies of high 
quality treated wastewater for use in irrigation.
    The Compact projects reflect GOJ's priorities, are endorsed by the 
Ministry of Water and Irrigation that will implement them, and respond 
to public demands for improved public administration, investment, and 
service provision. These are necessary and significant conditions for 
sustained administrative and political support of MCC's investment and 
lay the groundwork for effective project implementation. Finally, 
consistent with MCC's results-focused approach, the Compact allows for 
careful monitoring of implementation progress and rigorous evaluation 
of the nature and magnitude of selected project impacts.
    Table 1 presents a summary of the economic rates of return and the 
number of beneficiaries that each Compact project and the Compact 
program are expected to achieve.

                  Table 1--Summary of Economic Impacts
------------------------------------------------------------------------
                                      MCC      Economic
                                    project    rate of
             Project                  cost      return    Beneficiaries
                                      ($M)       (%)
------------------------------------------------------------------------
Water Network Project............     102.57         19        1,600,000
Wastewater Network Project.......      58.22         14        2,020,000
As-Samra Expansion Project.......      93.03  .........  ...............
Total Compact....................     253.82         16    \1\ 2,020,000
------------------------------------------------------------------------
\1\ The total number of beneficiaries does not sum because of overlap in
  the beneficiary populations between projects.

Millennium Challenge Compact Between the United States of America, 
Acting Through the Millennium Challenge Corporation, and Hashemite 
Kingdom of Jordan, Acting Through the Ministry of Water and Irrigation

Table of Contents

Article 1. Goal and Objectives
    Section 1.1 Compact Goal
    Section 1.2 Program Objective
    Section 1.3 Project Objectives
Article 2. Funding and Resources
    Section 2.1 Program Funding
    Section 2.2 Compact Implementation Funding
    Section 2.3 MCC Funding
    Section 2.4 Disbursement
    Section 2.5 Interest
    Section 2.6 Government Resources; Budget
    Section 2.7 Limitations of the Use of MCC Funding
    Section 2.8 Taxes
    Section 2.9 Lower Middle Income Countries
Article 3. Implementation
    Section 3.1 Program Implementation Agreement
    Section 3.2 Government Responsibilities
    Section 3.3 Policy Performance
    Section 3.4 Accuracy of Information
    Section 3.5 Implementation Letters
    Section 3.6 Procurement
    Section 3.7 Records; Accounting; Covered Providers; Access
    Section 3.8 Audits; Reviews
Article 4. Communications
    Section 4.1 Communications
    Section 4.2 Representatives
    Section 4.3 Signatures
Article 5. Termination; Suspension; Refunds
    Section 5.1 Termination; Suspension
    Section 5.2 Consequences of Termination, Suspension or 
Expiration
    Section 5.3 Refunds; Violation
    Section 5.4 Survival
Article 6. Compact Annexes; Amendments; Governing Law
    Section 6.1 Annexes
    Section 6.2 Amendments
    Section 6.3 Inconsistencies
    Section 6.4 Governing Law
    Section 6.5 Additional Instruments
    Section 6.6 References to MCC Web site

[[Page 67124]]

    Section 6.7 References to Laws, Regulations, Policies, and 
Guidelines
    Section 6.8 MCC Status
Article 7. Entry Into Force
    Section 7.1 International Agreements
    Section 7.2 Conditions Precedent to Entry into Force
    Section 7.3 Date of Entry Into Force
    Section 7.4 Compact Term
    Section 7.5 Provisional Application
Annex I: Program Description
Annex II: Multi-Year Financial Plan Summary
Annex III: Description of the Monitoring and Evaluation Plan
Annex IV: Conditions to Disbursement of Compact Implementation 
Funding
Annex V: Definitions
Annex VI: Tax Schedules

Millennium Challenge Compact

Preamble

    This Millennium Challenge Compact (this ``Compact'') is between the 
United States of America, acting through the Millennium Challenge 
Corporation, a United States government corporation (``MCC''), and the 
Hashemite Kingdom of Jordan (``Jordan'' or the ``Government''), acting 
through the Ministry of Water and Irrigation (individually a ``Party'' 
and collectively, the ``Parties''). Capitalized terms used in this 
Compact will have the meanings provided in Annex V.
    Recalling that the Government consulted with the private sector and 
civil society of Jordan to determine the priorities for the use of 
assistance and developed and submitted to MCC a proposal for such 
assistance to achieve lasting economic growth and poverty reduction; 
and
    Recognizing that MCC wishes to help Jordan implement the program 
described herein to achieve the goal and objectives described herein 
(as such program description and objectives may be amended from time to 
time in accordance with the terms hereof, the ``Program'');
    The Parties hereby agree as follows:

Article 1. Goal and Objectives

Section 1.1 Compact Goal

    The goal of this Compact is to reduce poverty through economic 
growth in Jordan (the ``Compact Goal'').

Section 1.2 Program Objective

    The objective of the Program (the ``Program Objective'') is to 
increase the effective supply of water available to the inhabitants of 
Zarqa Governorate through improvements in the efficiency of water 
delivery, the extent of wastewater collection and the capacity of 
wastewater treatment. The Program consists of the projects described in 
Annex I (each a ``Project'' and collectively, the ``Projects'').

Section 1.3 Project Objectives

    The objectives of each of the Projects (each a ``Project 
Objective'' and collectively, the ``Project Objectives'') are as 
follows:
    (a) The objectives of the Water Network Project are to (i) Improve 
the efficiency of network water delivery and the condition of home 
water systems, and (ii) decrease certain costs that households in Zarqa 
Governorate incur to satisfy their subsistence water needs.
    (b) The objectives of the Wastewater Network Project are to (i) 
Increase access to the wastewater network, (ii) increase the volume of 
wastewater collected within Zarqa Governorate for treatment and reuse, 
and (iii) reduce the incidents of sewage overflow.
    (c) The objectives of the As-Samra Expansion Project are to (i) 
Increase the capacity to treat wastewater from Amman and Zarqa 
Governorates, (ii) increase the volume of treated wastewater that is 
available as a substitute for freshwater for non-domestic use, and 
(iii) protect existing agriculture from the potential consequences of 
pollution from untreated wastewater.

Article 2. Funding and Resources

Section 2.1 Program Funding

    Upon entry into force of this Compact in accordance with Section 
7.3, MCC will grant to the Government, under the terms of this Compact, 
an amount not to exceed Two Hundred and Seventy Two Million Nine 
Hundred and Eighty Thousand United States Dollars (US$272,980,000.00) 
(``Program Funding'') for use by the Government to implement the 
Program. The allocation of Program Funding is generally described in 
Annex II.

Section 2.2 Compact Implementation Funding

    (a) Upon signing of this Compact, MCC will grant to the Government, 
under the terms of this Compact and in addition to the Program Funding 
described in Section 2.1, an amount not to exceed Two Million One 
Hundred and Twenty Thousand United States Dollars (US$2,120,000.00) 
(``Compact Implementation Funding'') under Section 609(g) of the 
Millennium Challenge Act of 2003, as amended (the ``MCA Act''), for use 
by the Government to facilitate implementation of the Compact, 
including for the following purposes:
    (i) Financial management and procurement activities;
    (ii) Administrative activities (including start-up costs such as 
staff salaries) and administrative support expenses such as rent, 
computers and other information technology or capital equipment;
    (iii) Monitoring and evaluation activities;
    (iv) Feasibility studies; and
    (v) Other activities to facilitate Compact implementation as 
approved by MCC.
    The allocation of Compact Implementation Funding is generally 
described in Annex II.
    (b) Each Disbursement of Compact Implementation Funding is subject 
to satisfaction of the conditions precedent to such disbursement as set 
forth in Annex IV.
    (c) If MCC determines that the full amount of Compact 
Implementation Funding available under Section 2.2(a) exceeds the 
amount that reasonably can be utilized for the purposes set forth in 
Section 2.2(a), MCC, by written notice to the Government, may withdraw 
the excess amount, thereby reducing the amount of the Compact 
Implementation Funding available under Section 2.2(a) (such excess, the 
``Excess CIF Amount''). In such event, the amount of Compact 
Implementation Funding granted to the Government under Section 2.2(a) 
will be reduced by the Excess CIF Amount, and MCC will have no further 
obligations with respect to such Excess CIF Amount.
    (d) MCC, at its option by written notice to the Government, may 
elect to grant to the Government an amount equal to all or a portion of 
such Excess CIF Amount as an increase in the Program Funding, and such 
additional Program Funding will be subject to the terms and conditions 
of this Compact applicable to Program Funding.

Section 2.3 MCC Funding

    Program Funding and Compact Implementation Funding are collectively 
referred to in this Compact as ``MCC Funding,'' and includes any 
refunds or reimbursements of Program Funding or Compact Implementation 
Funding paid by the Government in accordance with this Compact.

Section 2.4 Disbursement

    In accordance with this Compact and the Program Implementation 
Agreement, MCC will disburse MCC Funding for expenditures incurred in 
furtherance of the Program (each instance, a ``Disbursement''). Subject 
to the satisfaction of all applicable conditions precedent, the 
proceeds of Disbursements will be made available to the Government, at 
MCC's sole election,

[[Page 67125]]

by (a) deposit to one or more bank accounts established by the 
Government and acceptable to MCC (each, a ``Permitted Account'') or (b) 
direct payment to the relevant provider of goods, works or services for 
the implementation of the Program. MCC Funding may be expended only for 
Program expenditures.

Section 2.5 Interest

    The Government will pay or transfer to MCC, in accordance with the 
Program Implementation Agreement, any interest or other earnings that 
accrue on MCC Funding prior to such funding being used for a Program 
purpose.

Section 2.6 Government Resources; Budget

    (a) Consistent with Section 609(b)(2) of the MCA Act, the 
Government will make a contribution towards meeting the Program 
Objective and Project Objectives of this Compact. Annex II describes 
such contribution in more detail. In addition, the Government will 
provide all funds and other resources and will take all actions that 
are necessary to carry out the Government's responsibilities under this 
Compact.
    (b) The Government will use its best efforts to ensure that all MCC 
Funding it receives or is projected to receive in each of its fiscal 
years is fully accounted for in its annual budget on a multi-year 
basis.
    (c) The Government will not reduce the normal and expected 
resources that it would otherwise receive or budget from sources other 
than MCC for the activities contemplated under this Compact and the 
Program.
    (d) Unless the Government discloses otherwise to MCC in writing, 
MCC Funding will be in addition to the resources that the Government 
would otherwise receive or budget for the activities contemplated under 
this Compact and the Program.

Section 2.7 Limitations on the Use of MCC Funding

    The Government will ensure that MCC Funding is not used for any 
purpose that would violate United States law or policy, as specified in 
this Compact or as further notified to the Government in writing or by 
posting from time to time on the MCC Web site at http://www.mcc.gov 
(the ``MCC Web site''), including but not limited to the following 
purposes:
    (a) For assistance to, or training of, the military, police, 
militia, national guard or other quasi-military organization or unit;
    (b) For any activity that is likely to cause a substantial loss of 
United States jobs or a substantial displacement of United States 
production;
    (c) To undertake, fund or otherwise support any activity that is 
likely to cause a significant environmental, health, or safety hazard, 
as further described in MCC's environmental and social assessment 
guidelines and any guidance documents issued in connection with the 
guidelines posted from time to time on the MCC Web site or otherwise 
made available to the Government (collectively, the ``MCC Environmental 
Guidelines''); or
    (d) To pay for the performance of abortions as a method of family 
planning or to motivate or coerce any person to practice abortions, to 
pay for the performance of involuntary sterilizations as a method of 
family planning or to coerce or provide any financial incentive to any 
person to undergo sterilizations or to pay for any biomedical research 
which relates, in whole or in part, to methods of, or the performance 
of, abortions or involuntary sterilization as a means of family 
planning.

Section 2.8 Taxes

    (a) Unless the Parties specifically agree otherwise in writing, the 
Government will ensure that all MCC Funding is free from the payment or 
imposition of any existing or future taxes, duties, levies, 
contributions or other similar charges (but not fees or charges for 
services that are generally applicable in Jordan, reasonable in amount 
and imposed on a non-discriminatory basis) (``Taxes'') of or in Jordan 
(including any such Taxes imposed by a national, regional, local or 
other governmental or taxing authority of or in Jordan). Specifically, 
and without limiting the generality of the foregoing, MCC Funding will 
be free from the payment of (i) Any tariffs, customs duties, import 
taxes, export taxes, and other similar charges on any goods, works or 
services introduced into Jordan in connection with the Program; (ii) 
sales tax, value added tax, excise tax, property transfer tax, and 
other similar charges on any transactions involving goods, works or 
services in connection with the Program; (iii) taxes and other similar 
charges on ownership, possession or use of any property in connection 
with the Program; and (iv) taxes and other similar charges on income, 
profits or gross receipts attributable to work performed in connection 
with the Program and related social security taxes and other similar 
charges on all natural or legal persons performing work in connection 
with the Program except (x) natural persons who are citizens or 
permanent residents of Jordan; and (y) legal persons formed under the 
laws of Jordan (but excluding MCA-Jordan and any other entity formed 
for the purpose of implementing the Government's obligations 
hereunder).
    (b) The mechanisms that the Government will use to implement the 
tax exemption required by Section 2.8(a) are set forth in Annex VI. 
Such mechanisms may include exemptions from the payment of Taxes that 
have been granted in accordance with applicable law, refund or 
reimbursement of Taxes by the Government to MCC, MCA-Jordan or to the 
taxpayer, or payment by the Government to MCA-Jordan or MCC, for the 
benefit of the Program, of an agreed amount representing any 
collectible Taxes on the items described in Section 2.8(a).
    (c) If a Tax has been paid contrary to the requirements of Section 
2.8(a) or Annex VI, the Government will refund promptly to MCC (or to 
another party as designated by MCC) the amount of such Tax in United 
States Dollars or the currency of Jordan within thirty (30) days (or 
such other period as may be agreed in writing by the Parties) after the 
Government is notified in writing (whether by MCC or MCA-Jordan) that 
such Tax has been paid.
    (d) No MCC Funding, proceeds thereof or Program Assets may be 
applied by the Government in satisfaction of its obligations under 
Section 2.8(c).

Section 2.9 Lower Middle Income Countries

    Section 606(b) of the MCA Act restricts the amount of assistance 
that MCC may provide to ``lower middle income countries,'' a term that 
is defined in the MCA Act and includes Jordan. To the extent that MCC 
determines, in MCC's reasonable discretion, that the amount of Program 
Funding granted to the Government in this Compact may result in a 
violation of Section 606(b) of the MCA Act, MCC, at any time and from 
time to time upon written notice to the Government, may reduce the 
amount of Program Funding, or withhold any Disbursement of Program 
Funding, to avoid or remedy such a violation.

Article 3. Implementation

Section 3.1 Program Implementation Agreement

    The Parties will enter into an agreement providing further detail 
on the implementation arrangements, fiscal accountability and 
disbursement and use of MCC Funding, among other

[[Page 67126]]

matters (the ``Program Implementation Agreement'' or ``PIA''); and the 
Government will implement the Program in accordance with this Compact, 
the PIA, any other Supplemental Agreement and any Implementation 
Letter.

Section 3.2 Government Responsibilities

    (a) The Government has principal responsibility for overseeing and 
managing the implementation of the Program.
    (b) The Government hereby designates Millennium Challenge Account--
Jordan Limited Liability Company as the accountable entity to implement 
the Program and to exercise and perform the Government's right and 
obligation to oversee, manage and implement the Program, including 
without limitation, managing the implementation of Projects and their 
Activities, allocating resources and managing procurements. Such entity 
will be referred to herein as ``MCA-Jordan,'' and has the authority to 
bind the Government with regard to all Program activities. The 
designation by this Section 3.2(b) will not relieve the Government of 
any obligations or responsibilities hereunder or under any related 
agreement, for which the Government remains fully responsible. MCC 
hereby acknowledges and consents to the designation in this Section 
3.2(b).
    (c) The Government will ensure that any Program Assets or services 
funded in whole or in part (directly or indirectly) by MCC Funding are 
used solely in furtherance of this Compact and the Program unless MCC 
agrees otherwise in writing.
    (d) The Government will take all necessary or appropriate steps to 
achieve the Program Objective and the Project Objectives during the 
Compact Term (including, without limiting Section 2.6(a), funding all 
costs that exceed MCC Funding and are required to carry out the terms 
hereof and achieve such objectives, unless MCC agrees otherwise in 
writing).
    (e) The Government will fully comply with the Program Guidelines, 
as applicable, in its implementation of the Program.

Section 3.3 Policy Performance

    In addition to undertaking the specific policy, legal and 
regulatory reform commitments identified in Annex I (if any), the 
Government will seek to maintain and to improve its level of 
performance under the policy criteria identified in Section 607 of the 
MCA Act, and the selection criteria and methodology used by MCC.

Section 3.4 Accuracy of Information

    The Government assures MCC that, as of the date this Compact is 
signed by the Government, the information provided to MCC by or on 
behalf of the Government in the course of reaching agreement with MCC 
on this Compact is true, correct and complete in all material respects.

Section 3.5 Implementation Letters

    From time to time, MCC may provide guidance to the Government in 
writing on any matters relating to this Compact, MCC Funding or 
implementation of the Program (each, an ``Implementation Letter''). The 
Government will use such guidance in implementing the Program. The 
Parties may also issue jointly agreed-upon Implementation Letters to 
confirm and record their mutual understanding on aspects related to the 
implementation of this Compact, the PIA or other related agreements.

Section 3.6 Procurement

    The Government will ensure that the procurement of all goods, works 
and services by the Government or any Provider to implement the Program 
will be consistent with the ``MCC Program Procurement Guidelines'' 
posted from time to time on the MCC Web site (the ``MCC Program 
Procurement Guidelines''). The MCC Program Procurement Guidelines 
include the following requirements, among others:
    (a) Open, fair, and competitive procedures must be used in a 
transparent manner to solicit, award and administer contracts and to 
procure goods, works and services;
    (b) Solicitations for goods, works, and services must be based upon 
a clear and accurate description of the goods, works and services to be 
acquired;
    (c) Contracts must be awarded only to qualified contractors that 
have the capability and willingness to perform the contracts in 
accordance with their terms on a cost effective and timely basis; and
    (d) No more than a commercially reasonable price, as determined, 
for example, by a comparison of price quotations and market prices, 
will be paid to procure goods, works and services.
    Furthermore, any person or entity on (i) The master list of 
Specifically Designated Nationals and Blocked Persons maintained by the 
U.S. Department of Treasury's Office of Foreign Assets Control, (ii) 
the consolidated list of individuals and entities maintained by the 
``1267 Committee'' of the United Nations Security Council, (iii) the 
list maintained on http://www.epls.gov, or (iv) other lists specified 
by MCC will be ineligible to participate in an MCC-funded procurement 
or to receive MCC Funding.

Section 3.7 Records; Accounting; Covered Providers; Access

    (a) Government Books and Records. The Government will maintain, and 
will use its best efforts to ensure that all Covered Providers 
maintain, accounting books, records, documents and other evidence 
relating to the Program adequate to show, to MCC's satisfaction, the 
use of all MCC Funding and the implementation and results of the 
Program (``Compact Records''). In addition, the Government will furnish 
or cause to be furnished to MCC, upon its request, originals or copies 
of such Compact Records.
    (b) Accounting. The Government will maintain and will use its best 
efforts to ensure that all Covered Providers maintain Compact Records 
in accordance with generally accepted accounting principles prevailing 
in the United States, or at the Government's option and with MCC's 
prior written approval, other accounting principles, such as those (i) 
prescribed by the International Accounting Standards Board or (ii) then 
prevailing in Jordan. Compact Records must be maintained for at least 
five (5) years after the end of the Compact Term or for such longer 
period, if any, required to resolve any litigation, claims or audit 
findings or any applicable legal requirements.
    (c) Providers and Covered Providers. Unless the Parties agree 
otherwise in writing, a ``Provider'' is (i) any entity of the 
Government that receives or uses MCC Funding or any other Program Asset 
in carrying out activities in furtherance of this Compact or (ii) any 
third party that receives at least US$50,000 in the aggregate of MCC 
Funding (other than as salary or compensation as an employee of an 
entity of the Government) during the Compact Term. A ``Covered 
Provider'' is (1) a non-United States Provider that receives (other 
than pursuant to a direct contract or agreement with MCC) US$300,000 or 
more of MCC Funding in any Government fiscal year or any other non-
United States person or entity that receives, directly or indirectly, 
US$300,000 or more of MCC Funding from any Provider in such fiscal year 
or (2) any United States Provider that receives (other than pursuant to 
a direct contract or agreement with MCC) US$500,000 or more of MCC 
Funding in any Government fiscal year or any other United States person 
or entity that receives, directly or indirectly,

[[Page 67127]]

US$500,000 or more of MCC Funding from any Provider in such fiscal 
year.
    (d) Access. Upon MCC's request, the Government, at all reasonable 
times, will permit, or cause to be permitted, authorized 
representatives of MCC, an authorized Inspector General of MCC 
(``Inspector General''), the United States Government Accountability 
Office, any auditor responsible for an audit contemplated herein or 
otherwise conducted in furtherance of this Compact, and any agents or 
representatives engaged by MCC or the Government to conduct any 
assessment, review or evaluation of the Program, the opportunity to 
audit, review, evaluate or inspect facilities, assets and activities 
funded in whole or in part by MCC Funding.

Section 3.8 Audits; Reviews

    (a) Government Audits. Except as the Parties may agree otherwise in 
writing, the Government will, on at least a semi-annual basis, conduct, 
or cause to be conducted, financial audits of all disbursements of MCC 
Funding covering the period from signing of this Compact until the 
earlier of the following December 31 or June 30 and covering each six-
month period thereafter ending December 31 and June 30, through the end 
of the Compact Term. In addition, upon MCC's request, the Government 
will ensure that such audits are conducted by an independent auditor 
approved by MCC and named on the list of local auditors approved by the 
Inspector General or a United States-based certified public accounting 
firm selected in accordance with the ``Guidelines for Financial Audits 
Contracted by MCA'' (the ``Audit Guidelines'') issued and revised from 
time to time by the Inspector General, which are posted on the MCC Web 
site. Audits will be performed in accordance with the Audit Guidelines 
and be subject to quality assurance oversight by the Inspector General. 
Each audit must be completed and the audit report delivered to MCC no 
later than 90 days after the first period to be audited and no later 
than 90 days after each June 30 and December 31 thereafter, or such 
other period as the Parties may otherwise agree in writing.
    (b) Audits of Other Entities. The Government will ensure that MCC-
financed agreements between the Government or any Provider, on the one 
hand, and (i) a United States nonprofit organization, on the other 
hand, state that the United States nonprofit organization is subject to 
the applicable audit requirements contained in OMB Circular A-133, 
``Audits of States, Local Governments, and Non-Profit Organizations,'' 
issued by the United States Office of Management and Budget; (ii) a 
United States for-profit Covered Provider, on the other hand, state 
that the United States for-profit organization is subject to audit by 
the applicable United States Government agency, unless the Government 
and MCC agree otherwise in writing; and (iii) a non-US Covered 
Provider, on the other hand, state that the non-US Covered Provider is 
subject to audit in accordance with the Audit Guidelines.
    (c) Corrective Actions. The Government will use its best efforts to 
ensure that each Covered Provider (i) takes, where necessary, 
appropriate and timely corrective actions in response to audits; (ii) 
considers whether the results of the Covered Provider's audit 
necessitates adjustment of the Government's records; and (iii) permits 
independent auditors to have access to its records and financial 
statements as necessary.
    (d) Audit by MCC. MCC will have the right to arrange for audits of 
the Government's use of MCC Funding.
    (e) Cost of Audits, Reviews or Evaluations. MCC Funding may be used 
to fund the costs of any audits, reviews or evaluations required under 
this Compact.

Article 4. Communications

Section 4.1 Communications

    Any document or communication required or submitted by either Party 
to the other under this Compact must be in writing and, except as 
otherwise agreed with MCC, in English. For this purpose, the address of 
each Party is set forth below.
    To MCC:
    Millennium Challenge Corporation, Attention: Vice President, 
Compact Operations, (with a copy to the Vice President and General 
Counsel), 875 Fifteenth Street, NW., Washington, DC 20005, United 
States of America, Facsimile: (202) 521-3700, Telephone: (202) 521-
3600, E-mail: [email protected] (Vice President, Compact 
Operations), [email protected] (Vice President and General 
Counsel).
    To the Government:
    Ministry of Planning and International Cooperation, P.O. Box 555, 
Amman 11118, Jordan, Tel: +962 6 4642246, Fax: +962 6 4642247.

Section 4.2 Representatives

    For all purposes of this Compact, the Government will be 
represented by the individual holding the position of, or acting as, 
the Minister of Planning and International Cooperation, and MCC will be 
represented by the individual holding the position of, or acting as, 
Vice President, Compact Operations (each of the foregoing, a 
``Principal Representative''). Each Party, by written notice to the 
other Party, may designate one or more additional representatives 
(each, an ``Additional Representative'') for all purposes other than 
signing amendments to this Compact. The Government hereby designates 
the Chairperson of the Board of MCA-Jordan as an Additional 
Representative. A Party may change its Principal Representative to a 
new representative that holds a position of equal or higher authority 
upon written notice to the other Party.

Section 4.3 Signatures

    Signatures to this Compact and to any amendment to this Compact 
will be original signatures appearing on the same page or in an 
exchange of letters or diplomatic notes. With respect to all documents 
arising out of this Compact (other than the Program Implementation 
Agreement) and amendments thereto, signatures may, as appropriate, be 
delivered by facsimile or electronic mail and in counterparts and will 
be binding on the Party delivering such signature to the same extent as 
an original signature would be.

Article 5. Termination; Suspension; Expiration

Section 5.1 Termination; Suspension

    (a) Either Party may terminate this Compact without cause in its 
entirety by giving the other Party thirty (30) days' prior written 
notice. MCC may also terminate this Compact or MCC Funding without 
cause in part by giving the Government thirty (30) days' prior written 
notice.
    (b) MCC may, immediately, upon written notice to the Government, 
suspend or terminate this Compact or MCC Funding, in whole or in part, 
and any obligation related thereto, if MCC determines that any 
circumstance identified by MCC, as a basis for suspension or 
termination (whether in writing to the Government or by posting on the 
MCC Web site) has occurred, which circumstances include but are not 
limited to the following:
    (i) The Government fails to comply with its obligations under this 
Compact or any other agreement or arrangement entered into by the 
Government in connection with this Compact or the Program;
    (ii) An event or series of events has occurred that makes it 
probable that the Program Objective or any of the Project Objectives 
will not be achieved during

[[Page 67128]]

the Compact Term or that the Government will not be able to perform its 
obligations under this Compact;
    (iii) A use of MCC Funding or continued implementation of this 
Compact or the Program violates applicable law or United States 
Government policy, whether now or hereafter in effect;
    (iv) The Government or any other person or entity receiving MCC 
Funding or using Program Assets is engaged in activities that are 
contrary to the national security interests of the United States;
    (v) An act has been committed or an omission or an event has 
occurred that would render Jordan ineligible to receive United States 
economic assistance under Part I of the Foreign Assistance Act of 1961, 
as amended (22 U.S.C. 2151 et seq.), by reason of the application of 
any provision of such act or any other provision of law;
    (vi) The Government has engaged in a pattern of actions 
inconsistent with the criteria used to determine the eligibility of 
Jordan for assistance under the MCA Act; and
    (vii) The Government or another person or entity receiving MCC 
Funding or using Program Assets is found to have been convicted of a 
narcotics offense or to have been engaged in drug trafficking.

Section 5.2 Consequences of Termination, Suspension or Expiration

    (a) Upon the suspension or termination, in whole or in part, of 
this Compact or any MCC Funding, or upon the expiration of this 
Compact, the provisions of Section 4.2 of the Program Implementation 
Agreement will govern the post-suspension, post-termination or post-
expiration treatment of MCC Funding, any related Disbursements and 
Program Assets. Any portion of this Compact, MCC Funding, the Program 
Implementation Agreement or any other Supplemental Agreement that is 
not suspended or terminated will remain in full force and effect.
    (b) MCC may reinstate any suspended or terminated MCC Funding under 
this Compact if MCC determines that the Government or other relevant 
person or entity has committed to correct each condition for which MCC 
Funding was suspended or terminated.

Section 5.3 Refunds; Violation

    (a) If any MCC Funding, any interest or earnings thereon, or any 
Program Asset is used for any purpose in violation of the terms of this 
Compact, then MCC may require the Government to repay to MCC in United 
States Dollars the value of the misused MCC Funding, interest, 
earnings, or asset, plus interest within thirty (30) days after the 
Government's receipt of MCC's request for repayment. The Government 
will not use MCC Funding, proceeds thereof or Program Assets to make 
such payment.
    (b) Notwithstanding any other provision in this Compact or any 
other existing agreement to the contrary, MCC's right under Section 
5.3(a) for a refund will continue during the Compact Term and for a 
period of (i) five (5) years thereafter or (ii) one (1) year after MCC 
receives actual knowledge of such violation, whichever is later.
    (c) In addition to Section 5.3(a), MCC will be entitled to any 
refund of Program Funding related to the As-Samra Expansion Project to 
the extent such refund is contemplated by the Program Implementation 
Agreement.

Section 5.4 Survival

    The Government's responsibilities under Sections 2.7, 3.7, 3.8, 
5.2, 5.3, 5.4, and 6.4 will survive the expiration, suspension or 
termination of this Compact.

Article 6. Compact Annexes; Amendments; Governing Law

Section 6.1 Annexes

    Each annex to this Compact constitutes an integral part hereof, and 
references to ``Annex'' mean an annex to this Compact unless otherwise 
expressly stated.

Section 6.2 Amendments

    (a) The Parties may amend this Compact only by a written agreement 
signed by the Principal Representatives (or such other government 
official designated by the relevant Principal Representative).
    (b) Notwithstanding Section 6.2(a), the Parties may agree in 
writing, signed by the Principal Representatives (or such other 
government official designated by the relevant Principal 
Representative) or any Additional Representative, to modify any Annex 
to (i) suspend, terminate or modify any Project or Activity, or to 
create a new project; (ii) change the allocations of funds as set forth 
in Annex II as of the date hereof (including to allocate funds to a new 
project); (iii) modify the Implementation Framework described in Annex 
I; or (iv) add, delete or waive any condition precedent described in 
Annex IV; provided that, in each case, any such modification (1) is 
consistent in all material respects with the Program Objective and 
Project Objectives; (2) does not cause the amount of Program Funding to 
exceed the aggregate amount specified in Section 2.1 (as may be 
modified by operation of Section 2.2(d)); (3) does not cause the amount 
of Compact Implementation Funding to exceed the aggregate amount 
specified in Section 2.2(a); (4) does not reduce the Government's 
responsibilities or contribution of resources required under Section 
2.6(a); and (5) does not extend the Compact Term.

Section 6.3 Inconsistencies

    In the event of any conflict or inconsistency between:
    (a) Any Annex and any of Articles 1 through 7, such Articles 1 
through 7, as applicable, will prevail; or
    (b) This Compact and any other agreement between the Parties 
regarding the Program, this Compact will prevail.

Section 6.4 Governing Law

    This Compact is an international agreement and as such will be 
governed by the principles of international law.

Section 6.5 Additional Instruments

    Any reference to activities, obligations or rights undertaken or 
existing under or in furtherance of this Compact or similar language 
will include activities, obligations and rights undertaken by, or 
existing under or in furtherance of any agreement, document or 
instrument related to this Compact and the Program.

Section 6.6 References to MCC Web site

    Any reference in this Compact, the PIA or any other agreement 
entered into in connection with this Compact, to a document or 
information available on, or notified by posting on the MCC Web site 
will be deemed a reference to such document or information as updated 
or substituted on the MCC Web site from time to time.

Section 6.7 References to Laws, Regulations, Policies and Guidelines

    Each reference in this Compact, the PIA or any other agreement 
entered into in connection with this Compact, to a law, regulation, 
policy, guideline or similar document will be construed as a reference 
to such law, regulation, policy, guideline or similar document as it 
may, from time to time, be amended, revised, replaced, or extended and 
will include any law, regulation, policy, guideline or similar document 
issued under or otherwise applicable or related to such law, 
regulation, policy, guideline or similar document.

Section 6.8 MCC Status

    MCC is a United States government corporation acting on behalf of 
the

[[Page 67129]]

United States Government in the implementation of this Compact. MCC and 
the United States Government assume no liability for any claims or loss 
arising out of activities or omissions under this Compact. The 
Government waives any and all claims against MCC or the United States 
Government or any current or former officer or employee of MCC or the 
United States Government for all loss, damage, injury, or death arising 
out of activities or omissions under this Compact, and agrees that it 
will not bring any claim or legal proceeding of any kind against any of 
the above entities or persons for any such loss, damage, injury, or 
death. The Government agrees that MCC and the United States Government 
or any current or former officer or employee of MCC or the United 
States Government will be immune from the jurisdiction of all courts 
and tribunals of Jordan for any claim or loss arising out of activities 
or omissions under this Compact.

Article 7. Entry Into Force

Section 7.1 International Agreements

    The Parties understand that each of the Compact and the Project 
Implementation Agreement, upon its entry into force, will prevail over 
the domestic laws of Jordan.

Section 7.2 Conditions Precedent to Entry Into Force

    Before this Compact enters into force:
    (a) The Program Implementation Agreement must have been signed by 
the parties thereto;
    (b) The Government must have delivered to MCC:
    (i) A letter signed and dated by the Principal Representative of 
the Government, or such other duly authorized representative of the 
Government acceptable to MCC, confirming that the Government has 
completed its domestic requirements for this Compact to enter into 
force and that the other conditions precedent to entry into force in 
this Section 7.2 have been met;
    (ii) A signed legal opinion from the Minister of Justice of Jordan 
(or such other legal representative of the Government acceptable to 
MCC), in form and substance satisfactory to MCC; and
    (iii) Complete, certified copies of all decrees, legislation, 
regulations or other governmental documents relating to the 
Government's domestic requirements for this Compact to enter into 
force, which MCC may post on its Web site or otherwise make publicly 
available;
    (c) MCC shall not have determined that after signature of this 
Compact, the Government has engaged in a pattern of actions 
inconsistent with the eligibility criteria for MCC Funding;
    (d) The Government has delivered to MCC a plan, in form and 
substance satisfactory to MCC, including any necessary adjustments to 
wastewater tariffs in Amman and Zarqa Governorates, for fully funding 
the projected treatment charges payable as a result of the As-Samra 
Expansion Project;
    (e) The Government has delivered to MCC a plan, in form and 
substance satisfactory to MCC, including any necessary adjustments to 
water and wastewater tariffs in Zarqa Governorate, to ensure projected 
revenues fully fund projected operations and maintenance costs of the 
water and wastewater network in Zarqa Governorate no later than 2015; 
and
    (f) MCC has determined in its sole discretion, after consultation 
with the Government, that there has been satisfactory progress with 
respect to the As-Samra Expansion Project.

Section 7.3 Date of Entry Into Force

    This Compact will enter into force on the date of the letter from 
MCC to the Government in an exchange of letters confirming that MCC has 
completed its domestic requirements for entry into force of this 
Compact and that the conditions precedent to entry into force in 
Section 7.2 have been met.

Section 7.4 Compact Term

    This Compact will remain in force for five (5) years after its 
entry into force, unless terminated earlier under Section 5.1 (the 
``Compact Term'').

Section 7.5 Provisional Application

    Upon signature of this Compact and until this Compact has entered 
into force in accordance with Section 7.3, the Parties will 
provisionally apply the terms of this Compact; provided that, no MCC 
Funding, other than Compact Implementation Funding, will be made 
available or disbursed before this Compact enters into force.
    In Witness Whereof, the undersigned, duly authorized by their 
respective governments, have signed this Compact.

    Done at Washington, DC, this 25th day of October 2010, in the 
English language only.
    The United States of America, acting through the Millennium 
Challenge Corporation,

Daniel W. Yohannes,
Chief Executive Officer.

    The Hashemite Kingdom of Jordan, acting through the Ministry of 
Water and Irrigation,

Mohammad Najjar,
Minister of Water and Irrigation.

Annex I Program Description

    This Annex I describes the Program that MCC Funding will support in 
Jordan during the Compact Term.

A. Program Overview

1. Background and Consultative Process
    Jordan is a highly urbanized Middle Eastern country with a 
population of approximately six million people. With limited access to 
surface water or naturally recharged aquifers, Jordan ranks among the 
world's five most water poor countries.
    Jordan was deemed eligible for MCC Compact assistance in 2006. Late 
in 2007, the Government established the Millennium Challenge Unit (the 
``MCU'') to work directly with MCC to manage the process of developing 
a proposed Compact program. Following a detailed constraints analysis 
and sector analysis, the MCU conducted a broad consultative process 
that garnered feedback from private sector representatives, civil 
society organizations, donors, and ordinary citizens through large, 
town-hall style meetings in each of Jordan's twelve governorates. 
Throughout this process, the challenge of addressing Jordan's severe 
water shortages emerged as a key priority.
    The MCU invited key stakeholders in the water, sewer and sanitation 
sector to participate in a project design workshop that focused on the 
objective of making more water available to households and commercial 
users. Stakeholders emphasized the need to (a) improve water delivery 
systems to reduce water losses and (b) expand capacities for collecting 
and treating wastewater and reusing it in agriculture, wherever 
appropriate.
    The Government has identified specific projects related to the 
rehabilitation of the water distribution system and expansion of the 
capacity for collecting and treating wastewater in Zarqa Governorate, 
among the poorest and most urban areas in the country, and the 
expansion of the capacity of an existing wastewater treatment plant 
that treats the majority of wastewater from Amman and Zarqa 
Governorates.
2. Program Objective
    The Program Objective is to increase the effective supply of water 
available to the inhabitants of Zarqa Governorate through improvements 
in the efficiency of water delivery, the extent of wastewater 
collection and the capacity of wastewater treatment. The Program 
consists of the Water Network Project, the Wastewater Network Project 
and the

[[Page 67130]]

As-Samra Expansion Project, as further described in this Annex I.
3. Environmental and Social Safeguards
    All of the Projects will be implemented in compliance with the MCC 
Environmental Guidelines and the MCC Gender Policy, and any involuntary 
resettlement will be carried out in accordance with the World Bank's 
Operational Policy on Involuntary Resettlement in effect as of July 
2007 (``OP 4.12'') in a manner acceptable to MCC. The Government also 
will ensure that the Projects comply with all national environmental 
laws and regulations, licenses and permits, except to the extent such 
compliance would be inconsistent with this Compact. Specifically, the 
Government will (a) cooperate with or complete, as the case may be, any 
ongoing environmental and social impact assessments, or if necessary 
undertake and complete any additional environmental and social 
assessments, environmental and social management plans, environmental 
and social audits, resettlement policy frameworks, and resettlement 
action plans required under the laws of Jordan, the MCC Environmental 
Guidelines, this Compact, the Program Implementation Agreement, or any 
other Supplemental Agreement, or as otherwise required by MCC, each in 
form and substance satisfactory to MCC; (b) ensure that Project-
specific environmental and social management plans are developed and 
all relevant measures contained in such plans are integrated into 
project design, the applicable procurement documents and associated 
finalized contracts, in each case in form and substance satisfactory to 
MCC; and (c) implement to MCC's satisfaction appropriate environmental 
and social mitigation measures identified in such assessments or plans 
or developed to address environmental and social issues identified 
during implementation. Unless MCC agrees otherwise in writing, the 
Government will fund all necessary costs of environmental and social 
mitigation measures (including, without limitation, costs of 
resettlement) not specifically provided for, or that exceed the MCC 
Funding specifically allocated for such costs, in the Detailed 
Financial Plan for any Project.
    To maximize the positive social impacts of the Projects, address 
cross-cutting social and gender issues such as human trafficking, child 
and forced labor, and HIV/AIDS, and ensure compliance with the MCC 
Gender Policy, the Government will (i) develop a comprehensive social 
and gender integration plan which, at a minimum, incorporates the 
findings of a comprehensive gender analysis, identifies approaches for 
regular, meaningful and inclusive consultations with women and other 
vulnerable/underrepresented groups, consolidates the findings and 
recommendations of Project-specific social and gender analyses and sets 
forth strategies for incorporating findings of the social and gender 
analyses into final Project designs, as appropriate (``Social and 
Gender Integration Plan''); and (ii) ensure, through monitoring and 
coordination during implementation, that final Activity designs, 
construction tender documents, other bidding documents, and 
implementation plans are consistent with and incorporate the outcomes 
of the social and gender analyses and Social and Gender Integration 
Plan.

B. Description of Projects

    Set forth below is a description of each of the Projects that the 
Government will implement, or cause to be implemented, using MCC 
Funding to advance the applicable Project Objectives. In addition, 
specific activities that will be undertaken within each Project (each, 
an ``Activity''), including sub-activities, are also described.
1. Water Network Project
    (a) Summary of Project and Activities.
    The objectives of the water network restructuring and 
rehabilitation project (the ``Water Network Project'') are to (1) 
improve the efficiency of network water delivery and the condition of 
home water systems, and (2) decrease certain costs that households in 
Zarqa Governorate incur to satisfy their subsistence water needs. The 
Water Network Project is designed to address high rates of water loss 
in the water supply network in Zarqa Governorate and provide direct 
assistance to poor households in improving their household water and 
sanitation infrastructure.
    The Water Network Project is comprised of two Activities: (A) The 
restructuring and rehabilitation of the water supply systems in key 
areas of Zarqa Governorate (the ``Infrastructure Investment 
Activity''); and (B) assistance to households to improve the plumbing, 
water storage, sewage connections, and general awareness of best 
practices for sanitation and water efficiency (the ``Water Smart Homes 
Activity,'' or ``WSH Activity'').
    (i) Infrastructure Investment Activity.
    The Infrastructure Investment Activity is designed to restructure 
and rehabilitate transmission and distribution water supply systems in 
key areas of Zarqa Governorate. In addition to reducing physical leaks, 
this Activity is designed to facilitate the transition of the water 
supply systems from periodic distribution under high pressure to more 
frequent, gravity-fed distribution. The Infrastructure Investment 
Activity consists of the following three sub-activities:
    (1) Strategic Infrastructure Works. This sub-activity is designed 
to install up to 65 system meters at up to 32 locations, and conduct 
condition assessments of the system through mapping and geographic 
information systems (``GIS'').
    (2) Zarqa Water Supply Area (``WSA'') Works. This sub-activity is 
designed to rehabilitate, restructure, and upgrade works in the 
primary, secondary and tertiary water supply systems in the Zarqa WSA. 
Primary infrastructure works to be supported by MCC Funding include:
    (A) Strategic metering in the following three distribution areas: 
Zarqa High, Zarqa North, and Zarqa Mid-Batrawi (other than the Al-
Gweireyeh area) (collectively, the ``Zarqa Distribution Areas'');
    (B) Mapping and GIS condition assessments;
    (C) Construction of primary systems from Batrawi and Zarqa High 
Reservoirs to the Zarqa Distribution Areas;
    (D) Creation of up to 63 district metering area (``DMA'') 
connection points;
    (E) Rehabilitation and restructuring of up to 44 km of primary 
systems; and
    (F) Upgrading the existing reservoir at Zarqa Pump Station.
    Secondary infrastructure works to be supported by MCC Funding 
include the rehabilitation and restructuring of up to 595 km of 
secondary network pipelines.
    Tertiary infrastructure works to be supported by MCC Funding 
include:
    (G) Rehabilitation and restructuring of up to 37 km of tertiary 
network pipelines;
    (H) Replacement of up to 23,737 customer meters; and
    (I) Restructuring of up to 29,371 customer connection points.
    (3) Ruseifa WSA Works. This sub-activity is designed to 
rehabilitate, restructure, and upgrade works in the water systems in 
the Ruseifa WSA. Primary infrastructure works to be supported by MCC 
Funding include:
    (A) Strategic metering for the following distribution areas: 
Ruseifa High and Ruseifa Low (collectively, the ``Ruseifa Distribution 
Areas'');
    (B) Mapping and GIS condition assessments;
    (C) Creation of up to 26 DMA connection points;

[[Page 67131]]

    (D) Construction of up to 6 km of new primary network pipeline and 
upgrade of up to 11 km of existing primary network pipeline; and
    (E) Construction of new Basateen pumping station and upgrading of 
the existing Basateen Reservoir.
    Secondary infrastructure works to be supported by MCC Funding 
include the rehabilitation and restructuring of up to 332 km of 
secondary network pipelines.
    Tertiary infrastructure works to be supported by MCC Funding 
include:
    (F) Rehabilitation and restructuring of up to 219 km of tertiary 
network pipelines;
    (G) Replacement of up to 9,786 customer meters; and
    (H) Restructuring of up to 15,813 customer connection points.
    (ii) Water Smart Homes Activity.
    The WSH Activity is designed to improve the condition of home water 
systems and enhance the benefits that households, particularly poor 
households, gain from increases in the effective supply of water in 
Zarqa Governorate. The WSH Activity consists of the following two sub-
activities:
    (1) WSH Outreach Campaign. This sub-activity is designed to 
disseminate information on techniques for cleaning water storage tanks 
and properly maintaining home water systems, along with the benefits of 
regular maintenance, to households in the geographic areas targeted by 
the Infrastructure Investment Activity (the ``WSH Outreach Campaign''), 
and
    (2) WSH Direct Assistance Program. This sub-activity is designed to 
provide technical and financial assistance to poor households in Zarqa 
Governorate for critical improvements in their home systems for water 
storage, water delivery and sanitation, in exchange for certain cost-
sharing fees (the ``WSH Direct Assistance Program''). The WSH Direct 
Assistance Program is expected to support replacement of water storage 
tanks, replacement of pipes, installation of water-saving faucets and 
construction of proper connections to the wastewater collection system, 
as needed. Eligible recipients for MCC Funding under this sub-activity 
must first qualify for the National Aid Fund, a Ministry of Social 
Development program that provides financial support to the very poor.
    (b) Beneficiaries.
    The Water Network Project is expected to benefit approximately 
302,000 households, for a total of 1,600,000 individuals, over twenty 
years. This figure represents the projected total population of Zarqa 
Governorate who may benefit from the efficiency gains anticipated in 
the water supply network. This figure includes an estimated 110,000 
households, for a total of 600,000 people, who will benefit directly 
from changes in domestic expenditure or higher consumption of water 
provided through the water supply network. An estimated four percent of 
beneficiaries will be among those living on less than US$2.00 per day 
on a purchasing power parity basis, with those living on US$2.00-
US$4.00 per day representing another quarter of the total 
beneficiaries.
    This figure also includes 3,500 poor households, for a total of 
almost 19,000 individuals, who will benefit from direct assistance to 
rehabilitate their household water and sanitation systems.
    (c) Environmental and Social Mitigation Measures.
    Consultants responsible for the feasibility study of the 
Infrastructure Investment Activity completed a preliminary 
environmental and social impact assessment (``PESIA'') in May 2010. In 
the PESIA provided to the Ministry of Water and Irrigation (``MWI''), 
the consultants recommended a Category B classification under the MCC 
Environmental Guidelines and a Category 2 classification under 
Jordanian regulations. MWI will submit this recommendation, along with 
a project overview and a copy of the PESIA, to the Ministry of 
Environment (``MOE'') for its evaluation of the classification under 
Jordanian law. MOE has yet to issue its determination of the project 
category. Depending on the final categorization by MOE and MCC's 
assessment of the final resettlement requirements, a detailed 
Environmental and Social Impact Assessment (``ESIA'') may be required. 
Discussions among MCC, MWI and MOE have defined a process for the 
detailed ESIA that meets mutual requirements for evaluating 
environmental and social impacts, conducting transparent and inclusive 
public consultations, developing detailed management plans and meeting 
expectations for social analysis, including gender and social issues 
and resettlement concerns consistent with OP 4.12. Estimates for 
mitigations resulting from the ESIA have been included in the Multi-
Year Financial Plan Summary.
2. Wastewater Network Project
    (a) Summary of Project and Activities.
    The objectives of the wastewater network reinforcement and 
expansion project (the ``Wastewater Network Project'') are to (1) 
Increase access to the wastewater network, (2) increase the volume of 
wastewater collected within Zarqa Governorate for treatment and reuse, 
and (3) reduce the incidents of sewage overflow. The Wastewater Network 
Project is designed to increase the carrying capacity of impaired sewer 
main lines, reduce periodic overflows in the wastewater collection 
network, and extend lateral sewer lines to urban neighborhoods in which 
populations are not currently connected to the wastewater collection 
network.
    The Wastewater Network Project is comprised of two Activities: (A) 
The reinforcement of existing networks and rehabilitation of existing 
sewer main lines in West Zarqa (the ``West Zarqa Pumping Station Zone 
Activity''), and (B) the reinforcement of existing networks and 
rehabilitation of existing sewer main lines in East Zarqa (the ``East 
Zarqa Pumping Station Zone Activity'').
    (i) West Zarqa Pumping Station Zone Activity. In the West Zarqa 
zone, MCC Funding will support:
    (1) Expanding the lateral sewers by up to 102km of pipe for 
collection systems and house connections;
    (2) Reinforcing the network by replacing up to 10km of main trunk 
lines and constructing up to 3km of new main trunk lines; and
    (3) Rehabilitating existing sewer main lines by replacing up to 7km 
of blocked sewers.
    (ii) East Zarqa Pumping Station Zone Activity. In the East Zarqa 
zone, MCC Funding will support:
    (1) Expanding the lateral sewers by up to 38km of pipe for 
collection systems and house connections;
    (2) Reinforcing the network by replacing up to 4km of main trunk 
lines; and
    (3) Rehabilitating existing sewer main lines by replacing up to 8km 
of blocked sewers.
    (b) Beneficiaries.
    The Wastewater Network Project will provide direct benefits to the 
residents of East Zarqa and West Zarqa, where up to 19,000 households, 
for a total of approximately 100,000 people, will have opportunities to 
connect to new lateral sewer lines over the next twenty years and 
forego the installation, maintenance and potential health risks 
associated with the use of cesspits in an urban environment.
    (c) Environmental and Social Mitigation Measures.
    The consultant responsible for the feasibility study of the 
Wastewater Network Project completed a PESIA in May 2010. In the PESIA 
provided to MWI, the consultants recommended a Category B 
classification under the MCC Environmental Guidelines and a Category 2 
classification under Jordanian regulations. MWI submitted this 
recommendation, along with a project overview and a copy of the

[[Page 67132]]

PESIA, to MOE for its evaluation of the classification under Jordanian 
law. Based on the findings from the PESIA, MOE assigned the Project a 
Category 1 classification under Jordanian regulations. A full, detailed 
ESIA is currently underway. Discussions among MCC, MWI and MOE have 
defined a process for the detailed ESIA that meets mutual requirements 
for evaluating environmental and social impacts, conducting transparent 
and inclusive public consultations, developing detailed management 
plans and meeting expectations for social analysis, including gender 
and social issues and resettlement concerns consistent with OP 4.12. 
Estimates for mitigations resulting from the ESIA have been included in 
the Multi-Year Financial Plan Summary.
3. As-Samra Expansion Project
    (a) Summary of Project and Activities.
    The objectives of the As-Samra Wastewater Treatment Plant expansion 
project (the ``As-Samra Expansion Project'') are to (i) Increase the 
capacity to treat wastewater from Amman and Zarqa Governorates, (ii) 
increase the volume of treated wastewater that is available as a 
substitute for freshwater for non-domestic use, and (iii) protect 
existing agriculture from the potential consequences of pollution from 
untreated wastewater.
    MCC Funding for the As-Samra Expansion Project will support a 
portion of the cost associated with the construction of the expansion 
of the existing As-Samra Wastewater Treatment Plant. MCC Funding will 
also support technical assistance for the management and supervision of 
the construction.
    The expansion is designed to increase the hydraulic capacity of the 
existing treatment plant and its ability to handle suspended solids and 
biological materials, among other critical treatment requirements. The 
expanded plant will use activated-sludge technology with several 
important characteristics: (1) Primary settling, (2) biological 
treatment and clarification, (3) disinfection by chlorination, (4) 
energy recovery from treated water, (5) primary and biological sludge 
thickening, (6) sludge digestion and biogas energy recovery, (7) 
digested sludge storage, (8) ventilation and odor control, and (9) a 
mechanical dewatering process that is designed to accelerate 
decomposition and reduce volumes of sludge. The average daily hydraulic 
capacity of the plant is expected to increase from 267,000 cubic meters 
per day to 364,800 cubic meters per day; the capacity for treating 
total suspended solids (``TSS'') is expected to increase from 147,000 
kilograms per day to 236,800 kilograms per day; and the biological 
oxygen demand (``BOD5'') capacity is expected to increase 
from 174,000 kilograms per day to 232,200 kilograms per day. The 
treatment, storage and disposal of sludge and the quality of the final 
effluent are required to comply at all times with (A) the applicable 
Jordanian standards for sludge and for water discharged to wadis and 
catchment areas, and (B) the minimum technical requirements under the 
As-Samra Project Agreement. The expansion is expected to meet the 
region's wastewater treatment needs through 2025.
    (b) Beneficiaries.
    Together with the Wastewater Network Project, the As-Samra 
Expansion Project will benefit approximately 375,000 households, for a 
total of 2,020,000 people, in Amman and Zarqa Governorates. These 
households will benefit from additional supplies of freshwater that can 
be transferred to these areas as these Projects make larger volumes of 
treated wastewater available for substitution in agricultural 
applications in the Jordan Valley. This includes approximately 8,500 
households in the Jordan Valley, for a total of 46,000 people that are 
expected to benefit from consistent supplies of high-quality treated 
wastewater that can be used in irrigation.
    (c) Environmental and Social Mitigation Measures.
    The As-Samra Wastewater Treatment Plant is located on land that is 
owned by MWI and located approximately 2km from the nearest town, 
Khirbet As-Samra, and far from other large population centers, 
including Amman and Zarqa municipalities. Under the As-Samra Expansion 
Project, the plant operator will develop a detailed ESIA that will 
build upon the 2003 Environmental Assessment for construction of the 
existing plant. MCC, MWI and the plant operator will design an approach 
to the ESIA that meets the requirements of the MCC Environmental 
Guidelines, the International Finance Corporation's Performance 
Standards on Social & Environmental Sustainability, dated April 30, 
2006 (``IFC Performance Standards''), and applicable Jordanian 
environmental protection laws.
    The ESIA will define any necessary augmentations to current 
practices in place for monitoring odor, noise, water quality, heavy 
metal accumulation and disease vectors, especially those induced by 
sludge, as required under the existing environmental management plan.
    The ESIA will also define an effective plan that clearly sets forth 
the roles, responsibilities and costs associated with the management 
and disposal of large volumes of sludge in order to improve the current 
practice of storing sludge in stabilization ponds that are present on 
the project site. These stabilization ponds are expected to be filled 
within eight to ten years. The sludge treatment, storage and disposal 
plan will accord with Jordanian law (including applicable Jordanian 
standards) and the MCC Environmental Guidelines.
    The project site includes sufficient unused adjacent land for the 
proposed expansion. For this reason, there are no issues of land 
acquisition or resettlement and only limited social impacts associated 
with the construction and operation of the plant.
4. Donor Coordination.
    In relation to the Water Network Project, the Government and MCC 
coordinated closely with Germany's Deutsche Gesellschaft f[uuml]r 
Technische Zusammenarbeit (``GTZ'') and Kreditanstalt f[uuml]r 
Wiederaufbau (``KfW''). MCC leveraged the ongoing work of KfW and GTZ 
in Zarqa, particularly in two principal areas of Compact development: 
(a) Scoping and detailing specific works in Zarqa based on their 
experiences, and (b) undertaking preliminary financial analysis of 
Zarqa water and wastewater operations. KfW and GTZ are currently active 
in meter replacement and network rehabilitation in Al-Gweireyeh and 
also have a major project to develop detailed GIS tools for operations 
and management of the water systems in Zarqa Governorate. Early outputs 
from this GIS system served as useful inputs to the feasibility study 
for the Water Network Project.
    The Program will complement other current and potential work by 
other donors including but not limited to (i) the Japan International 
Cooperation Agency's project to improving the water supply for the 
Zarqa WSA, which includes restructuring of the primary and secondary 
water supply and distribution system in the areas of Zarqa, Ruseifa, 
Hashmeya, Sukhna and Awajan through construction of new storage and 
distribution reservoirs, transmission pipelines, pumping stations and 
rising mains, and disinfection facilities; (ii) China's project to 
replace water networks within the Ruseifa Low distribution area; and 
(iii) the European Union's project to improve the water supply network 
in the areas of Zarqa, Al-Gweireyeh, Awajan, Ruseifa, Bani Hashem and 
Dogara.

[[Page 67133]]

    In relation to the As-Samra Expansion Project, the Swedish 
International Development Agency provided technical assistance to MWI 
to structure and tender the financial arrangements for the original As-
Samra Wastewater Treatment Plant, as well as loans and grants to assist 
MWI in supervising the construction of the existing plant and its 
initial operations period through February 2010. The Project benefits 
from the lessons learned in financing and constructing the existing 
plant.
5. USAID
    The United States Agency for International Development (``USAID'') 
has been active in the water sector in Jordan for many years and has 
funded and executed projects throughout the country. MCC has 
collaborated and coordinated closely with USAID on sector policy, 
particularly with respect to Jordan's National Water Strategy and 
tariff scenarios. USAID is funding a project to develop a comprehensive 
water and wastewater infrastructure master plan, and to support studies 
related to wastewater infrastructure improvements in several areas in 
Jordan, including Zarqa Governorate. MCC will continue to liaise with 
USAID.
    For the As-Samra Expansion Project, USAID provided a grant for the 
construction of the existing As-Samra Wastewater Treatment Plant.
6. Sustainability
    The Water Authority of Jordan (``WAJ''), through its Zarqa 
administrative unit, is currently responsible for the operation and 
maintenance of water supply and wastewater collection infrastructure in 
Zarqa Governorate. The Water Network Project is expected to provide 
additional operating revenues within the Zarqa administrative unit of 
WAJ by increasing collections as a result of reduced water losses and 
thus delivery of higher volumes of water to end-users. The Wastewater 
Network Project is expected to increase the number of households that 
subscribe to WAJ wastewater collection services, thereby increasing 
collection of service fees.
    In addition, WAJ plans to reorganize the Zarqa administrative unit 
of WAJ. This is expected to increase the efficiency of operations and 
further improve the financial situation for the Zarqa administrative 
unit.
    When MWI becomes responsible for additional treatment charges 
payable under the As-Samra Expansion Project, the burden of these 
treatment charges may worsen the financial position of the water 
companies in Amman and Zarqa Governorates, collections from which will 
support the payment of the treatment charges. The Government has agreed 
to deliver plans to (a) fully fund these treatment charges, and (b) 
ensure projected revenues fully fund projected operations and 
maintenance costs of the water and wastewater network in Zarqa 
Governorate no later than 2015.

C. Implementation Framework

1. Overview
    The implementation framework and the plan for ensuring adequate 
governance, oversight, management, monitoring and evaluation, and 
fiscal accountability for the use of MCC Funding are summarized below. 
MCC and the Government will enter into the Program Implementation 
Agreement, and any other agreements in furtherance of this Compact, all 
of which, together with this Compact, set out certain rights, 
responsibilities, duties and other terms relating to the implementation 
of the Program.
2. MCC
    MCC will take all appropriate actions to carry out its 
responsibilities in connection with this Compact and the Program 
Implementation Agreement, including the exercise of its approval rights 
in connection with the implementation of the Program.
3. MCA-Jordan
    MCA-Jordan was established by the Government as the accountable 
entity. It is a limited liability company wholly owned by the 
Government and was registered on June 29, 2010, as the Millennium 
Challenge Account--Jordan Limited Liability Company, in accordance with 
the Jordanian Companies Law. This arrangement allows MCA-Jordan the 
independence to enter into contracts, manage its own finances, and hire 
staff outside of the standard civil service system. In accordance with 
Section 3.2(b) of this Compact and Section 1.3(a) of the Program 
Implementation Agreement, MCA-Jordan will act on the Government's 
behalf to implement the Program and to exercise and perform the 
Government's rights and responsibilities with respect to the oversight, 
management, monitoring and evaluation, and implementation of the 
Program, including, without limitation, managing the implementation of 
Projects and their Activities, allocating resources, and managing 
procurements. The Government will ensure that MCA-Jordan takes all 
appropriate actions to implement the Program, including the exercise 
and performance of the rights and responsibilities designated to it by 
the Government pursuant to this Compact and the Program Implementation 
Agreement. Without limiting the foregoing, the Government will also 
ensure that MCA-Jordan has full decision-making autonomy, including, 
inter alia, the ability, without consultation with, or the consent or 
approval of, any other party, to (i) Enter into contracts in its own 
name; (ii) sue and be sued; (iii) establish an account in a financial 
institution in the name of MCA-Jordan and hold MCC Funding in that 
account; (iv) expend MCC Funding; (v) engage a fiscal agent who will 
act on behalf of MCA-Jordan on terms acceptable to MCC; (vi) engage a 
procurement agent who will act on behalf of MCA-Jordan, on terms 
acceptable to MCC, to manage the acquisition of the goods, works, and 
services required by MCA-Jordan to implement the activities funded by 
this Compact; and (vii) competitively engage one or more auditors to 
conduct audits of its accounts. The Government will take the necessary 
actions to manage and operate MCA-Jordan, in accordance with the 
applicable conditions precedent to the disbursement of Compact 
Implementation Funding set forth in Annex IV to this Compact.
    In accordance with Articles of Association and Memorandum of 
Association of MCA-Jordan, (the ``Bylaws''), MCA-Jordan will consist of 
the following bodies: (1) A board of directors (the ``Board''), (2) a 
management team (the ``Management Unit''), (3) a stakeholders committee 
(the ``Stakeholders Committee''), and (4) the general shareholders 
assembly (the ``General Assembly''). The governance of MCA-Jordan is 
set forth in more detail in the Program Implementation Agreement and 
the Bylaws, which will, collectively, set forth the responsibilities of 
the Board, Management Unit and Stakeholders Committee. The Bylaws were 
developed and adopted in accordance with the Governance Guidelines.
    (a) Board
    (i) Composition. The Board is initially comprised of the following 
seven members, including four Government members and three 
representatives from civil society and private sector organizations: 
(1) Secretary General, Ministry of Planning and International 
Cooperation; (2) Secretary General, WAJ; (3) Secretary General, MOE; 
(4) Secretary General, Ministry of Municipalities; (5) a nominee from 
the General Federation of Jordanian Women; (6) a nominee from the 
Jordanian Hashemite Fund for Human Development; and (7) a nominee from

[[Page 67134]]

the Zarqa Chamber of Commerce. The Chief Executive Officer (the 
``CEO'') of MCA-Jordan and an MCC representative will serve as non-
voting observers.
    (ii) Roles and Responsibilities. The Board is responsible for the 
oversight, direction, and decisions of MCA-Jordan, as well as the 
overall implementation of the Program. The Board will hold regular 
meetings, at a minimum once per quarter.
    (b) Management Unit.
    (i) Composition. The Management Unit will initially include eleven 
key officers, as follows: (1) CEO, (2) Deputy CEO for Administration, 
(3) Deputy CEO for Project Management, (4) Finance Director, (5) 
Procurement Director, (6) Legal Director, (7) Environment and Social 
Assessment Director, (8) Monitoring and Evaluation Director, (9) 
Director for the Water Network Project, (10) Director for the 
Wastewater Network Project, and (11) Director for the As-Samra 
Expansion Project. These key officers will be supported by appropriate 
additional staff to enable the Management Unit to execute its roles and 
responsibilities.
    (ii) Roles and Responsibilities. With oversight from the Board, the 
Management Unit will have the principal responsibility for the day-to-
day management of the Program, including those roles and 
responsibilities specifically set forth in the Program Implementation 
Agreement and the Bylaws. The Management Unit will serve as the 
principal link between MCC and the Government, and will be accountable 
for the successful execution of the Program, each Project, and each 
Activity. MCA-Jordan will be subject to the audit requirements under 
Jordanian Companies Law. As a recipient of MCC Funding, MCA-Jordan will 
also be subject to MCC audit requirements.
    (c) Stakeholders Committee.
    (i) Composition. The Stakeholders Committee will provide input to 
the Board and the Management Unit on matters that relate to the 
Program, promoting transparency and ongoing consultation. The size, 
composition, and manner of selection of members of the Stakeholders 
Committee are subject to ongoing discussions between the Government and 
MCC, and will be dictated by the project areas of the Program. 
Membership will at least reflect the NGOs, private sector, civil 
society, and local and regional governments that were consulted by the 
Government in developing its proposal for the Compact.
    (ii) Roles and Responsibilities. Consistent with the Governance 
Guidelines, the Stakeholders Committee will continue the consultative 
process throughout implementation of the Program. While the 
Stakeholders Committee will not have any decision-making authority, it 
will, among other things, review, at the request of the Board or the 
Management Unit, certain reports, agreements, and documents related to 
the implementation of the Program in order to provide input to MCA-
Jordan regarding the implementation of the Program.
    (d) General Assembly.
    (i) Composition. The General Assembly of MCA-Jordan will be 
comprised of all shareholders of MCA-Jordan. The Government is the sole 
shareholder of MCA-Jordan.
    (ii) Roles and Responsibilities. The General Assembly will hold one 
annual meeting during the first four months of MCA-Jordan's fiscal year 
and fulfill all obligations under applicable Jordanian law.
4. Implementing Entities
    Subject to the terms and conditions of this Compact, the Program 
Implementation Agreement, and any other related agreement entered into 
in connection with this Compact, the Government, through MCA-Jordan, 
may engage one or more entities of the Government to implement and 
carry out any Project or Activity (or a component thereof) in 
furtherance of this Compact (each, an ``Implementing Entity''). The 
appointment of any Implementing Entity will be subject to review and 
approval by MCC. The Government will ensure that the roles and 
responsibilities of each Implementing Entity and other appropriate 
terms are set forth in an agreement, in form and substance satisfactory 
to MCC (each an ``Implementing Entity Agreement'').
5. Fiscal Agent
    The Government, through MCA-Jordan, will appoint a fiscal agent (a 
``Fiscal Agent'') which will be responsible for assisting the 
Government with its fiscal management and assuring appropriate fiscal 
accountability of MCC Funding, and whose duties will include those set 
forth in the Program Implementation Agreement and such agreement as 
MCA-Jordan enters into with the Fiscal Agent, which agreement will be 
in form and substance satisfactory to MCC.
6. Procurement Agent
    The Government, through MCA-Jordan, will appoint a procurement 
agent (the ``Procurement Agent'') to carry out and certify specified 
procurement activities in furtherance of this Compact. The roles and 
responsibilities of the Procurement Agent will be set forth in the 
Program Implementation Agreement or such agreement as the Government 
enters into with the Procurement Agent, which agreement will be in form 
and substance satisfactory to MCC. The Procurement Agent will adhere to 
the procurement standards set forth in the MCC Program Procurement 
Guidelines and ensure procurements are consistent with the procurement 
plan adopted by the Government pursuant to the Program Implementation 
Agreement, unless MCC agrees otherwise in writing.

Annex II Multi-Year Financial Plan Summary

    This Annex II summarizes the Multi-Year Financial Plan for the 
Program.

1. General

    A multi-year financial plan summary (``Multi-Year Financial Plan 
Summary'') is attached hereto as Exhibit A to this Annex II. By such 
time as specified in the Program Implementation Agreement, the 
Government will adopt, subject to MCC approval, a multi-year financial 
plan that includes, in addition to the multi-year summary of estimated 
MCC Funding and the Government's contribution of funds and resources, 
the annual and quarterly funding requirements for the Program 
(including administrative costs) and for each Project, projected both 
on a commitment and cash requirement basis.

2. Government LMIC Contribution

    During the Compact Term, the Government will make contributions, 
relative to its national budget and taking into account prevailing 
economic conditions, as are necessary to carry out the Government's 
responsibilities under Section 2.6(a) of this Compact. These 
contributions may include in-kind and financial contributions 
(including obligations of Jordan on any debt incurred toward meeting 
these contribution obligations). In connection with this obligation the 
Government has developed a budget over the Compact Term to complement 
MCC Funding through budget allocations to water and wastewater 
projects, management contracts and institutional support in Zarqa 
Governorate. The Government anticipates making contributions from its 
national budget of approximately US$73,700,000 over the Compact Term. 
Such contribution will be in addition to the Government's spending 
allocated toward such Project Objectives in its budget for the year 
immediately preceding the establishment of this Compact. The 
Government's contribution will be subject to any legal requirements in 
Jordan for the budgeting

[[Page 67135]]

and appropriation of such contribution, including approval of the 
Government's annual budget by its legislature. The Parties may set 
forth in appropriate supplemental agreements certain requirements 
regarding this Government contribution, which requirements may be 
conditions precedent to the Disbursement of MCC Funding.

Exhibit A Multi-Year Financial Plan Summary

                                        Multi-Year FInancial Plan Summary
                                                 [US$ millions]
----------------------------------------------------------------------------------------------------------------
              Project                   CIF       Year 1     Year 2     Year 3     Year 4     Year 5     Total
----------------------------------------------------------------------------------------------------------------
Water Network Project
Infrastructure Activity
Water Smart Homes Activity
    Sub-Total......................          0      13.09      28.52      36.04      20.76       4.16     102.57
2. Wastewater Network Project
    Sub-Total......................          0       6.70      16.20      20.67      12.82       1.83      58.22
3. As-Samra Expansion Project
    Sub-Total......................       0.63      17.92      45.28      26.00       3.20       0.00      93.03
4. Monitoring and Evaluation (M&E)
    Monitoring and Evaluation
        Sub-Total..................       0.03       0.69       0.04       0.72       0.52       0.81       2.81
5. Program Administration and Audit
    MCA-Jordan
    Fiscal Agent
    Procurement Agent
    Audit
        Sub-Total..................       1.46       3.39       3.40       3.40       3.41       3.41      18.47
                                    ----------------------------------------------------------------------------
            Grand Total............       2.12      41.79      93.44      86.83      40.71      10.21     275.10
----------------------------------------------------------------------------------------------------------------

Annex III Description of Monitoring and Evaluation Plan

    This Annex III generally describes the components of the monitoring 
and evaluation plan (``M&E Plan'') for the Program. The actual content 
and form of the M&E Plan will be agreed to by MCC and the Government in 
accordance with MCC's Policy for Monitoring and Evaluation of Compacts 
and Threshold Programs posted from time to time on the MCC Web site 
(the ``MCC Policy for Monitoring and Evaluation of Compacts and 
Threshold Programs''). The M&E Plan may be modified from time to time 
with MCC approval without requiring an amendment to this Annex III.

1. Overview

    MCC and the Government will formulate and agree to, and the 
Government will implement or cause to be implemented, an M&E Plan that 
specifies (a) how progress toward the Compact Goal, Program Objective 
and Project Objectives will be monitored, (``Monitoring Component''); 
(b) a process and timeline for the monitoring of planned, ongoing, or 
completed Activities to determine their efficiency and effectiveness; 
and (c) a methodology for assessment and rigorous evaluation of the 
outcomes and impact of the Program (``Evaluation Component''). 
Information regarding the Program's performance, including the M&E 
Plan, and any amendments or modifications thereto, as well as progress 
and other reports, will be made publicly available on the Web site of 
MCA-Jordan and elsewhere.

2. Program Logic

    The M&E Plan will be built on a logic model which illustrates how 
the Program, Projects and Activities contribute to the Compact Goal, 
the Program Objective and the Project Objectives.

3. Monitoring Component

    To monitor progress toward the achievement of the impact and 
outcomes, the Monitoring Component of the M&E Plan will identify (i) 
The Indicators (as defined below), (ii) the definitions of the 
Indicators, (iii) the sources and methods for data collection, (iv) the 
frequency for data collection, (v) the party or parties responsible, 
and (vi) the timeline for reporting on each Indicator to MCC.
    Further, the Monitoring Component will track changes in the 
selected Indicators for measuring progress towards the achievement of 
the objectives during the Compact Term. The M&E Plan will establish 
baselines which measure the situation prior to a development 
intervention, against which progress can be assessed or comparisons 
made (each a, ``Baseline''). The Government will collect Baselines on 
the selected Indicators or verify already collected Baselines where 
applicable and as set forth in the M&E Plan.
    (a) Indicators. The M&E Plan will measure the results of the 
Program using quantitative, objective and reliable data 
(``Indicators''). Each Indicator will have benchmarks that specify the 
expected value and the expected time by which that result will be 
achieved (``Target''). All Indicators will be disaggregated by gender, 
income level and age, and beneficiary types to the extent practicable. 
Subject to prior written approval from MCC, the Government may add 
Indicators or refine the definitions and Targets of existing 
Indicators.
    (i) Compact Indicators.
    (1) Goal. The M&E Plan will contain the following Indicators 
related to the Compact Goal and based on national statistics. The 
Program will contribute to progress against poverty nationwide by 
contributing to a reduction of the poverty rate in Zarqa Governorate, 
but the results are attributable to many factors in the economy:
    (A) Official poverty rate nationwide: 13.3 percent in 2008; and
    (B) Official poverty rate in Zarqa Governorate: 11.2 percent in 
2008.\1\
---------------------------------------------------------------------------

    \1\ Poverty Baselines are from the Department of Statistics 
``The Status Report of Poverty in Jordan: Based on Household Income 
and Expenditure Survey 2008'' (Arabic); July 12, 2010. As of July 
2010, Jordan did not have a current poverty target using its 
official poverty rate.

---------------------------------------------------------------------------

[[Page 67136]]

    (2) Objective and Outcome Indicators. The M&E Plan will contain the 
Indicators listed in the following tables.
---------------------------------------------------------------------------

    \2\ The baseline figure refers to all of urban Zarqa. The target 
will be measured only against areas planned for assistance under the 
Compact. If the update to the baseline survey reveals a significant 
difference between the figure for all of urban Zarqa and the areas 
planned for assistance under the Compact, an adjustment to the 
baseline and target will be noted in the M&E Plan ensuring that the 
magnitude of the improvement by Year 5 remains consistent with that 
of the Compact.
    \3\ Ibid.
    \4\ In order to conform to MCC's Common Indicators, this 
indicator will be supplemented after the next baseline study with 
``Average number of days of work lost by adult household members in 
last 2 weeks due to a water borne illness + Average number of days 
of school lost by school-age children in past 2 weeks due to water 
borne illness.''
    \5\ The baseline figure refers to all of urban Zarqa. The target 
will be measured only against areas planned for assistance under the 
Compact. If the update to the baseline survey reveals a significant 
difference between the figure for all of urban Zarqa and the areas 
planned for assistance under the Compact, an adjustment to the 
baseline and target will be noted in the M&E Plan ensuring that the 
magnitude of the improvement by Year 5 remains consistent with that 
of the Compact.
    \6\ Ibid.

                                  Table 1--Compact Program Objective Indicators
----------------------------------------------------------------------------------------------------------------
                                                                                          Baseline
               Result                        Indicator                Definition           value        Year 5
----------------------------------------------------------------------------------------------------------------
                                 Program Objective Level: Cross-Cutting Results
----------------------------------------------------------------------------------------------------------------
Effective supply of water increased   Network water            For Zarqa Governorate:            65           96
 through improvement in water          consumption per capita   [Annual billed
 delivery, extension of waste-water    (residential and non-    residential and non-
 collection, and expansion in waste-   residential).            residential (in m3)]/
 water treatment.                                               [population of
                                                                governorate] * 1000/
                                                                365 (l/c/d).
                                      Total residential water  Billed residential                62           89
                                       consumption.             network water
                                                                consumption + tankers,
                                                                treatment shops, and
                                                                bottled water (l/c/d).
----------------------------------------------------------------------------------------------------------------


                         Table 2--Water Network Project Objective and Outcome Indicators
----------------------------------------------------------------------------------------------------------------
                                                                                          Baseline
               Result                        Indicator                Definition           value        Year 5
----------------------------------------------------------------------------------------------------------------
                                                 Objective Level
----------------------------------------------------------------------------------------------------------------
Decrease cost to households of        Use of tanker water....  Annual average quantity          4.7          1.2
 meeting subsistence water needs.                               of tanker water
                                                                consumed per person (l/
                                                                c/d) in Water Network
                                                                Project areas.\2\
                                      Use of treatment shop    Annual average quantity          0.4          0.2
                                       water.                   of treatment shop
                                                                water consumed per
                                                                person (l/c/d) in
                                                                Water Network Project
                                                                areas.\3\
                                      Prevalence of            Percent of children               9%           7%
                                       waterborne disease.      under age five who had
                                                                disrrhea in the two
                                                                weeks preceding the
                                                                survey.\4\
Improve efficiency of network water   Dissatisfaction with     Percent of water                 34%          26%
 delivery.                             supply service.          utility customers
                                                                ``very dissatisfied''
                                                                or ``quite
                                                                dissatisfied'' with
                                                                frequency, duration,
                                                                and pressure of supply
                                                                (average of the three
                                                                dimensions) in Water
                                                                Network Project areas
                                                                \5\ Dissatisfaction
                                                                with water quality.
                                      Dissatisfaction with      O='xl'Percent of water          60%          40%
                                       water quality.           utility customers
                                                                ``very dissatisfied''
                                                                or ``quite
                                                                dissatisfied'' with
                                                                potability of network
                                                                water in Water Network
                                                                Project areas.\6\.
----------------------------------------------------------------------------------------------------------------
                                                  Outcome Level
----------------------------------------------------------------------------------------------------------------
Improve efficiency of network water   Non-revenue water as %   Difference between               47%          35%
 delivery.                             of Governorate system    water supplied
                                       input.                   including water
                                                                imported and water
                                                                sold including
                                                                exported (i.e., volume
                                                                of water ``lost'')
                                                                expressed as a
                                                                percentage of water
                                                                supplied including
                                                                water imported.
                                                                [(Production +
                                                                Imports) - (Exports +
                                                                Accounted Water)]/
                                                                (Production + Imports).
                                      Continuity of supply     Hours of supply/week              36           70
                                       time.                    (during the
                                                                summer).\7\
Condition of household water systems  Households cleaning      Percent of households            56%          65%
 improved.                             their water storage      cleaning their
                                       facilities.              domestic water storage
                                                                facilities in Water
                                                                Smart Homes Activity
                                                                area.\8\
----------------------------------------------------------------------------------------------------------------


[[Page 67137]]


                      Table 3--Wastewater Network Project Objective and Outcome Indicators
----------------------------------------------------------------------------------------------------------------
                                                                                          Baseline
               Result                        Indicator                Definition           value        Year 5
----------------------------------------------------------------------------------------------------------------
                                                 Objective Level
----------------------------------------------------------------------------------------------------------------
Incidents of sewage overflow reduced  Sewer blockage events..  Annual number of               8,500        2,000
                                                                blockages that
                                                                occurred in sewers
                                                                network (pumping
                                                                station blockages
                                                                shall not be
                                                                included).\9\
----------------------------------------------------------------------------------------------------------------
                                                  Outcome Level
----------------------------------------------------------------------------------------------------------------
Quantity of wastewater collected      Volume of wastewater     Total volume of                   24           31
 from Zarqa Governorate increased.     collected.               wastewater collected
                                                                through the sewer
                                                                system and pumped via
                                                                West Zarqa and East
                                                                Zarqa pumping stations
                                                                (million cubic meters/
                                                                year).
Access to wastewater network          Residential population   Zarqa Governorate                72%          82%
 increased.                            connected to the sewer   wastewater subscribers
                                       system.                  as a percent of water
                                                                subscribers.
----------------------------------------------------------------------------------------------------------------


                    Table 4--The As-Samra Expansion Project Objective and Outcome Indicators
----------------------------------------------------------------------------------------------------------------
                                                                                          Baseline
               Result                        Indicator                Definition           value        Year 5
----------------------------------------------------------------------------------------------------------------
                                                 Objective Level
----------------------------------------------------------------------------------------------------------------
Substitution of freshwater for        Treated wastewater used  Treated wastewater \10\           61           70
 treated wastewater increased.         in agriculture.          used for irrigation in
                                                                Northern and Middle
                                                                Jordan Valley as a
                                                                percent of all water
                                                                used for irrigation in
                                                                Northern and Middle
                                                                Jordan Valley.
----------------------------------------------------------------------------------------------------------------
                                                  Outcome Level
----------------------------------------------------------------------------------------------------------------
Existing agriculture protected from   Quality of As-Samra      Number of days during              0            0
 untreated wastewater.                 effluent meets           the past quarter when
                                       standard.                effluent does not meet
                                                                the applicable
                                                                standard set out in
                                                                the As-Samra Project
                                                                Agreement.
Quantity of treated wastewater for    Volume of waste water    Annual volume of                  65           99
 agriculture use and substitution      effluent discharged      wastewater treated to
 increased.                            from the As-Samra        at least secondary
                                       plant.                   level (measured as
                                                                annual volume of
                                                                wastewater effluent
                                                                discharged from the As-
                                                                Samra plant, million
                                                                cubic meters per year).
                                      Agriculture use of       Agriculture land in the         13.7         15.9
                                       treated wastewater.      Middle and Northern
                                                                Jordan Valley using
                                                                treated wastewater for
                                                                at least part of their
                                                                irrigation water
                                                                (1,000 hectares).
----------------------------------------------------------------------------------------------------------------

    (b) Data Collection and Reporting. The M&E Plan will establish 
guidelines for data collection and reporting, and identify the 
responsible parties. Compliance with data collection and reporting 
timelines will be conditions for Disbursements for the relevant 
Activities as set forth in the Program Implementation Agreement. The 
M&E Plan will specify the data collection methodologies, procedures, 
and analysis required for reporting on results at all levels. The M&E 
Plan will describe any interim MCC approvals for data collection, 
analysis, and reporting plans.
---------------------------------------------------------------------------

    \7\ Ibid.
    \8\ Ibid.
    \9\ If during the Compact Term sewage blockages become part of 
the GIS database, this indicator should be updated to better measure 
blockages by type and location.
    \10\ ``Treated wastewater'' includes rainwater runoff mixed with 
treated wastewater in King Talal Dam reservoir.
---------------------------------------------------------------------------

    (c) Data Quality Reviews. As determined in the M&E Plan or as 
otherwise requested by MCC, the quality of the data gathered through 
the M&E Plan will be reviewed to ensure that data reported are as 
valid, reliable, and timely as resources will allow. The objective of 
any data quality review will be to verify the quality and the 
consistency of performance data across different implementation units 
and reporting institutions. Such data quality reviews also will serve 
to identify where those levels of quality are not possible, given the 
realities of data collection.
    (d) Management Information System. The M&E Plan will describe the 
information system that will be used to collect data, store, process 
and deliver information to relevant stakeholders in such a way that the 
Program information collected and verified pursuant to the M&E Plan is 
at all times accessible and useful to those who wish to use it. The 
system development will take into consideration the requirement and 
data needs of the components of the Program, and will be aligned with 
existing MCC systems, other service providers, and ministries.
    (e) Role of MCA-Jordan. The monitoring and evaluation of this 
Compact spans three Projects and will involve a variety of 
governmental, nongovernmental, and private sector institutions. In 
accordance with the designation contemplated by Section 3.2(b) of this 
Compact, MCA-Jordan is responsible for implementation of the M&E Plan. 
MCA-Jordan will oversee all Compact-related monitoring and evaluation 
activities conducted for each

[[Page 67138]]

of the Projects, ensuring that data from all implementing entities is 
consistent, accurately reported and aggregated into regular Compact 
performance reports as described in the M&E Plan.

4. Evaluation Component

    The Evaluation Component of the M&E Plan will contain three types 
of evaluations: (i) Impact evaluations, (ii) project performance 
evaluations, and (iii) special studies. The Evaluation Component of the 
M&E Plan will describe the purpose of the evaluation, methodology, 
timeline, required MCC approvals, and the process for collection and 
analysis of data for each evaluation. The results of all evaluations 
will be made publicly available in accordance with MCC's Policy for 
Monitoring and Evaluation of Compacts and Threshold Programs.
    (a) Impact Evaluation. The M&E Plan will include a description of 
the methods to be used for impact evaluations and plans for integrating 
the evaluation method into Project design. Based on in-country 
consultation with stakeholders, the strategies outlined below were 
jointly determined as having the strongest potential for rigorous 
impact evaluation. The M&E Plan will further outline in detail these 
methodologies. Final impact evaluation strategies are to be included in 
the M&E Plan. The following is a summary of the potential impact 
evaluation methodologies:
    (i) Water Network Project/Infrastructure Investment Activity. The 
evaluation will focus on determining both household level impacts as 
well as benefits to the water utility. The household level impacts of 
interest include reduced expenditures on water scarcity coping 
mechanisms such as use of tanker and treatment shop water. Health 
outcomes will also be examined. The impact is expected to be determined 
through quasi-experimental techniques comparing the beneficiary 
households to households in similar circumstances outside the project 
areas. The institutional level impacts such as reduced operating costs 
may be determined through financial and operations modeling of with and 
without project scenarios. The without project assumptions would be 
drawn from utility performance prior to the intervention as well as 
concurrent performance of other comparable water utilities in Jordan.
    (ii) Water Network Project/WSH Activity. The evaluation will look 
at the changes in (1) maintenance/cleaning of home water systems, (2) 
the impact on household use of expensive alternative sources of water, 
and (3) the incidence of certain waterborne diseases. The primary 
methodology expected is propensity score matching. In the case of over-
subscription to the sub-component of household water system 
rehabilitation, an element of randomized award of benefits among 
eligible beneficiaries will be considered.
    (iii) Wastewater Network Project. The evaluation will include an 
analysis of the health benefits achieved, particularly reduction in 
waterborne disease. The methodology is expected to employ quasi-
experimental techniques comparing beneficiary households (those near 
rehabilitated mains or newly connected to the network) with non-
beneficiary households.
    (b) Final Evaluation. The M&E Plan will make provision for final 
Project level evaluations (``Final Evaluations''). With the prior 
written approval of MCC, the Government will engage independent 
evaluators to conduct the Final Evaluations at the end of each Project. 
The Final Evaluations will review progress during Compact 
implementation and provide a qualitative context for interpreting 
monitoring data and impact evaluation findings. They must at a minimum 
(1) Evaluate the efficiency and effectiveness of the Activities; (2) 
determine if and analyze the reasons why the Compact Goal, Program 
Objective and Project Objective(s), outcome(s) and output(s) were or 
were not achieved; (3) identify positive and negative unintended 
results of the Program; (4) provide lessons learned that may be applied 
to similar projects; and (5) assess the likelihood that results will be 
sustained over time.
    (i) Special Studies. The M&E Plan will include a description of the 
methods to be used for special studies, as necessary, funded through 
this Compact or by MCC. Plans for conducting the special studies will 
be determined jointly between the Government and MCC before the 
approval of the M&E Plan. The M&E Plan will identify and make provision 
for any other special studies, ad hoc evaluations, and research that 
may be needed as part of the monitoring and evaluating of this Compact. 
Either MCC or the Government may request special studies or ad hoc 
evaluations of Projects, Activities, or the Program as a whole prior to 
the expiration of the Compact Term. When the Government engages an 
evaluator, the engagement will be subject to the prior written approval 
of MCC. Contract terms must ensure non-biased results and the 
publication of results.
    (c) Request for Ad Hoc Evaluation or Special Study. If the 
Government requires an ad hoc independent evaluation or special study 
at the request of the Government for any reason, including for the 
purpose of contesting an MCC determination with respect to a Project or 
Activity or to seek funding from other donors, no MCC Funding resources 
may be applied to such evaluation or special study without MCC's prior 
written approval.

5. Other Components of the M&E Plan

    In addition to the monitoring and evaluation components, the M&E 
Plan will include the following components for the Program, Projects 
and Activities, including, where appropriate, roles and 
responsibilities of the relevant parties and providers:
    (a) Costs. A detailed cost estimate for all components of the M&E 
Plan; and
    (b) Assumptions and Risks. Any assumption or risk external to the 
Program that underlies the accomplishment of the Program Objective, 
Project Objectives and Activity outcomes and outputs. However, such 
assumptions and risks will not excuse any Party's performance unless 
otherwise expressly agreed to in writing by the other Party.

6. Approval and Implementation of the M&E Plan

    The approval and implementation of the M&E Plan, as amended from 
time to time, will be in accordance with the Program Implementation 
Agreement, any other relevant Supplemental Agreement and the MCC Policy 
for Monitoring and Evaluation of Compacts and Threshold Programs.

Annex IV Conditions Precedent to Disbursement of Compact Implementation 
Funding

    This Annex IV sets forth the conditions precedent applicable to 
Disbursements of Compact Implementation Funding (each a ``CIF 
Disbursement''). Capitalized terms used in this Annex IV and not 
defined in this Compact will have the respective meanings assigned 
thereto in the Program Implementation Agreement. Upon execution of the 
Program Implementation Agreement, each CIF Disbursement will be subject 
to the terms of the Program Implementation Agreement.

1. Conditions Precedent to Initial CIF Disbursement

    Each of the following must have occurred or been satisfied prior to 
the initial CIF Disbursement:
    (a) The Government (or MCA-Jordan) has delivered to MCC:
    (i) An interim fiscal accountability plan acceptable to MCC; and

[[Page 67139]]

    (ii) A CIF procurement plan acceptable to MCC.

2. Conditions Precedent to all CIF Disbursements (Including Initial CIF 
Disbursement)

    Each of the following must have occurred or been satisfied prior to 
each CIF Disbursement:
    (a) The Government (or MCA-Jordan) has delivered to MCC the 
following documents, in form and substance satisfactory to MCC:
    (i) A completed Disbursement Request, together with the applicable 
Periodic Reports, for the applicable Disbursement Period, all in 
accordance with the Reporting Guidelines;
    (ii) A certificate of MCA-Jordan, dated as of the date of the CIF 
Disbursement Request, in such form as provided by MCC;
    (iii) If a Fiscal Agent has been engaged, a Fiscal Agent 
Disbursement Certificate; and
    (iv) If a Procurement Agent has been engaged, a Procurement Agent 
Disbursement Certificate.
    (b) If any proceeds of the CIF Disbursement are to be deposited in 
a bank account, MCC has received satisfactory evidence that (i) the 
Bank Agreement has been executed, and (ii) the Permitted Accounts have 
been established.
    (c) Appointment of an entity or individual to provide fiscal agent 
services, as approved by MCC, until such time as the Government 
provides to MCC a true and complete copy of a Fiscal Agent Agreement, 
duly executed and in full force and effect, and the Fiscal Agent 
engaged thereby is mobilized.
    (d) Appointment of an entity or individual to provide procurement 
agent services, as approved by MCC, until such time as the Government 
provides to MCC a true and complete copy of the Procurement Agent 
Agreement, duly executed and in full force and effect, and the 
Procurement Agent engaged thereby is mobilized.
    (e) MCC is satisfied, in its sole discretion, that (i) The 
activities being funded with such CIF Disbursement are necessary, 
advisable or otherwise consistent with the goal of facilitating the 
implementation of the Compact and will not violate any applicable law 
or regulation; (ii) no material default or breach of any covenant, 
obligation or responsibility by the Government, MCA-Jordan or any 
Government entity has occurred and is continuing under this Compact or 
any other Supplemental Agreement; (iii) there has been no violation of, 
and the use of requested funds for the purposes requested will not 
violate, the limitations on use or treatment of MCC Funding set forth 
in Section 2.7 of this Compact or in any applicable law or regulation; 
(iv) any Taxes paid with MCC Funding through the date 90 days prior to 
the start of the applicable Disbursement Period have been reimbursed by 
the Government in full in accordance with Section 2.8(c) of this 
Compact; and (v) the Government has satisfied all of its payment 
obligations, including any insurance, indemnification, tax payments or 
other obligations, and contributed all resources required from it, 
under this Compact and any other Supplemental Agreement.
    (f) For any CIF Disbursement occurring after this Compact has 
entered into force in accordance with Article 7: MCC is satisfied, in 
its sole discretion, that (i) MCC has received copies of any reports 
due from any technical consultants (including environmental auditors 
engaged by MCA-Jordan) for any Activity since the previous Disbursement 
Request, and all such reports are in form and substance satisfactory to 
MCC; (ii) the Implementation Plan Documents and Fiscal Accountability 
Plan are current and updated and are in form and substance satisfactory 
to MCC, and there has been progress satisfactory to MCC on the 
components of the Implementation Plan for any relevant Projects or 
Activities related to such CIF Disbursement; (iii) there has been 
progress satisfactory to MCC on the M&E Plan and Social and Gender 
Integration Plan for the Program or relevant Project or Activity and 
substantial compliance with the requirements of the M&E Plan and Social 
and Gender Integration Plan (including the targets set forth therein 
and any applicable reporting requirements set forth therein for the 
relevant Disbursement Period); (iv) there has been no material negative 
finding in any financial audit report delivered in accordance with this 
Compact and the Audit Plan, for the prior two quarters (or such other 
period as the Audit Plan may require); (v) MCC does not have grounds 
for concluding that any matter certified to it in the related MCA 
Disbursement Certificate, the Fiscal Agent Disbursement Certificate or 
the Procurement Agent Disbursement Certificate is not as certified; and 
(vi) if any of the officers or key staff of MCA-Jordan have been 
removed or resigned and the position remains vacant, MCA-Jordan is 
actively engaged in recruiting a replacement.
    (g) MCC has not determined, in its sole discretion, that an act, 
omission, condition, or event has occurred that would be the basis for 
MCC to suspend or terminate, in whole or in part, the Compact or MCC 
Funding in accordance with Section 5.1 of this Compact.

Annex V Definitions

    Activity has the meaning provided in Part B of Annex I.
    Additional Representative has the meaning provided in Section 4.2.
    As-Samra Expansion Project has the meaning provided in paragraph 
3(a) of Part B of Annex I.
    As-Samra Project Agreement means the Project Agreement between the 
Government, represented by MWI, and Samra Wastewater Treatment Plant 
Company Limited dated 28 July 2002 (as amended and restated on 10 
December 2003, as further amended on June 29, 2006, November 5, 2008 
and April 8, 2010, and as amended and restated after the date hereof).
    Audit Guidelines has the meaning provided in Section 3.8(a).
    Baseline has the meaning provided in paragraph 3 of Annex III.
    Board has the meaning provided in paragraph 3 of Part C of Annex I.
    BOD 5 has the meaning provided in paragraph 3(a) of Part 
B of Annex I.
    Bylaws has the meaning provided in paragraph 3 of Part C of Annex 
I.
    Cabinet Resolution has the meaning provided in Annex VI.
    CEO has the meaning provided in paragraph 3(a)(i) of Part C of 
Annex I.
    Certificate has the meaning provided in Schedule E to Annex VI.
    CIF Disbursement has the meaning provided in Annex IV.
    Compact has the meaning provided in the Preamble.
    Compact Contract has the meaning provided in Schedule A to Annex 
VI.
    Compact Goal has the meaning provided in Section 1.1.
    Compact Implementation Funding has the meaning provided in Section 
2.2(a).
    Compact Records has the meaning provided in Section 3.7(a).
    Compact Term has the meaning provided in Section 7.4.
    Covered Provider has the meaning provided in Section 3.7(c).
    Disbursement has the meaning provided in Section 2.4.
    DMA has the meaning provided in paragraph 1(a)(i)(2)(D) of Part B 
of Annex I.
    East Zarqa Pumping Station Zone Activity has the meaning provided 
in paragraph 2(a) of Part B of Annex I.
    Eligible Entities has the meaning provided in Annex VI.
    Eligible Individuals has the meaning provided in Annex VI.
    ESIA has the meaning provided in paragraph 1(c) of Part B of Annex 
I.

[[Page 67140]]

    Evaluation Component has the meaning provided in paragraph 1 of 
Annex III.
    Excess CIF Amount has the meaning provided in Section 2.2(c).
    Final Evaluations has the meaning provided in paragraph 4(b) of 
Annex III.
    Fiscal Agent has the meaning provided in paragraph 5 of Part C of 
Annex I.
    General Assembly has the meaning provided in paragraph 3 of Part C 
of Annex I.
    GIS has the meaning provided in paragraph 1(a)(i)(1) of Part B of 
Annex I.
    Governance Guidelines means MCC's Guidelines for Accountable 
Entities and Implementation Structures, as such may be posted on MCC's 
Web site from time to time.
    Government has the meaning provided in the Preamble.
    GTZ has the meaning provided in paragraph 4 of Part B of Annex I.
    IFC Performance Standards has the meaning provided in paragraph 
3(c) of Part B of Annex I.
    Implementation Letter has the meaning provided in Section 3.5.
    Implementing Entity has the meaning provided in paragraph 4 of Part 
C of Annex I.
    Implementing Entity Agreement has the meaning provided in paragraph 
4 of Part C of Annex I.
    Indicators has the meaning provided in paragraph 3(a) of Annex III.
    Infrastructure Investment Activity has the meaning provided in 
paragraph 1(a) of Part B of Annex I.
    Inspector General has the meaning provided in Section 3.7(d).
    ISTD has the meaning provided in Schedule A to Annex VI.
    Jordan has the meaning provided in the Preamble.
    KfW has the meaning provided in paragraph 4 of Part B of Annex I.
    M&E Plan has the meaning provided in Annex III.
    Management Unit has the meaning provided in paragraph 3 of Part C 
of Annex I.
    MCA Act has the meaning provided in Section 2.2(a).
    MCA-Jordan has the meaning provided in Section 3.2(b).
    MCC has the meaning provided in the Preamble.
    MCC Environmental Guidelines has the meaning provided in Section 
2.7(c).
    MCC Funding has the meaning provided in Section 2.3.
    MCC Gender Policy means the MCC Gender Policy (including any 
guidance documents issued in connection with the guidelines) posted 
from time to time on the MCC Web site or otherwise made available to 
the Government.
    MCC Policy for Monitoring and Evaluation of Compacts and Threshold 
Programs has the meaning provided in Annex III.
    MCC Program Procurement Guidelines has the meaning provided in 
Section 3.6.
    MCC Web site has the meaning provided in Section 2.7.
    MCU has the meaning provided in paragraph 1 of Part A of Annex I.
    MOE has the meaning provided in paragraph 1(c) of Part B of Annex 
I.
    MOF has the meaning provided in Annex VI.
    Monitoring Component has the meaning provided in paragraph 1 of 
Annex III.
    MOPIC has the meaning provided in Annex VI.
    Multi-Year Financial Plan Summary has the meaning provided in 
paragraph 1 of Annex II.
    MWI has the meaning provided in paragraph 1(c) of Part B of Annex 
I.
    OP 4.12 has the meaning provided in paragraph 3 of Part A of Annex 
I.
    Party and Parties have the meaning provided in the Preamble.
    PEISA has the meaning provided in paragraph 1(c) of Part B of Annex 
I.
    Permitted Account has the meaning provided in Section 2.4.
    Principal Representative has the meaning provided in Section 4.2.
    Procurement Agent has the meaning provided in paragraph 6 of Part C 
of Annex I.
    Program has the meaning provided in the Preamble.
    Program Assets means any assets, goods or property (real, tangible 
or intangible) purchased or financed in whole or in part (directly or 
indirectly) by MCC Funding.
    Program Funding has the meaning provided in Section 2.1.
    Program Guidelines means collectively the Audit Guidelines, the MCC 
Environmental Guidelines, the MCC Gender Policy, the Governance 
Guidelines, the MCC Program Procurement Guidelines, the Reporting 
Guidelines, the MCC Policy for Monitoring and Evaluation of Compacts 
and Threshold Programs, the MCC Cost Principles for Government 
Affiliates Involved in Compact Implementation (including any successor 
to any of the foregoing) and any other guidelines, policies or guidance 
papers relating to the administration of MCC-funded compact programs 
and as from time to time published on the MCC Web site.
    Program Implementation Agreement and PIA have the meaning provided 
in Section 3.1.
    Program Objective has the meaning provided in Section 1.2.
    Project(s) has the meaning provided in Section 1.2.
    Project Objective(s) has the meaning provided in Section 1.3.
    Provider has the meaning provided in Section 3.7(c).
    Reporting Guidelines means the MCC ``Guidance on Quarterly MCA 
Disbursement Request and Reporting Package'' posted by MCC on the MCC 
Web site or otherwise publicly made available.
    Ruseifa Distribution Areas has the meaning provided in paragraph 
1(a)(i)(3)(A) of Part B of Annex I.
    Social and Gender Integration Plan has the meaning provided in 
paragraph 3 of Part A of Annex I.
    Stakeholders Committee has the meaning provided in paragraph 3 of 
Part C of Annex I.
    Supplemental Agreement means any agreement between (a) the 
Government (or any Government affiliate, including MCA-Jordan) and MCC 
(including, but not limited to, the PIA) or (b) MCC and/or the 
Government (or any Government affiliate, including MCA-Jordan), on the 
one hand, and any third party, on the other hand, including any of the 
Providers, in each case, setting forth the details of any funding, 
implementing or other arrangements in furtherance of this Compact.
    Target has the meaning provided in paragraph 3(a) of Annex III.
    Taxes has the meaning provided in Section 2.8(a).
    TSS has the meaning provided in paragraph 3(a) of Part B of Annex 
I.
    United States Dollars or US$ means the lawful currency of the 
United States of America.
    USAID has the meaning provided in paragraph 5 of Part B of Annex I.
    VAT has the meaning provided in Schedule A to Annex VI.
    WAJ has the meaning provided in paragraph 6 of Part B of Annex I.
    Wastewater Network Project has the meaning provided in paragraph 
2(a) of Part B of Annex I.
    Water Network Project has the meaning provided in paragraph 1(a) of 
Part B of Annex I.
    Water Smart Homes Activity or WSH Activity has the meaning provided 
in paragraph 1(a) of Part B of Annex I.
    West Zarqa Pumping Station Zone Activity has the meaning provided 
in paragraph 2(a) of Part B of Annex I.
    WSA has the meaning provided in paragraph 1(a)(i)(2) of Part B of 
Annex I.
    WSH Direct Assistance Program has the meaning provided in paragraph 
1(a)(ii)(2) of Part B of Annex I.
    WSH Outreach Campaign has the meaning provided in paragraph 
1(a)(ii)(1) of Part B of Annex I.

[[Page 67141]]

    Zarqa Distribution Areas has the meaning provided in paragraph 
1(a)(i)(2)(A) of Part B of Annex I.

Annex VI Tax Schedules

Introduction

    The Government will ensure that MCA-Jordan and all contractors 
(prime contractors and subcontractors), consultants, and other entities 
and individuals that receive MCC Funding directly or indirectly (the 
``Eligible Entities'' or ``Eligible Individuals,'' as appropriate) are 
exempt from Taxes in accordance with Section 2.8.
    The mechanism that the Government will use to implement the 
exemption is as follows:
    1. The Ministry of Planning and International Cooperation 
(``MOPIC''), the Ministry of Finance (``MOF'') and MCA-Jordan will 
cooperate in drafting a resolution to be presented to the Council of 
Ministers for approval. The draft resolution will be subject to MCC 
approval before being presented to the Council of Ministers.
    2. The draft resolution will, at a minimum, specify:
    (a) The Projects that will benefit from the exemption;
    (b) The expected timeframe of each Project;
    (c) The expected cost of each Project; and
    (d) A complete list of Taxes that will be exempted.
    3. The Council of Ministers approves the blanket exemption for all 
Project and Activities (the ``Cabinet Resolution'').
    4. The following schedules describe the basic procedures that an 
Eligible Entity or Eligible Individual should follow to ensure the 
proper implementation of the exemption.

Schedule A Value Added Tax (VAT) \11\
---------------------------------------------------------------------------

    \11\ To the extent that VAT is imposed at the port of entry on 
imported goods, together with custom duties, the applicable tax 
exemption procedures are described in Schedule B below.
---------------------------------------------------------------------------

Procedures

    1. The Council of Ministers issues the Cabinet Resolution, as 
described in the Introduction.
    2. Any MCC-funded contract or agreement with an Eligible Entity or 
Eligible Individual (each, a ``Compact Contract'') will explicitly 
state that such Eligible Entity or Eligible Individual is entitled to 
complete exemption from Taxes in accordance with the Cabinet 
Resolution. In the event a Compact Contract is a contract with a 
subcontractor, such contract will (a) explicitly state that the 
subcontractor is entitled to the complete exemption from Taxes in 
accordance with the Cabinet Resolution, and (b) attach the contract 
between the prime contractor and MCA-Jordan.
    3. When the Eligible Entity or Eligible Individual needs to 
purchase goods or services, it will provide MCA-Jordan with the 
following:
    (a) For goods: A list of the goods needed to be purchased on a tax-
exempt basis, including the total needed and the approximate cost. MCA-
Jordan will indicate its approval on the list provided by the Eligible 
Entity or Eligible Individual. The Eligible Entity or Eligible 
Individual takes the MCA-Jordan approved list of goods to be purchased 
and a copy of the Compact Contract to the Income and Sales Tax 
Department (``ISTD''), which provides its approval for the purchase on 
a tax-exempt basis. The Eligible Entity or Eligible Individual provides 
the vendor with the above-mentioned documentation and purchases the 
goods net of VAT.
    (b) For services: The same procedure in paragraph 3(a) above is 
followed. Instead of a list of items to be purchased, however, the 
Eligible Entity or Eligible Individual provides a description of the 
services needed, the approximate cost of such services and the period 
of performance of such services.
    4. MCA-Jordan follows the same procedures for its own purchases of 
goods and services related to the Projects.

Schedule B Customs Duties

Procedures

Purchases of Imported Goods
    1. The Council of Ministers issues the Cabinet Resolution, as 
described in the Introduction.
    2. When MCA-Jordan signs a Compact Contract, MCA-Jordan sends to 
Jordan Customs an exemption request with the list of materials the 
Eligible Entity or Eligible Individual intends to purchase for use on 
the relevant Project. The letter must state the name of the Project and 
the Eligible Entity or Eligible Individual, and the Cabinet Resolution 
must be attached.
    3. The Compact Contract will explicitly state that the Eligible 
Entity or Eligible Individual is exempt from paying customs duties in 
accordance with the Cabinet Resolution.
    4. When the imported goods arrive, Jordan Customs compares what is 
in the shipment against the list it maintains and then releases them to 
the customs broker working for the Eligible Entity or Eligible 
Individual. All Eligible Entities and Eligible Individuals are required 
to use the services of a customs broker.
    5. At the end of the Project, the MCA-Jordan construction manager 
performs a reconciliation between goods imported for use on the Project 
and goods actually used on the Project. Any goods imported for use on 
the Project not actually used on the Project (for example, more goods 
imported than used) may be subject to customs duties. Therefore, if an 
Eligible Entity or Eligible Individual knows that more goods will be 
needed than originally proposed, it must work with MCA-Jordan to ensure 
that Jordan Customs has been provided with a list of the additional 
materials.
    6. The procedures set forth above also apply to MCA-Jordan except 
that MCA-Jordan will work directly with Jordan Customs.
Temporary Admission of Equipment, Vehicles and Household Goods, by 
Eligible Entities and Eligible Individuals
    1. The procedures outlined in paragraphs 1, 2, and 3 above will be 
followed except that MCA-Jordan must specifically request that an 
Eligible Entity or Eligible Individual performing work for the Project 
be permitted to bring in, on a temporary basis, equipment for use on 
the Project and vehicles and household goods of such Eligible 
Individual or Eligible Entity's employees working on the Project.
    2. Once the Cabinet Resolution has been issued, MCA-Jordan sends 
the exemption request to Jordan Customs with the Cabinet Resolution 
attached.
    3. When the items to receive temporary admission arrive, the goods 
are released to the customs broker working for the Eligible Individual 
or Eligible Entity.
    4. The temporary admission request must be renewed annually until 
the earlier of (a) the completion of the applicable contract, (b) the 
end of the Compact-related work, and (c) the expiration or termination 
of the Compact.

Schedule C Corporate Income Tax

Procedures

    1. The Council of Ministers issues the Cabinet Resolution, as 
described in the Introduction.
    2. Any Eligible Entity earning income only from MCC Funding in 
Jordan in any given tax year will be exempt from Tax on such income and 
as such will not be required to withhold Taxes on income earned during 
the tax year. At the end of the tax year, the Eligible Entity files a 
tax return indicating that the income earned on the MCC-funded

[[Page 67142]]

Projects is not subject to Tax in accordance with the Cabinet 
Resolution and the Compact Contract.
    3. Any Eligible Entity earning only a portion of its income from 
MCC Funding in any given fiscal year will:
    (a) Maintain its books and records to segregate the financial 
activity related to the Projects from those financial activities that 
are not related to the Compact.
    (b) At the end of any such fiscal year, file its Tax return on 
income that is not related to the Compact, as applicable, providing the 
documentation required in paragraph 2 above.

Schedule D Individual Income Tax

Procedures

    1. The Council of Ministers issues a Cabinet Resolution, as 
described in the Introduction.
    2. Any Eligible Individual earning income only from MCC Funding in 
Jordan in any given tax year will be exempt from withholding any such 
income Taxes during the tax year and from paying any Tax on income 
earned during the tax year. At the end of the tax year, the individual 
files a tax return indicating that the income earned on the MCC-funded 
Projects is not subject to Tax in accordance with the Cabinet 
Resolution and the Compact Contract.
    3. Any Eligible Individual earning income paid with MCC Funding and 
non-Compact-related income in any given fiscal year will be permitted 
to exclude the gross amount of such Compact-related personal income for 
the purposes of filing his/her year-end individual income Taxes in 
Jordan for any such fiscal year.

Schedule E Fuel Tax

    VAT is the only Tax included in petroleum products.

Procedures

    1. The Council of Ministers issues the Cabinet Resolution, as 
described in the Introduction.
    2. The Government will issue a certificate, or other documentary 
evidence (the ``Certificate''), to the Eligible Entity or Eligible 
Individual that allows the holder of such Certificate to be exempt from 
VAT at the point of purchase for fuel or other petroleum products.
    3. Purchases of fuel and other petroleum products will be purchased 
through approved wholesalers upon presentation of the Certificate.

Schedule F Social Security Tax

Procedures

    1. The Council of Ministers issues the Cabinet Resolution, as 
described in the Introduction.
    2. The Cabinet Resolution will state the following:
    (a) Eligible Individuals are exempted from paying the employee 
portion of social security Tax to the Government.
    (b) Employers of Eligible Individuals are exempted from paying the 
employer portion of social security Tax to the Government.
    3. Neither the Eligible Individuals nor their employers will be 
required to file any paperwork or returns with regard to social 
security Taxes.

Schedule G Tax on Foreign Import Services (i.e., Foreign Consultant 
Services)

Procedures

    1. The Council of Ministers issues the Cabinet Resolution, as 
described in the Introduction.
    2. The Cabinet Resolution will state that MCA-Jordan will not be 
required to withhold VAT on each invoice submitted by any foreign 
consultant that is an Eligible Entity or Eligible Individual.
    3. Any foreign consultant that is an Eligible Entity or Eligible 
Individual will not charge VAT on invoices submitted to MCA-Jordan.
    4. MCA-Jordan will not be required to withhold VAT on any invoice 
submitted by a foreign consultant that is an Eligible Entity or 
Eligible Individual.

Schedule H Company Registration Fee

Procedures

    1. The Council of Ministers issues the Cabinet Resolution, as 
described in the Introduction.
    2. The Cabinet Resolution will state that Eligible Entities that 
are required to register in Jordan to perform Compact-related work will 
be exempt from paying the company registration fee imposed by the 
Ministry of Trade and Industry.
    3. At the time of registering in Jordan to perform Compact-related 
work, the Eligible Entity will provide copies of (a) the Cabinet 
Resolution, and (b) its Compact Contract to the Ministry of Trade and 
Industry.

Schedule I Work Permit Fee

Procedures

    1. The Council of Ministers issues the Cabinet Resolution, as 
described in the Introduction.
    2. The Cabinet Resolution will state that Eligible Individuals who 
are required to obtain a work permit to perform Compact-related work 
will be exempt from paying the work permit fee imposed by the Ministry 
of Labor.
    3. At the time of obtaining a work permit to perform Compact-
related work, the Eligible Individual will provide copies of (a) the 
Cabinet Resolution, and (b) its Compact Contract to the Ministry of 
Labor.

[FR Doc. 2010-27459 Filed 10-29-10; 8:45 am]
BILLING CODE 9211-03-P