TREATIES AND OTHER INTERNATIONAL ACTS SERIES 17-622

________________________________________________________________________

FOREIGN ASSISTANCE

Millennium Challenge Compact 

Between the 

UNITED STATES OF AMERICA

and BENIN

Signed at Washington September 9, 2015

with

Annexes 
 NOTE BY THE DEPARTMENT OF STATE

 Pursuant to Public Law 89—497, approved July 8, 1966

(80 Stat. 271; 1 U.S.C. 113)—

“. . .the Treaties and Other International Acts Series issued

under the authority of the Secretary of State shall be competent

evidence . . . of the treaties, international agreements other than

treaties, and proclamations by the President of such treaties and

international agreements other than treaties, as the case may be, 

therein contained, in all the courts of law and equity and of maritime

jurisdiction, and in all the tribunals and public offices of the

United States, and of the several States, without any further proof

or authentication thereof.”
 BENIN

 Foreign Assistance

 Millennium Challenge Compact

 signed at Washington 

 September 9, 2015;

 Entered into force June 22, 2017.

 With annexes.
MILLENNIUM CHALLENGE COMPACT 


BETWEEN 


THE UNITED STATES OF AMERICA 


ACTING THROUGH 


THE MILLENNIUM CHALLENGE CORPORATION 


AND 


THE REPUBLIC OF BENIN 

Article 1. 
 Goal and Objectives .......................................................................................... 1 


Section 1.1 
 Compact Goal ............................................................................................. 1 


...................................................................................... 1 


....................................................................................... 2 


Section 1.2 
 Program Objective 

Section 1.3 
 Project Objectives 

Article 2. 
 Funding and Resources ..................................................................................... 2 


Section 2.1 
 Program Funding ........................................................................................ 2 


............................................................. 2 


............................................................................................. 3 


.............................................................................................. 3 


........................................................................................................ 3 


................................................................. 3 


................................................... 4 


........................................................................................................... 4 


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 on the Use of MCC Funding 

Section 2.8 
 Taxes 

Article 3. 
 Implementation ................................................................................................. 5 


Section 3.1 
 Program Implementation Agreement .......................................................... 5 


...................................................................... 5 


..................................................................................... 6 


............................................................................. 6 


............................................................................... 6 


.............................................................................. 6 


..................................... 7 


.......................................................................................... 8 


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 and Grants 

Section 3.7 
 Records; Accounting; Covered Providers; Access 

Section 3.8 
 Audits; Reviews 

Article 4. 
 Communications ............................................................................................... 9 


Section 4.1 
 Communications ......................................................................................... 9 


........................................................................................... 9 


.................................................................................................. 10 


Section 4.2 
 Representatives 

Section 4.3 
 Signatures 

Article 5. 
 Termination; Suspension; Expiration ............................................................. 10 


Section 5.1 
 Termination; Suspension .......................................................................... 10 


........................ 11 


.................................................................................... 11 


............................................................................... 11 


..................................................................................................... 11 


Section 5.2 
 Consequences of Termination, Suspension or Expiration 

Section 5.3 
 Refunds; Violation 

Section 5.4 
 Late Payment Interest 

Section 5.5 
 Survival 

MILLENNIUM CHALLENGE COMPACT 

TABLE OF CONTENTS 
Article 6. Compact Annexes; Amendments; Governing Law ........................................ 12 


Section 6.1 Annexes..................................................................................................... 12 


Section 6.2 Amendments and Modifications ............................................................... 12 


Section 6.3 Inconsistencies .......................................................................................... 12 


Section 6.4 Governing Law ......................................................................................... 12 


Section 6.5 Additional Instruments .............................................................................. 13 


Section 6.6 References to MCC Website ..................................................................... 13 


Section 6.7 References to Laws, Regulations, Policies and Guidelines ...................... 13 


Section 6.8 MCC Status ............................................................................................... 13 


Article 7. Entry Into Force .............................................................................................. 13 


Section 7.1 International Agreement ........................................................................... 13 


Section 7.2 Conditions Precedent to Entry into Force ................................................. 13 


Section 7.3 Date ofEntry into Force ........................................................................... 14 


Section 7.4 Compact Term .......................................................................................... 14 


Section 7.5 Provisional Application ............................................................................ 14 


Article 8. Additional Conditions to MCC Funding ........................................................ 14 


Section 8.1 	 Conditions Precedent to Initial On-Grid Tranche Funding 


Disbursement ............................................................................................ 14 


Section 8.2 	 Conditions Precedent to Intial Off-Grid Tranche Funding 


Disbursement ............................................................................................ 14 


Section 8.3 	 Failure to Satisfy Conditions Precedent to Intial Disbursement.. ............. 15 


Annex I: 	 Program Description 

Annex II: 	 Multi-Year Financial Plan Summary 

Annex III: 	 Description of the Monitoring and Evaluation Plan 

Annex IV: 	 Conditions Precedent to Disbursement of Compact Implementation Funding 

Annex V: 	 Additional Conditions Precedent to Entry Into Force 

Annex VI: 	 Conditions Precedent to On-Grid Tranche Funding and Off-Grid Tranche Funding 

Annex VII: 	 Definitions 

ToC - ii 
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 Republic of Benin ("Benin"), acting through its 

government (the "Government") (individually, a "Party", and collectively, the "Parties"). 

Capitalized terms used in this Compact will have the meanings provided in Annex VII. 

Recalling that in 2011 the Parties successfully concluded an initial Millennium Challenge 

Compact that advanced the progress of Benin in achieving lasting economic growth and poverty 

reduction, demonstrated the strong partnership between the Parties and was implemented in 

accordance with MCC's core policies and standards; 

Recognizing that the Parties are committed to the shared goals of promoting economic 

growth and the elimination of extreme poverty in Benin and that MCC assistance under this 

Compact supports Benin's demonstrated commitment to strengthening good governance, 

economic freedom and investments in its people; 

Recalling that the Government consulted with the private sector and civil society of 

Benin to determine the priorities for the use of MCC 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 Benin 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 Benin (the "Compact Goaf'). MCC's assistance will be provided in a manner that 

strengthens good governance, economic freedom and investments in the people of Benin. 

Section 1.2 Program Objective. The objective of the Program (the "Program Objective") is 

to expand business production and productivity, generate greater economic opportunities for 

households and improve the capacity to provide public and social services by improving the 
quantity and quality ofthe supply of electricity. The Program consists of the projects described 

in Annex I (each, a "Project", and collectively, the "Projects"). 

Section 1.3 Project Objectives. The objective of each ofthe Projects (each, a "Project 

Objective'', and collectively, the "Project Objectives") is described in Annex I. 

ARTICLE2. 

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 ofthis Compact, an amount not 

to exceed Three Hundred Fifty Seven Million United States Dollars (US$357,000,000) 

("Program Funding") consisting of Two Hundred Fifty Seven Million United States Dollars 

(US$257,000,000) ("Tranche I Funding"), Eighty Million United States Dollars 

(US$80,000,000) ("On-Grid Tranche Funding"), and Twenty Million United States Dollars 

(US$20,000,000) ("Off-Grid Tranche 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 the signing of this Compact, MCC will grant to the Government, under the 

terms ofthis Compact and in addition to the Program Funding described in Section 2.1, an 

amount not to exceed Eighteen Million United States Dollars (US$18,000,000) ("Compact 

Implementation Funding") under Section 609(g) ofthe Millennium Challenge Act of 2003, as 

amended (the "MCA Act"), for use by the Government to facilitate implementation ofthis 

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, design and other project preparatory 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) In accordance with Section 7.5, this Section 2.2 and other provisions of this 

Compact applicable to Compact Implementation Funding will be effective, for purposes of 

Compact Implementation Funding only, as of the date this Compact is signed by MCC and the 

Government. 

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(c) Each Disbursement of Compact Implementation Funding is subject to satisfaction 

of the conditions precedent to such Disbursement as set forth in Annex IV. 

(d) IfMCC 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 ofthe Compact Implementation Funding 

available under Section 2.2(a) (such excess, the "Excess CIFAmount"). 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. 

(e) 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, 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 MCC's Guidelines for Country Contributions, the Government 

will make a contribution of no less than seven and one-half percent (7.5%), in addition to any 

other fiscal cost to the Government, ofthe amount of MCC Funding provided under this 

Compact 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 other 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 for the duration ofthe Program. 

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(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, 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 

Guidelines and any guidance documents issued in connection with such guidelines (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 Benin, reasonable in amount and imposed on a nondiscriminatory basis) ("Taxes") of or in Benin (including any such Taxes imposed by a national, 

regional, local or other governmental or taxing authority of or in Benin). Specifically, and 

without limiting the generality ofthe 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 Benin 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 

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(1) natural persons who are citizens or permanent residents of Benin and (2) legal persons 

formed under the laws of Benin (but excluding MCA-Benin II and any other entity formed for 

the purpose of implementing the Government's obligations hereunder). 

(b) The principal mechanisms that the Government will use to implement the tax 

exemption required by Section 2.8(a) are set forth in the Program Implementation Agreement. 

Such mechanisms may include exemptions from the payment ofTaxes that have been granted in 

accordance with applicable law, refund or reimbursement of Taxes by the Government to MCC, 

MCA-Benin II or to the taxpayer, or payment by the Government to MCA-Benin II or MCC, for 

the benefit ofthe Program, of an agreed amount representing any collectible Taxes on the items 

described in Section 2.8(a). 

(c) Ifa Tax has been paid contrary to the requirements of Section 2.8(a) or the 

Program Implementation Agreement, 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 Benin 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-Benin II) that 

such Tax has been paid. Failure to refund such amount within the specified time will result in 

interest accruing on the unpaid amount in accordance with Section 5.4. 

(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 ). 

ARTICLE3. 

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 ofMCC Funding, among other 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) With the prior written consent ofMCC, the Government will designate an entity 

to be established 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-Benin 

II," and will have the authority to bind the Government with regard to all Program activities. 

The Government hereby designates MCA-Benin II also to exercise and perform the 

Government's rights and responsibilities to oversee, manage and implement the activities defined 

in the Grant and Implementation Agreement, dated as of September 24, 2013, as amended. The 

designation contemplated by this Section 3 .2(b) will not relieve the Government of any 

5 
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 ensure that the Program is implemented and that the 

Government carries out its obligations hereunder with due care, efficiency and diligence in 

conformity with sound technical, financial and management practices, and in conformity with 

this Compact, the Program Implementation Agreement, each other Supplemental Agreement and 

the Program Guidelines. 

(f) The Government grants to MCC a perpetual, irrevocable, royalty-free, worldwide, 

fully paid, assignable right and license to practice or have practiced on its behalf (including the 

right to produce, reproduce, publish, repurpose, use, store, modify or make available) any portion 

or portions of Intellectual Property as MCC sees fit in any medium, now known or hereafter 

developed, for any purpose whatsoever. 

Section 3.3 Policy Performance. In addition to undertaking the specific policy, legal and 

regulatory reform commitments identified in Annex I, 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 published by MCC. 

Section 3.4 Accuracy oflnformation. 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 ofthe Program (each, an "Implementation Letter"). The Government will use 

such guidance in implementing the Program. 

Section 3.6 Procurement and Grants. 

(a) 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 in accordance 

with MCC's Program Procurement Guidelines (the "MCC Program Procurement 

Guidelines"). The MCC Program Procurement Guidelines include the following requirements, 

among others: 

6 

(i) 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; 

(ii) solicitations for goods, works and services must be based upon a clear and 

accurate description of the goods, works and services to be acquired; 

(iii) 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 

(iv) 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. 

(b) Unless MCC otherwise consents in writing, the Government will ensure that any 

grant issued in furtherance of the Program (each, a "Grant") is awarded, implemented and 

managed pursuant to open, fair and competitive procedures administered in a transparent manner 

acceptable to MCC. In furtherance ofthis requirement, and prior to the issuance of any Grant, 

the Government and MCC will agree upon written procedures to govern the identification of 

potential Grant recipients, including, without limitation, appropriate eligibility and selection 

criteria and award procedures. Such agreed procedures will be posted on the MCA-Benin II 

website. 

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 Benin. 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) Access. Upon MCC's request, the Government, at all reasonable times, will 

permit, or cause to be permitted, authorized representatives ofMCC, the Inspector General of 

MCC ("Inspector Generaf'), the United States Government Accountability Office, any auditor 

responsible for an audit contemplated herein or otherwise conducted in furtherance ofthis 

Compact, and any agents or representatives engaged by MCC or the Government to conduct any 

assessment, review or evaluation ofthe Program, the opportunity to audit, review, evaluate or 

inspect facilities, assets and activities funded in whole or in part by MCC Funding. 

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Section 3.8 Audits; Reviews. 

(a) Government Audits. Except as the Parties may agree otherwise in writing, the 

Government will, on an annual basis (or on a more frequent basis if requested by MCC in 

writing), conduct, or cause to be conducted, financial audits of all Disbursements of MCC 

Funding covering the period from signing ofthis Compact until the following March 31 and 

covering each twelve-month period thereafter ending March 31, through the end of the Compact 

Term. MCA-Benin II will develop and implement a plan, in accordance with the Audit 

Guidelines, for the audit ofthe expenditures ofthe entities that are subject to audit pursuant to 

the Audit Guidelines (the "Audit Plan"). Changes to the period to be audited will be included in 

the Audit Plan and approved by MCC in writing. 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 oflocal auditors approved by the Inspector General or a United 

States-based certified public accounting firm selected in accordance with MCC's Guidelines for 

Financial Audits Contracted by the Millennium Challenge Corporation's Accountable Entities 

issued and revised from time to time by the Inspector General (the "Audit Guidelines"). 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 ninety (90) days after the applicable audit period, 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 ofStates, 

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 ofthe Covered Provider's audit necessitates 

adjustment ofthe 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 ofMCC 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. 

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ARTICLE4. 

COMMUNICATIONS 

s.ection 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. All such documents or communication must be submitted to the address 

of each Party set forth below or to such other address as may be designated by any Party in a 

written notice to the other Party. 

ToMCC: 

Millennium Challenge Corporation 

Attention: Vice President, Compact Operations 

(with a copy to the Vice President and General Counsel) 

875 Fifteenth Street, N.W. 

Washington, DC 20005 

United States of America 

Telephone: + 1 (202) 521-3600 

Facsimile: + 1 (202) 521-3700 

Email: VPOperations@mcc.gov (Vice President, Compact Operations) 

VPGeneralCounsel@mcc.gov (Vice President and General Counsel) 

To the Government: 

Ministry of Economy, Finance and 

Denationalization Programs 

Attention: Minister of Economy, Finance and 

Denationalization Programs 

01 BP 2354 Cotonou 

Zone administrative Route de l'Aeroport 

Benin 

Telephone: +229 21 30 12 47 

Facsimile: +229 213018 51 

To MCA-Benin II: 

Upon establishment of MCA-Benin II, MCA-Benin II will notify the Parties of its 

contact details. 

Section 4.2 Representatives. For all purposes relevant to implementation ofthis Compact, the 

Government will be represented by the individual holding the position of, or acting as, Minister 

of Economy, Finance and Denationalization Programs ofthe Republic of Benin, and MCC will 

be represented by the individual holding the position of, or acting as, Vice President, Compact 

Operations (each ofthe foregoing, a "Principal Representative"). Each Party, by written notice 

to the other Party, may designate one or more additional representatives of the Government or 

MCC, as appropriate (each, an "Additional Representative") for all purposes relevant to 

9 
implementation ofthis Compact except Section 6.2(a). Once MCA-Benin II is created and the 

National Coordinator thereof is appointed, such National Coordinator will be an Additional 

Representative of the Government. MCC hereby designates the Deputy Vice President, 

Department of Compact Operations, Africa, 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 ofletters or diplomatic 

notes. 

ARTICLES. 

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 (as notified to the Government in writing) 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 Objectives or any ofthe Project Objectives will not be achieved during 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 Benin ineligible to receive United States economic assistance under Part I ofthe 

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; 

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(vi) the Government has engaged in a pattern of actions inconsistent with the 

criteria used to determine the eligibility of Benin 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, ofthis Compact or any 

MCC Funding, or upon the expiration of this Compact, the provisions ofthe 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 ofthis 

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) Ifany MCC Funding, any interest or earnings thereon, or any Program Asset is 

used for any purpose in violation ofthe terms of this Compact, then MCC may require the 

Government to repay to MCC in United States Dollars the value ofthe 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 agreement to 

the contrary, MCC's right under Section 5.3(a) to obtain 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. 

Section 5.4 Late Payment Interest. Ifthe Government fails to pay any amount under this 

Compact or the Program Implementation Agreement when due (including amounts under 

Section 2.8(c) and 5.3(a)), interest will be paid on such unpaid amount. Interest will accrue on 

such unpaid amount at a rate equal to the then-current US Treasury Current Value of Funds Rate, 

calculated on a daily basis and a 360-day year from the due date of such payment until such 

amount is paid in full. Any such payment will first be credited against interest due, and once the 

interest due amount is extinguished, then payments will be credited against outstanding principal. 

Section 5.5 Survival. The Government's responsibilities under this Section and Sections 2.7, 

2.8, 3.2(f), 3.7, 3.8, 5.2, 5.3, 5.4 and 6.4 will survive the expiration, suspension or termination of 

this Compact, provided that the terms of Section 2.8 will survive for only one hundred twenty 

(120) days following this Compact's expiration. 

11 

Section 5.6 Consultations. Either Party may, at any time, request consultations relating to the 

interpretation or implementation of this Compact. Such consultations will begin at the earliest 

possible date. The Parties will enter any such consultations guided by the principle of achieving 

the Compact Goal in a timely and cost-effective manner. 

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 and Modifications. 

(a) The Parties may amend this Compact only by a written agreement. Such 

agreement will specify how it enters into force. 

(b) Notwithstanding subsection (a) above, the Parties agree that the Government and 

MCC may, by written agreement which will enter into force upon signature, modify any Annex 

to: (i) suspend, terminate or modify any Project or Activity; (ii) change the allocations of funds 

as set forth in Annex II as of the date hereof; (iii) modify the implementation framework 

described in Annex I; (iv) add, modify or delete any indicator, baseline or target or other 

information set forth in Annex III as of the date hereof, subject to and in accordance with the 

MCC M&E Policy; or (v) add, modify or delete any condition precedent described in Annex IV, 

Annex V or Annex VI; 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(e)); (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 ofresources required under Section 

2.6(a); and (5) does not extend the Compact Term. 

(c) The Parties understand that any modification of any Annex of this Compact 

pursuant to this Section 6.2 may be entered into by the Government without the need for further 

action by the Government (including any parliamentary action), or satisfaction of any additional 

domestic requirements of Benin. 

Section 6.3 Inconsistencies. In the event of any conflict or inconsistency between: 

(a) any Annex and any of Articles 1 through 8, such Articles 1 through 8, 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. 

12 

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 Website. 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 Website will be deemed a reference to such 

document or information as updated or substituted on the MCC Website 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 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 Benin for any claim or loss arising out of activities or omissions under 

this Compact. 

ARTICLE 7. 

ENTRY INTO FORCE 

Section 7 .1 International Agreement. The Government will proceed in a timely manner to 

complete all of its domestic requirements for this Compact to enter into force. The Parties 

understand that this Compact, upon entry into force, will prevail over the domestic laws of 

Benin. 

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: 

13 

(i) a letter signed and dated by the Principal Representative ofthe 

Government, or such other duly authorized representative of the Government acceptable to 

MCC, confirming that the Government has completed its domestic requirements necessary 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 Keeper of the Seals, Minister ofJustice, 

Legislation and Human Rights of Benin (or such other legal representative of the Government 

acceptable to MCC), in form and substance satisfactory to MCC; 

(iii) complete, certified copies of all decrees, legislation, regulations or other 

governmental documents relating to the Government's domestic requirements necessary for this 

Compact and the PIA to enter into force, which MCC may post on its website or otherwise make 

publicly available; 

(c) MCC will 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; and 

(d) The conditions set forth in Annex V have been satisfied. 

Section 7.3 Date ofEntry into Force. This Compact will enter into force on the date of the 

second letter in an exchange of letters between MCC and the Government confirming that MCC 

and the Government have completed their respective 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 to MCC's satisfaction. 

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 ofthis 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. 

ARTICLE 8. 

ADDITIONAL CONDITIONS TO MCC FUNDING 

Section 8.1 Conditions Precedent to Initial Disbursement of On-Grid Tranche Funding. In 

addition to the relevant conditions set forth in the Program Implementation Agreement, each of 

the applicable conditions to On-Grid Tranche Funding set forth in Annex VI must be met to 

MCC's satisfaction prior to the initial Disbursement of On-Grid Tranche Funding. 

Section 8.2 Conditions Precedent to Initial Disbursement of Off-Grid Tranche Funding. In 

addition to the relevant conditions set forth in the Program Implementation Agreement, each of 

the applicable conditions to Off-Grid Tranche Funding set forth in Annex VI must be met to 

MCC's satisfaction prior to the initial Disbursement of Off-Grid Tranche Funding. 

14 

Section 8.3 Failure to Satisfy Conditions Precedent to Initial Disbursement. The conditions 

precedent to the initial Disbursement of On-Grid Tranche Funding and to the initial 

Disbursement of Off-Grid Tranche Funding must have been satisfied no later than the applicable 

Outside Date. Ifthe conditions precedent to the initial Disbursement of On-Grid Tranche 

Funding or the initial Disbursement of Off-Grid Tranche Funding have not been satisfied by the 

applicable Outside Date, then: 

(a) MCC will by written notice to the Government reduce the amount of Program 

Funding by the total amount of On-Grid Tranche Funding or Off-Grid Tranche Funding, as the 

case may be, and deobligate the total amount of such On-Grid Tranche Funding or Off-Grid 

Tranche Funding from the Compact; and 

(b) On-Grid Tranche Funding or Off-Grid Tranche Funding, as the case may be, will 

not be available to be reallocated to the Program during the Compact Term. 

SIGNATURE PAGE FOLLOWS ON THE NEXT PAGE 

15 

IN WITNESS WHEREOF, each Party, by its duly authorized representative, has signed this 

Compact. 

Done at Washington, DC, in duplicate, this 9th day of September, 2015, in the English language 

only. 

FOR THE UNITED STATES OF 	 FOR THE REPUBLIC OF BENIN 


AMERICA, acting through THE 

MILLENNIUM CHALLENGE 

CORPORATION 

Name: Name: Kome Koutche 

Title: Title: 	 Minister of State in charge of 

Economy, Finance and 

Denationalization Programs 

SIGNATURE PAGE TO MILLENNIUM CHALLENGE COMPACT 


BETWEEN THE UNITED STATES OF AMERICA 


ACTING THROUGH THE MILLENNIUM CHALLENGE CORPORATION 


AND THE REPUBLIC OF BENIN 

ANNEX I 


PROGRAM DESCRIPTION 


This Annex I describes the Program that MCC Funding will support in Benin during the 

Compact Term. 

Any reference to a Government ministry in this Annex I will be deemed a reference to any 

successor Government ministry with the sector authority relevant to the Compact. 

A. PROGRAM OVERVIEW 

1. Background and Consultative Process. 

(a) Background. 

Benin was selected as eligible to develop this second compact in fiscal year (FY) 2012 after 

successful completion of a $307 million compact which entered into force in October 2006 and 

was completed in October 2011, and which aimed to reduce poverty through increasing access to 

markets, land, justice and financial services, including a major modernization of the Port of 

Cotonou. Benin was reselected by MCC in FY 2013 but in FY 2014 Benin did not qualify for 

compact eligibility; as a result, the Parties' engagement on compact development was limited. In 

FY 2015, Benin's performance on the scorecard resulted in reinstatement of compact eligibility. 

An analysis by the Government and MCC completed in October 2012 found that poor electricity 

infrastructure and an inadequate business environment are binding constraints to growth in 

Benin. A companion analysis of private sector opportunities pointed to diversified agribusiness 

as a growth opportunity for Benin, while an analysis of social and gender issues emphasized the 

important role women play in agriculture and agribusiness as farmers, processors and traders, 

and the importance of agriculture as a sector that employs the population with a high 

concentration of the poor. 

In March 2013, the Government, through the Unite de Coordination de la Formulation du 2eme 

Programme et du Suivi des Reformes de MCA-Benin, submitted a compact proposal to MCC 

focused on promoting agribusiness through improvements to the business environment, along 

with investments in supporting transport and electric power infrastructure. After a year and a 

half of project development and due diligence, it was evident that insufficient electric power, 

both in terms of quality and quantity, was a key concern for all agribusinesses, and that electric 

power was a strategic national priority of the Government. Accordingly, the compact proposal 

was reoriented in September 2014 towards an exclusive focus on the electric power sector; with 

the new focus, the proposal also supports Power Africa, a United States Government effort to 

increase the number of people with access to electric power in Sub-Saharan Africa ("Power 

Africa"). 

(b) Consultative Process. 

Throughout the development of this Compact, the Government engaged in an inclusive 

nationwide consultative process that included all sectors of society and all key stakeholders in 

the sectors examined. 
Following Benin's selection for a second compact, the Government established teams to tour 

every region of Benin to consult the public on the most significant constraints to growth in the 

country. Stakeholders consulted included local authorities, traders, craftsmen, farmers, civil 

society leaders and representatives of civic associations and women's groups. The consultations 

were inclusive and collaborative and included questions specific to the private sector, as well as 

gender inclusive questions. The results ofthe public consultations informed the selection of key 

constraints to growth, as well as the social and gender analysis and the investment opportunity 

analysis. MCC participated in many ofthe consultations and worked with the Government to 

distill key findings. Consultations also took place in Cotonou with business and civil society 

organizations, donors, and the central government. The nationwide consultations were attended 

by over 1,000 people, more than 20 percent of whom were women. 

As the Benin compact development process progressed and evolved to focus on the electricity 

sector, MCC and the Government have continued to consult with the private sector, civil society, 

the Benin diaspora and other stakeholders for input on the feasibility and utility ofthe proposed 

compact program. 

2. Description of Program and Beneficiaries. 

(a) Program Description. 

The Program targets poor electricity infrastructure, a binding constraint to economic growth in 

Benin, where the insufficient quantity and quality of electricity results in reduced productivity, 

output, and investment for businesses, less effective delivery of public and social services and 

diminished well-being and economic opportunity for households. The root causes of these 

problems are lack of resources, and public policies and institutions that have been unable to 

deliver sufficient power to meet growing national demand. 

The Program will address these core problems through policy reforms and institutional 

strengthening, large-scale investments in energy generation and distribution infrastructure and 

off-grid electrification to expand access in a country where only one-third of the population has 

access to electricity. As a result ofthese interventions, the Program is expected to expand 

business production and productivity, increase economic opportunities for households and 

improve the capacity to provide public and social services. 

To that end, the Program is comprised of four Projects: (i) the Policy Reform and Institutional 

Strengthening Project, (ii) the Electricity Generation Project, (iii) the Electricity Distribution 

Project, and the (iv) Off-Grid Electricity Access Project. 

(b) Beneficiaries. 

Over a twenty year period commencing at entry into force, approximately 1.97 million 

households (approximately 9.8 million people) are expected to benefit from the Program. Of 

these Program beneficiaries, an estimated 49% live on less than US$4 per day. In addition, this 

estimate of overall Program beneficiaries does not include any potential beneficiaries from the 

Off-Grid Electricity Project, nor does it include beneficiaries of new household connections in 

the Electricity Distribution Project. 

ANNEX I-2 
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 Objective. In 

addition, specific activities that will be undertaken within each Project (each, an "Activity"), 

including sub-activities, are also described. 

1. Policy Reform and Institutional Strengthening Project. 

(a) Summary of Project and Activities. 

The Objective of the Policy Reform and Institutional Strengthening Project is to strengthen the 

capacity ofthe Societe Beninoise d'Energie Electrique ("SBEE'), Autorite de Regulation de 

l 'Electricite ("ARE'), and other Government of Benin institutions to improve the governance, 

management, and operations ofthe electricity sector ("Policy Reform and Institutional 

Strengthening Project Objective"). To achieve the Policy Reform and Institutional 

Strengthening Project Objective, MCC Funding will support interventions to (A) improve 

governance in the electricity sector by supporting an independent and professional regulator, by 

reforming tariffs, by introducing independent power producers ("IPP') and by enhancing energy 

efficiency; (B) improve management, operations and maintenance within SBEE; and (C) inform 

and educate the public on tariffs, energy efficiency and other key electricity sector issues. 

(i) Policy, Regulation, and Institutional Support Activity. 

The Policy, Regulation, and Institutional Support Activity aims to improve the overall 

governance of the electricity sector in Benin by improving regulation; establishing a tariff policy, 

plan, and periodic tariff adjustments; increasing energy efficiency; and strengthening the policy 

and institutional framework for IPPs. MCC Funding will support: 

(A) Assistance to ARE through operational support and capacity 

building; establishment of regulatory tools, processes, and procedures; preparation and 

implementation oftariff studies and development of a tariff policy and Tariff Plan to achieve 

cost-reflective tariffs, encourage private sector investment in power generation and ensure access 

for the poor; 

(B) Expansion and strengthening of energy efficiency standards and 

labeling programs in Benin, including the formulation of technical standards, development of a 

program for product labeling, enhancement of product quality enforcement and testing, 

introduction of support for public sector procurement of energy efficient goods and industrial 

energy efficiency; 

(C) Improvement of the environment for IPPs, including by 

establishing a legal and regulatory framework, standard forms of contract, credit enhancement 

mechanisms and a competitive solicitation process by means of technical assistance, transaction 

advisory services and other support; and 

(D) Support of the following policy reviews: legal review ofthe 

electricity codes (the Benin-Togo and the Benin Electricity Codes) to target necessary revisions; 

technical analysis of structuring options for Government and SBEE-owned generation assets 

ANNEX 1-3 
including creation of stand-alone enterprises; and situation assessment and preliminary study as 

input to national gas policy and strategy for acquiring a reliable supply of gas for power 

generation. 

(ii) Utility Strengthening Activity. 

The Utility Strengthening Activity aims to ensure the operational independence of SBEE and 

improve its core business functions so as to become more financially viable and better able to 

serve its customers. Together with the sector-wide improvements from the Policy, Regulation 

and Institutional Support Activity, the Utility Strengthening Activity is expected to help improve 

key aspects of SBEE' s operations and to result in its ability to better provide power to consumers 

of all income classes. MCC Funding will support: 

(A) Implementation of governance and management reforms of SBEE, 

including through technical and other advisory services and capacity building for corporate and 

strategic management; 

(B) Financial and accounting improvements through capacity building; 

information technology infrastructure, management and support; implementation of a stock 

management system; preparation of a fixed assets register, and support for reconciliation of 

customer accounts and other elements of SBEE's accounting system, all to improve utility 

performance, operational managemen, and to more accurately reflect the current financial 

condition ofthe utility; 

(C) Strengthening of SBEE's maintenance capabilities including: (1) 

human resources development; (2) provision of vehicles, tools, equipment, spare parts and other 

items as may be required; (3) development of a maintenance management system and acquisition 

of related software and standard operating procedures; and 

(D) Capacity building for SBEE personnel through training and 

instituting policy and procedural changes to create a safe working environment (including with 

respect to protections from sexual harassment) with equal opportunities for men and women's 

professional advancement. 

(iii) Public Information and Education Activity. 

The Public Information and Education Activity aims to inform the public about energy sector 

policy reforms and to change energy use behavior through information and education about 

energy efficiency, renewable electricity sources and related topics. To this end, the Public 

Information and Education Activity will create a program to educate consumers about energy 

efficiency and renewable energy for household use. The Public Information and Education 

Activity will take into account language differences, education levels, gender and rural and urban 

access to information and technology. 

(b) Environmental and Social Mitigation Measures. 

According to MCC Environmental Guidelines, the Policy Reform and Institutional Strengthening 

Project is a "Category C" project, and no major environmental and social impacts are anticipated. 

ANNEX I-4 

However, any reforms related to human resource management will be undertaken consistent with 

the requirements of IFC Performance Standard 2. 

More broadly, health and safety records for SBEE's operations are not available. MCC Funding 

will be used to undertake an environmental and social health and safety audit ("ESH&S Audit") 

to evaluate any deficiencies in organizational arrangements, company policies, training programs 

and record keeping for health and safety management. Once the ESH&S Audit is complete, 

MCC Funding will be used to assist SBEE to develop an environmental and social, health and 

safety management system ("SBEE ESHSMS"), in form and substance satisfactory to MCC. 

Such SBEE ESHSMS will include, among others, an identification of SBEE's environmental and 

social standards and establishment of performance targets to achieve these standards. 

(c) Social Inclusion and Gender Integration. 

Social inclusion and gender integration under the Policy Reform and Institutional Strengthening 

Project are directed at institutionalizing targeted and pro-poor tariffs, as well as ensuring equal 

opportunities for women and men within SBEE and an improved workplace environment. 

With respect to the Ministere de l 'Energie, des Recherches Petrolieres et Minieres et du 

Developpment des Energies Renouvelables and ARE, MCC Funding will provide assistance to 

develop appropriate and targeted approaches to assist affordable electricity for the poor, 

including through consideration of a lifeline tariff as part of the Tariff Policy for SBEE 

customers. 

With respect to SBEE, MCC Funding will finance technical assistance to develop and implement 

strategies to increase SBEE's capacity and incentive to provide affordable services to the poor. 

These strategies will include a diagnostic of the cost and time required to secure a residential 

connection to the national electric grid as well as the development of tools to allow SBEE to 

better target assistance to poor households, such as subsidies and lifeline tariffs. 

In addition, to bolster SBEE's capacity to ensure gender integration, a gender audit of SBEE will 

be conducted to better understand human resource practices and document issues, challenges, 

capacity and good practices that can be expanded. The Policy Reform and Institutional 

Strengthening Project also will provide assistance to strengthen SBEE's capacity to attract and 

train women through existing internship and training programs. 

(d) Donor Coordination. 

Donors working on policy and institutional reform of Benin's electricity sector include, among 

others, the European Union ("EU"), the Agence Franr;aise de Developpement ("AFD "),World 

Bank, Deutsche Gesellschaft fur Internationale Zusammenarbeit ("GIZ''), the Global 

Environment Fund, and the United Nations Development Program. The principal donors have 

organized an energy sector donor roundtable, which meets on a bi-annual basis, to ensure 

coordination of infrastructure investments and agendas for sector policy reform ("Energy Sector 

Donor Roundtable"). 

The Policy Reform and Institutional Strengthening Project was developed in close coordination 

with the donors cited above and is consistent with the recommendations issued by the Energy 

Sector Donor Roundtable. Before finalizing the Program, the Government and MCC consulted 

ANNEX I- 5 
with the principal donors in the sector to ensure an appropriate division of labor on policy and 

institutional reform and to ensure that close consultation would continue throughout the 

implementation ofthis Compact. 

(e) USAID. 

During Compact development, MCC has coordinated closely with the United States Agency for 

International Development ("USAID"). Representatives from USAID participated in the peer 

review of proposed compact activities and MCC has engaged with Power Africa regarding 

MCC's plans for policy and institutional reform and support. The Parties will continue to 

collaborate during implementation ofthis Compact, including with respect to opportunities for 

transaction advisory services provided by Power Africa to support or complement the effort of 

the project to introduce IPPs into Benin. 

(f) Sustainability. 

The Policy Reform and Institutional Strengthening Project is designed to ensure the 

sustainability ofthe infrastructure investments to be made within the Electricity Generation 

Project, Electricity Distribution Project and the Off-Grid Electricity Access Project, as well as 

the electric power sector of Benin more broadly. The Project will create policies, systems, 

standard operating procedures and will provide additional financing that will endure in the key 

institutions ofthe sector beyond the life of this Compact. The Project is the result of 

consultations with Government stakeholders, the donor community, and other key actors in the 

sector. The interventions also are consistent with the Government's 2009 Strategic Development 

Plan of Benin's Electricity Sector and SBEE's 2014-2019 strategic plan, which specifies the 

need for a performance contract with the state ("contrat plan"), for improved customer service 

(including with respect to reducing wait times and the burden of connection costs), for improved 

financial management, and for improved employee morale and performance. Interviews with 

SBEE employees, both at headquarters and in the field, reflect a commitment to these 

improvements and the Activities within the Policy Reform and Institutional Strengthening 

Project. 

(g) Policy, Legal and Regulatory Reforms. 

The Parties have identified the following policy, legal, regulatory, and institutional reforms and 

actions that the Government will pursue in support ofthe Project: 

(i) The Government will ensure the adoption of necessary amendments to the 

Accord International Portant Code Benino-Togolais de l 'Electricite (the "Benin-Togo 

Electricity Code") and the Loi Portant Code de l 'Electricite en Republique du Benin (the "Benin 

Electricity Code") as well as any implementing regulations required thereunder; 

(ii) The Government will be in compliance with the Tariff Plan; 

(iii) The Government will be in compliance with the Government Arrears 

Payment Plan; 

ANNEX I-6 

(iv) The Government will ensure that each annual Government budget 

provides sufficient resources for the Selected Government Entities to pay their reasonably 

anticipated electricity bills; 

(v) Except for electricity bills subject to debt recovery actions, unpaid 

electricity bills incurred since the signing of this Compact owed to SBEE by Selected 

Government Entities will not be more than sixty ( 60) days past due; 

(vi) The Government will ensure that each annual Government budget 

provides sufficient resources for the operation of ARE; and 

(vii) The Government will adopt the Master Plan and use it as the basis for 

investment decisions over the planning horizon stipulated in the Master Plan. 

2. 	 Electricity Generation Project. 

(a) 	 Summary of Project and Activities. 

The Objective of the Electricity Generation Project is to: (A) increase the hours of operation for 

businesses and public and social services; (B) reduce reliance on costlier sources of energy; (C) 

reduce losses of products and perishable goods; and (D) improve productivity for users of 

electricity (the "Electricity Generation Project Objective"). To accomplish the Electricity 

Generation Project Objective, MCC Funding will be used to increase Benin's domestic 

generation capacity by up to 78 MW while decreasing its dependence on external energy 

sources, specifically by installing photovoltaic generation capacity, rehabilitating existing 

thermal generation units and rehabilitating and installing additional generation capacity at an 

existing micro-hydroelectric power plant. 

(i) Photovoltaic Generation Activity. 

The Photovoltaic ("PV'') Generation Activity aims to address Benin's power supply deficit by 

providing a renewable source of electricity. MCC Funding will support: 

(A) 	 The installation of an estimated 5 MW PV power plant at 

Natitingou; 

(B) 	 The installation of an estimated 10 MW PV power plant at 

Djougou; 

(C) 	 The installation of an estimated 15 MW PV power plant at 

Parakou; 

(D) 	 The installation of an estimated 15 MW PV power plant at 

Bohicon; and 

(E) 	 The preparation of engineering designs for PV plants at each of 

the sites in Onigbolo (estimated at 35 MW) and Bembereke 

(estimated at 2 MW). As part of the Policy and Institutional 

Strengthening Project, MCC will work with the Government to 

ANNEX I- 7 
develop the PV plants at Onigbolo and Bembereke as potential IPP 

opportunities. 

Development and construction of each PV plant includes: (1) project preparation (site 


acquisition, permitting, environmental and social mitigation including resettlement compensation 


(to the extent necessary)); (2) acquisition, installation and commissioning ofthe plant consisting 


of PV panels, mounting system, inverters, monitoring system and grid connections; (3) 


associated civil, mechanical and electrical construction works; and (4) engineering design, 


supervision and warranties. 


Unless MCC otherwise agrees in writing, Tranche I Funding will finance Photovoltaic 


Generation Activity investments in Natitingou and Djougou and project preparatory work for 


Parakou and Bohicon, and On-Grid Tranche Funding will finance the works for Photovoltaic 


Generation Activity investments in Parakou and Bohicon. Accordingly, the initial Disbursement 


for works for the investments in Parakou and Bohicon will be subject to the conditions governing 


disbursements for On-Grid Tranche Funding as set forth in Annex VI. 


(ii) Thermal Generation Activity. 

The Thermal Generation Activity aims to rehabilitate existing thermal generation units, including 

to complement planned investments under the Photovoltaic Generation Activity. MCC Funding 

will support: 

• 	 The rehabilitation of six 2 MW Wartsila thermal generation units at Porto Novo 

(two of which will operate in stand-by mode); 

• 	 The rehabilitation of six 2 MW Wartsila thermal generation units at Parakou (two 

of which will operate in stand-by mode); and 

• 	 The rehabilitation offour 2 MW Wartsila thermal generation units at Natitingou. 

Rehabilitation of each thermal plant includes project preparation (permitting, environmental and 

social mitigation including cleanup of hydrocarbon and poly chlorinated bi phenyl ("PCB") 

contamination (to the extent necessary)), acquisition of spare parts for rehabilitation and 

supplementary cost items, civil and rehabilitation works and engineering design and supervision. 

(iii) Hydroelectric Generation Activity. 

The Hydroelectric Generation Activity will rehabilitate the Y eripao Hydropower Plant. MCC 

Funding will support: 

(A) Project preparation including permitting, a hydrologic study to 

assess downstream impacts of expansion and environmental and social mitigation (as may be 

necessary); 

(B) The rehabilitation ofthe existing generation unit; 

(C) The installation of an additional turbine into the existing 

powerhouse, thus doubling the capacity from the existing 505 kW to 1 MW; 

ANNEX I- 8 
(D) Rehabilitation and expansion of the access road; and 

(E) Ifdeemed necessary by MCC, the removal of sedimentation from 

the reservoir. 

(b) Environmental and Social Mitigation Measures. 

According to the MCC Environmental Guidelines, the Electricity Generation Project is classified 

as a "Category B" project. A Category B classification indicates that this Project (and each of its 

Activities) presents potential environmental and social impacts. 

MCC requires several measures to mitigate the risks associated with the Project. For each of the 

Activities under the Electricity Generation Project, MCC Funding will be used to conduct sitespecific environmental audits and/or environmental and social impact assessments (which will 

include environmental and social management plans) and resettlement action plans during the 

project design phase. The results of those audits will form the basis of site-specific 

environmental and social impact assessments ("ES/As") and/or environmental and social 

management plans, as appropriate. The results of the ESIAs and resettlement action plans 

("RAPs") will form, in part, the basis of site-specific technical specifications for works contracts. 

With respect to the potential presence of hydrocarbon or PCB contamination, a hazardous waste 

management plan will be required outlining appropriate removal, handling, storage and disposal, 

possibly outside of Benin, of oil-contaminated or PCB-contaminated soils and equipment, and 

other hazardous waste associated with implementation of the Thermal Generation Activity 

("Hazardous Waste Management Plan"). MCC Funding under the Hydroelectric Generation 

Activity also will finance a hydrologic study to determine the extent, if any, of impacts on the 

flow regime of the river from the existing plant and to provide recommendations on potential 

corrective measures (including habitat protection and restoration). 

With respect to resettlement, the preparation of a resettlement policy framework is currently 

underway and is being designed to establish the principles of land and asset valuation and 

procedures for compensation pertaining to all activities under this Compact ("Resettlement 

Policy Framework"). This Resettlement Policy Framework will provide guidance for sitespecific resettlement action plans that will be required for each ofthe project sites. 

With respect to health and safety, the SBEE ESHSMS will include expanded occupational health 

and safety policies, guidelines, and procedures. 

With respect to climate change, the Parties are committed to assessing climate change risks and 

opportunities in connection with the Electricity Generation Project. A preliminary assessment of 

greenhouse gas emissions and carbon savings estimates was made as part of the feasibility study 

conducted for the Project, and a full evaluation will be conducted in conjunction with the ESIAs. 

(c) Social Inclusion and Gender Integration. 

Social inclusion and gender integration under the Electricity Generation Project will be 

addressed through the measures outlined with respect to the Policy Reform and Institutional 

Strengthening Project. 

ANNEX I- 9 
(d) Donor Coordination. 

The Electricity Generation Project has and will continue to benefit from coordination among the 

Parties and other donors. Donors who are currently working on electricity generation include, 

among others: (1) the World Bank and the EU, which are funding updates to existing feasibility 

studies for hydroelectric plants along the Oueme River; and (2) the Islamic Development Bank, 

which is considering funding a thermal generation plant at the Maria Gleta site in Cotonou. A 

Communaute Electrique du Benin ("CEB") hydropower plant currently is under development at 

Adjarala on the Benin-Togo border, to be funded through the China Export-Import Bank. This 

plant is anticipated to provide power to CEB, which in tum will supply it to SBEE and to the 

Compagnie Energie Electrique du Togo. 

(e) USAID. 

During Compact development, MCC coordinated closely with USAID. Representatives from 

USAID participated in the peer review of proposed compact activities. The Parties will work 

with USAID, as appropriate, to identify and explore potential opportunities for future 

coordination with respect to IPPs associated with the Electricity Generation Project. 

(f) Sustainability. 

Operational and financial sustainability are fundamental to achieving the results ofthe Electricity 

Generation Project. MCC's economic analysis is based on a twenty (20) year operating life of 

the plants funded under this Compact. Without adequate maintenance, this twenty (20) year 

operating life will not be achieved and, even in early phases of operation, the plant performance 

will be reduced significantly. In order to ensure the sustainability of the thermal power plants, 

appropriate implementation by MCA-Benin II and SBEE ofthe maintenance interventions 

contemplated under the Utility Strengthening Activity is critical. 

(g) Policy, Legal and Regulatory Reforms. 

The Parties have identified the following policy, legal and regulatory reforms and actions that the 

Government will pursue in support of the Electricity Generation Project: 

(i) To ensure a reliable and affordable supply of natural gas to fuel future 

generation projects, the Government will prepare a gas policy to provide the framework for the 

sourcing and acquisition of supplies of natural gas for electricity generation from external 

sources (both pipeline and liquefied natural gas); 

(ii) The Government will present a plan, in form and substance satisfactory to 

MCC, evaluating the optimal structure of electricity generation, including the possible creation 

of a para-public electricity production company to consolidate ownership and operations of 

Government and government-owned utility generation assets; and 

(iii) The Government's obligation to ensure that SBEE adopts an appropriate 

maintenance management system, in form and substance satisfactory to MCC, will be a 

condition to certain Disbursements for this Project, as further specified in the Program 

Implementation Agreement. 

ANNEX I- 10 
3. Electricity Distribution Project. 

(a) Summary of Project and Activities. 

The Objective ofthe Electricity Distribution Project is to (A) increase the hours of operation for 

businesses and public and social services, (B) reduce reliance on costlier sources of energy, (C) 

reduce losses of products and perishable goods, and (D) improve productivity for users of 

electricity (the "Electricity Distribution Project Objective"). To accomplish the Electricity 

Distribution Project Objective, MCC Funding will be used to modernize Benin's electricity 

distribution infrastructure to expand grid capacity to accommodate future growth, improve 

reliability and reduce losses and outages. The Electricity Distribution Project focuses on 

improving the grid serving Cotonou (and selected regional networks as a complement to 

proposed solar generation investments), as well as on a national level by building a modem 

distribution dispatch and control center to more effectively manage the network. 

(i) Regional Grid Strengthening Activity. 

MCC Funding under the Regional Grid Strengthening Activity will support: 

(A) Replacement of lines, upgrading substations, installation of new 

switchgear connections and building of new substations for the cities ofNatitingou, Parakou and 

Djougou to support the interconnection of this Compact's investments under the Photovoltaic 

Generation Activity, to meet demand growth in those regional population centers and reduce 

technical losses; 

(B) Construction of a new 63kV connection from Porto Novo to 

Akpakpa, and construction of a new substation to improve network capacity and reliability; and 

(C) General network projects, including compensation equipment and 

sectionalizing switches. 

Construction for each sub-Activity listed above includes project preparation (site acquisition 

and/or preparation, permitting, environmental and social mitigation including resettlement 

compensation (to the extent necessary)), acquisition and installation of components, civil and 

electrical works and design and supervision. 

(ii) Cotonou Grid Strengthening Activity. 

The Cotonou Grid Strengthening Activity will both increase the capacity of the Cotonou grid and 

improve reliability of the network through investments in a variety of priority infrastructure 

projects, including new lines, switchgears, substations and network extensions and connections. 

The Cotonou demand increase sub-activity includes, among other infrastructure works, a new 63 

kV busbar switchgear in Vedoko, a new 63 kV connection from Vedoko to Akpakpa, a new 63 

kV ring connection, and new 63/15 kV infeed connections to a number of substations and city 

network extension. The Cotonou reliability increase sub-activity includes 161 and 63 kV busbar 

feeders at specified locations, replacement of a number of 15 kV substations, infeed connections 

and 63 kV switchgear modifications at specified locations. Construction for each sub-activity 

includes project preparation (site acquisition and/or preparation, permitting, environmental and 

ANNEX I- 11 
social mitigation including resettlement compensation (to the extent necessary)), acquisition and 

installation of components, civil and electrical works and engineering design and supervision. 

(iii) National Electricity Dispatch Activity. 

The National Electricity Dispatch Activity will construct a national distribution control center 

("NDCC'), a necessary requirement to accommodate the planned photovoltaic generation and to 

provide real-time network monitoring, control, and data collection. MCC Funding will support: 

(A) project preparation (site acquisition and/or preparation, permitting, environmental and social 

mitigation including resettlement compensation (to the extent necessary)); (B) acquisition and 

installation of master station hardware, software and related services for NDCC; (C) supervisory 

control and data acquisition ("SCADA") equipment; (D) telecommunication system equipment 

and installation; (E) new building for NDCC including furnishings; (F) testing and 

commissioning; (G) spare parts, tools, and training; and (H) engineering design, supervision and 

warranties. MCC Funding also will be used for distribution substation modifications in 

preparation for connection to the SCAD A system and installation of advanced meter 

infrastructure and automatic meter reading for large customers compatible with the SCAD A 

system. 

(b) Environmental and Social Mitigation Measures. 

According to MCC Environmental Guidelines, the Electricity Distribution Project is currently 

classified as a "Category B" project because as currently envisioned, work is anticipated to 

proceed in existing alignments and utilize existing structures or poles. However, construction of 

overhead electrical power lines are considered "sensitive sector" projects under the MCC 

Environmental Guidelines. As a result, MCC will further review and adjust, as necessary, 

project classification (and any associated requirements, including with respect to the presence of 

any hazardous materials) after feasibility studies and project designs are concluded. 

MCC Funding will be used to conduct site-specific ESIAs, including environmental and social 

management plans, and RAPs during the project design phase. The results of the ESIAs and 

RAPs will form the basis of site-specific technical specifications for works contracts. Further, 

MCA-Benin II will establish guidelines, in form and substance satisfactory to MCC, to ensure 

appropriate measures for contracts involving laying cable. 

The Hazardous Waste Management Plan contemplated under the Electricity Generation Project 

also will contain any relevant provisions relating to the Electricity Distribution Activity. In 

addition, some Activities are planned to be carried out in sensitive locations which have received 

classification under the Ramsar Convention. Such Activities will be conducted in a manner 

consistent with the Government's obligations under the Ramsar Convention. 

With respect to health and safety, the SBEE ESHSMSs will include expanded occupational 

health and safety policies, guidelines, and procedures. In the case of CEB, an environmental and 

social, health and safety management system will be prepared and specifically relating to those 

assets contemplated under this Compact ("CEB ESHSMS"). 

(c) Social Inclusion and Gender Integration. 

ANNEX I - 12 
Social inclusion and gender integration within the Distribution Project includes targeting new 

electricity connections for the urban poor. The implementation modalities for delivering those 

connections will consider international best practice and may undertake a variety of approaches 

in an effort to understand the most appropriate implementation method in Benin. 

(d) Donor Coordination. 

The Electricity Distribution Project has and will continue to benefit from coordination among the 

Parties and other donors. Major donor-funded work on SBEE's distribution network includes the 

Abomey-Calavi Project, jointly funded by the EU and AFD. Such work focuses on the 

rehabilitation and reinforcement of the existing network in urban, peri-urban, and rural areas on 

the west side of Cotonou. In developing the technical standards for the Electricity Distribution 

Project, the Government and MCC coordinated closely with the consulting team working on the 

Abomey-Calavi Project. The World Bank has also funded improvements to both transmission 

and distribution infrastructure (as well as prepayment meters) and GIZ has funded work on 

expansion of the existing SBEE network into rural areas. In addition, during implementation of 

the Electricity Distribution Project, MCA-Benin II will coordinate with the Global Environment 

Fund with respect to the Hazardous Waste Management Plan and any required Ramsar 

Convention documentation. 

(e) USAID. 

During Compact development, MCC coordinated closely with USAID. Representatives from 

USAID participated in an external peer review of proposed Compact Activities. MCC will work 

with USAID, as appropriate, to identify and explore potential opportunities for future 

coordination with respect to the Electricity Distribution Project. 

(f) Sustainability. 

The principal risk to the sustainability of the Electricity Distribution Project relates to SBEE's 

ability to plan and implement a comprehensive maintenance regime. This risk will be mitigated 

through the execution ofthe Utility Strengthening Activity, which specifically addresses 

operations and maintenance issues through its interventions, as well as through the Policy, 

Regulation, and Institutional Support Activity, through its support oftariff reforms that are 

important to the financing of maintenance and other SBEE operations. Outputs from this 

intervention include an operations and maintenance management system satisfactory to MCC, 

addressing, among others, the availability of proper equipment, spare parts, training for SBEE 

staff and standard operating procedures. 

(g) Policy, Legal and Regulatory Reforms. 

The Parties have identified the following policy, legal and regulatory reforms and actions that the 

Government will pursue in support of the Electricity Distribution Project: 

(i) The Government will pursue the installation of pre-paid meters in public 

administration buildings (which buildings as a whole represent an estimated ninety percent 

(90%) of Government consumption); 

ANNEX I- 13 
(ii) The Government's obligation to prepare a PCB master plan, in accordance 

with its existing international legal obligations, will be a condition to particular Disbursements 

for this Project, as further specified in the Program Implementation Agreement; and 

(iii) The Government's obligation to provide evidence to MCC that CEB: (A) 

has adopted the CEB ESHSMS; and (B) has entered into an agreement with MCA-Benin II 

setting forth CEB' s roles and responsibilities with respect to the investments contemplated 

hereunder, will be a condition to particular Disbursements for this Project, as further specified in 

the Program Implementation Agreement. 

4. Off-Grid Electricity Access Project. 

(a) Summary of Project and Activities. 

Two-thirds of Benin's population does not have access to electricity. Many of these people are 

in rural areas where expansion ofthe existing grid is unlikely in the near or medium-term. The 

Objective of this Project is to increase access to electricity and thereby (A) increase the hours of 

operation for businesses and public and social services, (B) reduce reliance on costlier sources of 

energy, (C) reduce losses of products and perishable goods, and (D) improve productivity for 

users of electricity (the "Off-Grid Electricity Access Project Objective"). To accomplish the 

Off-Grid Electricity Access Project Objective, MCC Funding will provide financing for off-grid 

electrification, including institutional and household-level solar PV systems and mini-grid 

systems, and energy efficiency activities nationwide by providing funding through a grant 

facility, together with necessary funding for policy and institutional strengthening to support the 

entire off-grid power sector in Benin. 

(i) Enabling Environment for Off-Grid Electricity Activity. 

Benin does not have the capital required for a rapid expansion of the nation's electric network. 

To accelerate the rate of electrification, an enabling environment for off-grid electricity is 

essential. To that end, MCC Funding will support: 

• Design and implementation of a national off-grid electrification framework, in 

form and substance satisfactory to MCC ("National Framework"). The National Framework 

will articulate a model for off-grid electrification to include regulatory and institutional 

framework, licensing, tariff evaluations, regulations and technical standards. Such model 

will be designed to ensure minimum technical specifications, quality of service standards, 

licensing, pricing and contracting arrangements; and 

• Development ofmarket information, market characterization, outreach to the 

private sector and sector donors, and community-led engagement on the OCEF (as defined 

below). 

(ii) Off-Grid Clean Energy Facility Activity. 

The Off-Grid Clean Energy Facility ("OCEF') Activity will increase access to electricity for the 

currently unconnected majority of the population in rural and peri-urban areas by removing 

initial cost and investment barriers in the off-grid electricity sector. MCC Funding will support 

ANNEX I- 14 
the establishment ofOCEF and grants issued thereunder in four primary windows: 

• Critical public infrastructure to provide standalone electricity generation capability 

("Window One"); 

• 	 Mini-grids providing electricity generation and distribution for household, commercial, 

agricultural and industrial use ("Window Two"); 

• 	 Household generation and storage, such as renewable energy sources devices for 


individual families ("Window Three"); and 


• 	 Energy efficiency measures for buildings, facilities and installations ("Window Four", 

and together with Window One, Window Two and Window Three, the "OCEF 

Windows"). 

Unless otherwise agreed by MCC, OCEF will be managed by a competitively procured, 

independent facility manager ("Facility Manager"). MCC Funding will finance the associated 

costs and fees, as applicable, of engaging the Facility Manager. The administration of OCEF 

will be governed by an operations manual, in form and substance satisfactory to MCC, setting 

forth, among others, eligibility criteria for each OCEF Window (including environmental and 

gender considerations), requirements for economic rates of return, appropriate governance and 

implementation structures (including a structure for the selection of projects) and transparency 

requirements relating to the use OCEF funding ("OCEF Operations Manuaf'). 

OCEF will seek to leverage MCC Funding through partnerships with private companies, nongovernmental organizations, communities or other entities that demonstrate viable off-grid, clean 

energy solutions for Benin. 

Unless MCC otherwise agrees, Off-Grid Tranche Funding will finance the OCEF Activity's 

grants for Window Two. Accordingly, initial Disbursement for any grants for Window Two will 

be subject to the conditions governing Disbursements for the Off-Grid Tranche as set forth in 

Annex VI. 

(b) Environmental and Social Mitigation Measures. 

According to MCC Environmental Guidelines, the Enabling Environment for Off-Grid 

Electricity Activity is considered a "Category C" project because it is not expected to have 

significant environmental or social impacts that cannot be mitigated. The Enabling Environment 

for Off-Grid Electricity Activity will incorporate, as appropriate, safety and resource efficiency 

principles consistent with MCC Environmental Guidelines, including the IFC Performance 

Standards. 

According to MCC Environmental Guidelines, the OCEF Activity is considered a "Category D" 

project because it is a facility and will use MCC Funding to finance subprojects that may 

potentially result in adverse environmental and social impacts. The OCEF Operations Manual 

will address requirements for the preparation and approval of the assessment and management of 

environmental and social impacts including the need to comply with the IFC Performance 

Standards for any project proposed under the OCEF Activity. Consistent with IFC Performance 

Standard 4, emphasis will be placed on community and occupational safety. 

ANNEX I - 15 
(c) Social Inclusion and Gender Integration. 

The Off-Grid Electricity Access Project, through the OCEF Activity, will solicit innovative 

solutions to address the energy deficits of poor and rural communities. To ensure that the OCEF 

Activity meets the energy needs of women, criteria for project selection will include technology 

solutions that will reduce women's time and labor burdens such as electrified water pumps, 

improved cookstoves and mechanized grinders. 

To support the development of a robust supply chain of affordable, clean and efficient energy 

solutions where traditional distribution channels do not exist, the Off-Grid Electricity Access 

Project will seek to adapt successful women's energy entrepreneurship models to the Beninois 

context. Entrepreneurship training will increase women's capacity to plan strategically, analyze 

local markets and manage microenterprise. Women will be connected to existing microfinance 

institutions to facilitate the purchase of inventory for resale. Such inventory might include solar 

lamps, clean cookstoves and other products that women perceive existing demand for in their 

own communities. The Off-Grid Electricity Access Project therefore is expected to have a direct 

impact on low-income women both by creating income-generating opportunities and by 

supplying appliances that decrease women's time and labor burdens. 

(d) Donor Coordination. 

As with the rest ofthis Compact, the Off-Grid Electricity Access Project has and will continue to 

benefit from coordination among the Parties and other donors. In particular, GIZ and Stichting 

Nederlandse Vrijwilligers have been working with private sector actors (including large 

businesses such as the cellular services provider MTN Benin and small, independent businesses 

that sell household solar products) to develop market-driven, sustainable solutions for off-grid 

electrification. In developing the Off-Grid Electricity Access Project, MCC benefited from 

discussions with these and other donors and entities. 

(e) USAID. 

MCC worked with USAID to understand its experience with off-grid electrification through the 

Beyond the Grid initiative, part of Power Africa, and also to identify firms and organizations that 

would be potentially interested in partnering with MCC through the Off-Grid Electricity Access 

Project. 

(f) Sustainability. 

The primary risks to the sustainability ofthe Off-Grid Electricity Access Project are the unclear 

legal and regulatory framework that leads to limited off-grid investment, the low purchasing 

power of the majority of households in Benin and the lack of awareness or risk aversion to the 

adoption of new technologies. The Enabling Environment for Off-Grid Electricity Activity is 

intended to address this risk. At the individual project level, the sustainability for mini-grids or 

household solar products will depend on the project developer/sponsor's ability to deliver a 

quality service for a price that is both affordable and profitable. The Facility Manager will be 

required to carefully examine the financial and business models for all proposed projects and to 

select only those that meet established standards established under the OCEF Operations 

Manual. Another mitigant is through the Public Information and Education Activity under the 

ANNEX I- 16 

Policy Reform and Institutional Strengthening Project, which will educate consumers about solar 

and other technologies for lighting, cooking and other household needs. 

(g) Policy, Legal and Regulatory Reforms. 

In support ofthe Off-Grid Electricity Access Project, and in addition to the conditions set forth 

in Annex VI, MCA-Benin II will adopt the OCEF Operations Manual. 

C. IMPLEMENTATION FRAMEWORK 

1. MCA-Benin II. 

(a) Structure and Establishment. 

The Government will establish an accountable entity, MCA-Benin II, as an autonomous entity of 

public nature and utility under the laws of Benin. MCA-Benin II will not be under the control of 

any state controlling body and it will have operational and legal independence, including, inter 

alia, the ability to (i) enter into contracts in its own name; (ii) sue and be sued; (iii) establish a 

bank account in its own name; (iv) expend MCC Funding and the Government Contribution; and 

(v) engage contractors, consultants and/or grantees, including, without limitation, a procurement 

and fiscal agent. The Government will include MCA-Benin II with respect to the Government's 

coordination of bilateral or multilateral development assistance projects related to the Program. 

MCA-Benin II's internal operations will be governed by the decree creating it and by its bylaws, 

each in form and substance satisfactory to MCC. 

MCA-Benin II will be administered, managed, and supported by the following bodies: (i) a 

board of directors (the "Board ofDirectors"); (ii) a management team; and (iii) one or more 

Stakeholders' Committees (as defined below). 

(b) Board of Directors. 

The Board of Directors will have ultimate responsibility for the oversight, direction, and 

decisions of MCA-Benin II, as well as the overall implementation of the Compact. The Board 

of Directors will be comprised of nine voting members, plus three or more non-voting 

members. The voting members of the Board of Directors will include the following 

representatives: 

(i) Representative of the President, who will also serve as Chair of the Board; 

(ii) A representative of the Ministry of Economic Development, Public 

Policies Evaluation and Promotion of Good Governance; 

(iii) A representative of the Ministry of Economy, Finance and 

Denationalization Programs; 

(iv) A representative of the Ministry of Energy, Oil and Mining Exploration 

and Renewable Energy Developpement; 

ANNEX I- 17 
(v) A representative ofthe Ministry ofEnvironment, Climate Change 

Management, Reforestation and Natural and Forest Resources Protection; 

(vi) A representative of the National Assembly; 

(vii) A private sector representative from the Chamber of Commerce and 

Industry of Benin; 

(viii) One representative from a civil society organization; and 

(ix) One representative from a civil society organization different from (viii) 

above. 

The members of the Board of Directors may be represented by alternates appointed pursuant to 

MCA-Benin Il's governing documents. In addition, a representative of the Ministry of Foreign 

Affairs, MCA-Benin II's National Coordinator, and MCC's Resident Country Director in Benin 

will serve as non-voting members of the Board. 

The process of selecting the Board members will be agreed in writing by the Parties and will be 

consistent with the Governance Guidelines. The Government acknowledges and agrees that 

both: (A) continuity of Board membership; and (B) authority of Board members to represent 

their respective ministry or organization, are each critical to fulfilling their duties and 

implementing the Program. 

(c) Management Team. 

The Management Team, as defined below, will report to the Board of Directors and will have 

principal responsibility for the day-to-day operations and management ofthe Compact. 

The Management Team will be led by a National Coordinator and will be composed of directors 

and officers as agreed between the Parties and consistent with the Governance Guidelines (the 

"Management Team"). The Management Team will be selected after an open and competitive 

recruitment and selection process (or its equivalent), and the appointment of each member of the 

Management Team is subject to MCC approval. The directors will be supported by appropriate 

additional staff to enable the Management Team to execute its roles and responsibilities. Upon 

written notice by MCC to MCA-Benin II, the selection of candidates for additional positions 

within MCA-Benin II will be subject to MCC approval. 

(d) Stakeholders' Committee(s). 

(i) Composition. MCA-Benin II will be assisted by one or more 

stakeholders' committees, (each, a "Stakeholders' Committee"), which will be created according 

to a process in accordance with MCC's Governance Guidelines and as approved by MCC. 

Without limiting the foregoing, as required in MCC's Governance Guidelines, each 

Stakeholders' Committee will be composed of inter alia, program beneficiaries, regional and 

local government representatives, entities with an interest or involvement in the implementation 

of the Compact, key NGOs and any applicable civil society and private sector representatives. 

ANNEX I - 18 
(ii) Roles and Responsibilities. The Stakeholders' Committee(s) will be 

responsible for continuing the consultative process throughout implementation of the Compact. 

While the Stakeholders' Committee(s) will not have any decision-making authority, the 

Stakeholders' Committee(s) will be responsible for reviewing, at the request ofthe Board or the 

Management Team, certain reports, agreements and documents related to the implementation of 

the Compact in order to provide advice and input to MCA-Benin II regarding the 

implementation ofthe Program. 

2. 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 

may engage one or more entities ofthe Government to implement and carry out any Project or 

Activity (or a component thereof) under 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. 

3. Fiscal Agent. 

Unless MCC agrees otherwise in writing, the Government will engage 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. The duties of the Fiscal Agent will 

include those set forth in the Program Implementation Agreement and an agreement, in form and 

substance satisfactory to MCC, between the Government and the Fiscal Agent. 

4. Procurement Agent. 

Unless MCC agrees otherwise in writing, the Government will engage one or more procurement 

agents (collectively, 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 and an agreement, in form and 

substance satisfactory to MCC, between the Government and the Procurement Agent. 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 I- 19 

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 and Activity, 

projected both on a commitment and cash requirement basis. 

2. Government 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 Benin 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 each of the Projects and Program Administration. The 

Government will make a contribution of approximately US$28, 125,000 (or 7 .5 percent of the 

amount ofMCC Funding provided under this Compact) over the Compact Term. The 

Government will allocate such contribution in the national budget according to a multi-year plan. 

The Government will provide evidence ofthe approval thereof to MCC prior to entry into force. 

In the event that deobligation ofthe On-Grid Tranche Funding or the Off-Grid Tranche Funding 

occurs in accordance with Section 8.3(a) ofthis Compact, the obligation for the corresponding 

Government contribution will cease to apply. Such contributions will be in addition to the 

Government's spending 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 Benin for the budgeting and appropriation of such contribution, 

including approval of the Government's budget by its legislature. The Parties may set forth in 

the Program Implementation Agreement or other appropriate Supplemental Agreements certain 

requirements regarding this Government contribution, which requirements may be conditions 

precedent to the Disbursement of MCC Funding. During implementation ofthe Program, the 

Government's contributions may be modified or new contributions added with MCC approval, 

provided that the modified or new contributions continue to advance the Project Objectives. 
EXHIBIT A TO ANNEX II 


MULTI-YEAR FINANCIAL PLAN SUMMARY 


Com pact Program Tranche I and CIF 

:t.~ . l'llflo.IiutOid:Mllf! 

t~t••ltitt.l~ct 

I. I Policy, Regulation, and Institutional Support 

Activity 

1.2 Utility Strengthening Activity 

1.3 Public lnfonnation & Education Activity 

Sub-total 

2.1 Photovoltaic Generation Activity (Tranche I) 

2.2 Thermal Generation Activity 

2.3 Hydroelectric Generation Activity 

Sub-total 

3.1 Regional Grid Strengthening Activity 

3.2 Cotonou Grid Strengthening Activity 

3.3 National Electricity Dispatch Activity 

Sub-total 

'lluduit 

6.1 MCA-Benin II 

6.2 Fiscal Agent 

6.3 Procurement Agent 

6.4 Audit 

973,000 

500,000 

200,000 

1,673,000 

6,090,000 

610,000 

104,000 

6,804,000 

200,000 

1,879,000 

700,000 

2,779,000 23,797,400 33,032,400 16,262,200 6,521,600 109,711,000 

20,279,000 

5,669,000 

25,948,000 

5,250,000 

5,250,000 

24,573,000 

5,833,000 

5,833,000 

750,000 

4,381,800 

907,800 

400,000 

5,689,600 

12,235,800 

2,494,800 

263,800 

14,994,400 

767,800 

14,619,800 

8,409,800 

6,544,800 

4,315,800 

1,000,000 

11,860,600 

12,235,800 

4,934,800 

471,800 

1,245,800 

21,979,800 

9,806,800 

5,462,800 

5,167,800 

400,000 

11,030,600 

11,518,400 

3,713,800 

479,400 

2,039,800 

16,864,800 

8,413,800 

2,867,800 

4,315,800 

7,183,600 

721,600 

721,600 

3,705,800 

11,748,800 

807,600 

Year 5 

1,678,800 

2,111,800 

3,790,600 

253,800 

6,267,800 

Total 

21,909,000 

17,319,000 

2,000,000 

41,228,000 

42,080,000 

12,475,000 

1,319,000 

55,874,000 

8,213,000 

73,360,000 

28,138,000 

ANNEX 11-2 
ANNEX III 

DESCRIPTION OF THE MONITORING AND EVALUATION PLAN 

This Annex III summarizes the monitoring and evaluation plan for this Compact ("M&E Plan"). 

The actual structure and content ofthe M&E Plan, which may differ from those specified in this 

Annex III, will be agreed to by MCC and the Government in accordance with MCC's Policy for 

Monitoring and Evaluation ofCompacts and Threshold Programs (the "MCC M&E Policy"). In 

addition, the M&E Plan may be modified from time to time as described in the MCC M&E 

Policy without requiring an amendment to this Annex III. The M&E Plan will be posted 

publicly on the MCC Website and updated as necessary. 

The Government will provide MCA-Benin II and MCC, as the case may be, with any 

information as may be required for the completion of the M&E Plan. In addition, the Program 

Implementation Agreement will stipulate, as necessary, a timeframe for the amendment and 

restatement ofthis Annex III. 

1. Objective. 

MCC and the Government will formulate and agree to, and the Government will implement or 

cause to be implemented, an M&E Plan that explains in detail how and what MCC and MCABenin II will: (a) monitor to determine whether the Projects are on track to achieve their 

intended results ("Monitoring Component"), and (b) evaluate to assess implementation 

strategies, provide lessons learned, determine cost effectiveness and estimate the impact of 

Compact interventions ("Evaluation Component"). The M&E Plan will summarize all 

indicators that must be reported to MCC on a regular basis, as well as a description of any 

complementary data to be collected for evaluation of the Program. The M&E Plan will also 

include any monitoring and evaluation ("M&E') requirements that MCA-Benin II must meet in 

order to receive Disbursements, and will serve as a communication tool so that MCA-Benin II 

staff and other stakeholders clearly understand the objectives and targets MCA-Benin II is 

responsible for achieving. The results of M&E activities, measured by monitoring data and 

evaluations, will be made publicly available on the website of MCA-Benin II and on the MCC 

Website. 

2. Program Logic. 

The M&E Plan will summarize the Compact logic model, which illustrates how the Projects, 

Activities and sub-Activities (as necessary) contribute to Compact Goals, Program Objectives, 

and Project Objectives. The Compact logic model will be complemented by lower-level logic 

models at the Project, Activity, and/or sub-Activity levels (as necessary) depending on Compact 

design and implementation. All logic models will clearly summarize the outputs, outcomes, and 

goals expected to result from the Program. A description ofthe logic underlying each Project is 

included below. 
Compact Program Logic 

Economi: Growth and Poverty Reduction via: 

• Expanded Business Production and Productivity 

• Greater Econorric Opportunities for Households 

• Improved Capacity to Provide Publi: and Social Services 

Poficy Reform and 

lnstiMional 

Strengthening 

Project 

Electricity Electricity Off-Grid Electri:ity 

Distributi:m Project Genmtion Project Access Project 

This Compact is designed to have a concentrated impact on the following key problem areas 

within Benin's electricity sector: 

(a) technical and infrastructure weaknesses (including electricity supply and the 

stability ofthe electric network); and 

(b) key constraints that have led to grid weaknesses (including the policy and 

regulatory framework and operational capability ofthe actors in the sector). 

The Electricity Distribution Project and the Electricity Generation Project will address technical 

and infrastructure weaknesses by: (i) increasing the supply of electricity; (ii) increasing the 

capacity ofthe network to deliver that supply; (iii) improving voltage quality and stability ofthe 

electric network; and (iv) reducing the frequency and duration of outages. These outcomes will 

ANNEXIII-2 

be accomplished by increasing the amount of energy (kWh) available to the grid, reductions in 

technical losses, and maintenance and network capacity, stability and management 

improvements. 

In addition, new grid connections will be added under the Cotonou Grid Strengthening Activity 

and the Off-grid Electricity Access Project will lay the regulatory groundwork for off-grid 

interventions and fund a variety of off-grid solutions to energy access. 

The Policy Reform and Institutional Strengthening Project will address key constraints that have 

led to grid weaknesses by: 

• 	 Improving the overall governance ofthe power sector, including improved policy and 

institutional frameworks and capabilities for IPPs, energy efficiency, and tariffs, and 

support to the independent regulator and updates to the Benin Electricity Code. These 

components are expected to improve the overall functioning ofthe sector by improving 

governance, planning and financing; and 

• 	 Improving SBEE's governance, financial sustainability, human resources, asset and other 

management, and maintenance. Improved capacity within SBEE, combined with the 

sector-wide improvements from the Policy, Regulation, and Institutional Support 

Activity, are expected in the long-term to help improve all aspects of operations, enabling 

SBEE to better address the technical, as well as operational challenges, of providing 

sufficient and stable energy through Benin's distribution network. 

The planned improvements in the quality and availability of energy are expected to contribute to 

increased productivity, greater hours of operation for businesses and public services, lower 

reliance on costlier energy sources (such as generators and kerosene), reduced losses of products 

and perishable goods and reduced degradation to equipment due to fluctuations in voltage. 

These long term outcomes are expected to promote economic growth by furthering the Program 

Goal. 

(c) Projected Economic Benefits and Beneficiaries. 

The economic analysis for this Compact utilizes a consumer surplus approach to estimate the net 

benefits of the Program. The data for the economic analysis comes from a nationwide survey of 

over 5,700 households and businesses oftheir willingness to pay for electrical power. A key 

finding ofthe survey was the presence of a large secondary market for electricity in Benin, 

which accounts for nearly one-third of all household connections nationwide. The secondary 

market is a function of the high cost of and delay in connecting to the grid, and in those markets 

neighbors sell to neighbors at, in some cases, twice the price charged by the utility. 

The current estimated Program-level economic rate ofreturn ("ERR") is 12 percent. Key 

parameters influencing the ERR include the willingness to pay for electric power in secondary 

markets. 

The M&E Plan will also define in detail the persons or entities expected to benefit from the 

Program. Beneficiary analysis is an extension of economic rate of return analysis that seeks to 

disaggregate the total increase in income to determine specifically which segments of society 

ANNEX III-3 
will benefit from the Compact Projects and Activities. MCC considers beneficiaries1 of Projects 

and Activities to be those people who experience better standards ofliving as a result ofthe 

Project or Activity (as the case may be) through higher real incomes. 

Over the life of the Compact, 1,968,668 households (approximately 9.8 million people) are 

expected to benefit from the Program. The ratio between the present value of benefits and the 

present value of costs for the Program is US$1.11. Of that amount, US$0.04 benefit the 

"extremely poor'', US$0.03 benefit the "poor", US$0.47 benefit the "near poor", and US$0.57 

benefit the "not poor"2• Of the US$1.11, US$0.83 benefit people with direct connections to the 

SBEE network, while US$0.28 benefit consumers in secondary markets in which direct 

customers of SBEE sell electricity to their neighbors. 

The M&E Plan will also outline key assumptions and risks that underlie the accomplishment of 

the theory of change summarized in the Program logic. However, such assumptions and risks 

will not excuse any Party's performance unless otherwise expressly agreed to in writing by the 

other Party. 

With respect to the Policy Reform and Institutional Strengthening Project, the assumptions are: 

• 	 ARE has the capability and autonomy required to fulfill its regulatory responsibilities; 

• 	 A tariff policy and the Tariff Plan are adopted and implemented by the Government, 

leading to additional financing for the sector; 

• 	 Energy efficiency standards, labeling and quality control are created, implemented and 

enforced by the Government; 

• 	 An improved IPP framework will be sufficient for businesses to overcome other 

impediments to investing in Benin and that businesses will have sufficient assurance and 

trust that they will be paid for the electricity they produce; 

• 	 Governance, management, operational and financing improvements yield more effective 

service delivery and maintenance by SBEE; and 

• 	 The public understands and supports electricity sector policy reforms and new electricity 

and energy efficiency technologies and approaches. 

1 As used in this Compact, the term "beneficiary" has the meaning described in MCC's Guidelines for Economic and Beneficiary 

Analysis. 

2 "Extremely poor" are defined as households earning under US$1.25 per day, "poor" are households earning between US$1.25 

and US$2 per day, "near poor'" are households earning between US$2 and US$4 per day, and "not-poor" are households 

earning above US$4 per day. 

ANNEX III-4 

With respect to the Electricity Generation Project and the Electricity Distribution Project, the key 

assumptions are: 

• 	 Policy reforms required to release $80 million in funding for the Electricity Generation 

Project will be completed on schedule; 

• 	 The Projects are able to reduce the frequency and duration of outages to the point that 

appreciable benefits accrue to beneficiaries; 

• 	 The distribution network improvements lead to greater network capacity, voltage stability 

and improved network management and operations; 

• 	 Infrastructure investments under this Compact will be properly maintained after the 

Compact Term and equipment will continue to function for the duration of its expected 

lifespan; and 

• 	 Tariffs will be cost-reflective such that the Government has sufficient funds to operate 

the infrastructure funded hereunder; and 

• 	 Construction ofthe Onigbolo-Parakou 161 kV CEB transmission line will be completed 

prior to the end ofthe Compact Term. 

With respect to the Off-Grid Electricity Access Project, the key assumptions are: 

• 	 Policy reforms required to release $20 million in funding for the Project will be 


completed on schedule; 


• 	 Users currently without access to electricity (who also are disproportionately poor) will 

be able to afford, understand and accept new off-grid solutions; and 

• 	 The improved regulatory and institutional frameworks will not only be necessary, but 

also sufficient for businesses to make concrete investments in Benin. 

3. Monitoring Component. 

As defined in the MCC M&E Policy, monitoring is the continuous, systematic collection of data 

on specified indicators to provide indications of progress toward objectives and the achievement 

of intermediate results along the way. To monitor progress toward the achievement ofresults of 

this Compact, the Monitoring Component of the M&E Plan will identify: (a) the Indicators (as 

defined below); (b) the definitions ofthe Indicators; (c) the sources and methods for data 

collection; ( d) the frequency for data collection; ( e) the party or parties responsible for collecting 

and analyzing relevant data; and (f) the timeline for reporting on each Indicator to MCC. It 

should be noted that some indicators will continue to be tracked after the Compact Term as 

necessary. 

ANNEX III-5 

The M&E Plan will measure the results ofthe Program using quantitative, objective and reliable 

data ("Indicators"). 

(i) The M&E Plan will establish baselines for every Indicator (each, a "Baseline"). 

An Indicator's Baseline should be established prior to the start ofthe corresponding Project, 

Activity and/or Sub-Activity. Baselines demonstrate that the problem can be specified in 

measurable terms, and are thus a prerequisite for adequate intervention design. The Government 

will collect Baselines on the selected Indicators or verify already collected Baselines where 

applicable. 

(ii) The M&E Plan will establish a benchmark for each Indicator that specifies the 

expected value and the expected time by which the result will be achieved ("Target"). 

(iii) The M&E Plan will indicate which Indicators will be disaggregated by gender, 

income level, age and beneficiary types to the extent practical and applicable. 

(iv) MCC's Common Indicators (as described in the MCC M&E Policy) will also be 

included as relevant. 

(v) Subject to prior written approval from MCC and in accordance with the MCC 

M&E Policy, the Government may add Indicators or refine the definitions and Targets of 

existing Indicators. 

(vi) MCA-Benin II must report to MCC on monitoring Indicators in the M&E Plan on 

a quarterly basis using an Indicator Tracking Table ("ITT') in the form provided by MCC. No 

changes to Indicators, Baselines or Targets may be made in the ITT until the changes have been 

approved in the M&E Plan. Additional guidance on Indicator reporting is contained in MCC 's 

Guidance on Quarterly MCA Disbursement Request and Reporting Package. In the case that 

MCA-Benin II submits a six-month disbursement request, the ITT must still be submitted 

quarterly. 

Key Indicators that can be reported on at least an annual basis will be included in quarterly 

monitoring indicator reports, while Indicators that require survey data or a longer time period to 

track will be tracked through the evaluations. The M&E Plan will contain the monitoring 

Indicators listed in the tables below. 

The Indicators listed below are not exhaustive. Instead, they represent data that has been 

deemed, at this stage, important to collect. Additional outcome, output and process Indicators 

will be developed for each Project as design and implementation details are further defined. 

ANNEX III-6 

Table 1.1: Monitoring Indicators 

Short-term Outcomes 

Reduced Collection Total Revenue from Paid Invoices I Total Commercial Rate Amount Invoiced Percentage TBD 

Losses 

kWh of 

electricity 

Demand saved Demand reduction by Government ministries through Reduction by the public sector through energy efficient practices and kWh TBD 

Government equipment energy 

efficiency 

practices 

Medium-term Outcomes 

Total The total MWh of electricity sales to all 840,546 

Electricity MWh TBD 

Sold customer types (2012) 

Increased Cost 

Recovery for Operating Total Revenue Collected I Total Operating SBEE CostRecovery Cost (defined as operating expenses plus Percentage TBD TBD 

Ratio depreciation) 

Short-term Outcomes 

1,073,809 

Total Electricity Total system supplied, in MWh, produced or MWh TBD Supply imported in a year (2012) 

Unweighted average across all power plants ofthe 

Power Plant following: Total number of hours (in the quarter) 

Availability that a plant is able and available to produce Percentage TBD TBD 

electricity I total number of hours in the same 

Increased time frame 

Domestic 108 

Generation Installed Total installed generation capacity, in MW, of MW TBD 

Output Capacity plants within the country (excluding CEB plants) (2012) 

Total Number of The number of MWh of energy produced 8,333 MWh Produced MWh TBD 

Domestically domestically in Benin on an annual basis 

(2012) 

Share of Total installed capacity of on- or off-grid 4% 

Renewable renewable electricity sources, in MW, as a Percentage TBD 

Energy percentage oftotal installed capacity (2012) 

TBD 

0 

(2014) 

ANNEX lll-7 
Distribution I - [Total MWh Billed I Total MWh received Percentage TBD TBD System Losses from transmission] 

Reduced 

Technical Losses 1- [Total MWh transmitted I Total MWh Technical Losses Percentage TBD TBD invoiced] 

Medium-term Outcomes 

Improved Percentage oftime within ±10% voltage Voltage Quality Percentage TBD TBD

Voltage Quality range 

Reduced 


Frequency and 


Duration of 


Outages 


System Average Sum of durations, in customer-hours, of all 

Interruption customer interruptions in a given quarter I Hours TBD TBD Duration Index Total number of customers connected to 

(SAIDI) network in the same timeframe 

System Average Sum ofthe number of customers who 

Interruption experienced an interruption in a given quarter Number TBD TBD

Frequency Index I Total number of customers connected to 

(SAIFI) network in the same timeframe 

Medium-term Outcomes 

Increased Access 

to Electricity 

New Customers 

with Access to 

Off-Grid Energy 

The number of new connections (whether 

households or other entities) who gain access 

to electricity as a direct result of Compact 

Activities 

Number 

0 

TBD 

(2014) 

ANNEX III-8 

4. Evaluation Component. 

While good program monitoring is necessary for program management, it is not sufficient for 

assessing ultimate results. MCC therefore advocates the use of different types of evaluations as 

complementary tools to better understand the effectiveness of its programs. As defined in the 

MCC M&E Policy, evaluation is the objective, systematic assessment of a program's design, 

implementation and results. MCC is committed to making its evaluations as rigorous as 

warranted in order to understand the causal impacts of its programs on the expected outcomes 

and to assess cost effectiveness. The Evaluation Component ofthe M&E Plan may contain three 

types of evaluation activities as necessary: (i) independent evaluations (impact and/or 

performance evaluations); (ii) self-evaluation, and (iii) special studies, each of which is further 

described in the MCC M&E Policy. 

(a) Independent Evaluations. 

Every Project must undergo a comprehensive, independent evaluation (impact and/or 

performance) in accordance with the MCC M&E Policy. The Evaluation Component of the 

M&E Plan will describe the purpose ofthe evaluation, methodology, timeline, required MCC 

approvals and the process for collection and analysis of data for each evaluation. All 

independent evaluations must be designed and implemented by independent, third-party 

evaluators. Ifthe Government wishes to engage an evaluator, the engagement will be subject to 

the prior written approval of MCC. Contract terms must be acceptable to MCC and ensure nonbiased results and the publication of results. 

For each independent evaluation, MCA-Benin II is expected to review and provide feedback to 

independent evaluators on the evaluation design reports, evaluation materials (including 

questionnaires), baseline report (if applicable) and any interim/final reports in order to ensure 

proposed evaluation activities are feasible, and final evaluation products are technically and 

factually accurate. 

Evaluation plans and methodologies for each Project have not yet been fully developed. 

However, MCC and MCA-Benin II intend to develop impact evaluation designs for the 

Electricity Generation Project, the Electricity Distribution Project, and the Off-Grid Electricity 

Access Project, while performance evaluations are more likely for the Policy Reform and 

Institutional Strengthening Project. The Parties anticipate that the evaluation plans for each 

Project will be generally in the substance set forth below. 

(b) Electricity Generation Project and Electricity Distribution Project Evaluation. 

The defined logics of the Electricity Generation Project and the Electricity Distribution Project 

are closely linked, with the combined goals of reducing the frequency and duration of outages 

and improving voltage quality and stability. These technical improvements are expected to 

further the Program Goal. 

The evaluation methodology currently being considered for these Projects is the interrupted time 

series methodology, which would use technical data on grid quality measured repeatedly and 

with high frequency to examine the expected intermediate outcomes in electricity quality and 

delivery. To examine the longer-term expected outcomes, the interrupted time series data could 

ANNEX III-9 

be supplemented by potential household and/or enterprise surveys to conduct a pre- and postassessment at changes in long-term effects of changes in outages and voltage quality at the 

household or firm-level. 

In addition to questions regarding the quality of Project design, the soundness of the Program 

logic, the fidelity of Program implementation and lessons learned (common questions for all 

evaluations), the Electricity Generation Project and Electricity Distribution Project Evaluation 

could be focused on answering the following questions: 

Elcctricit~ Generation Project and Electrici~· Distribution Project E' aluation Questions 

1. 	 What impact have Project Activities had on the frequency and duration of outages? 

2. 	 What impact have Project Activities had on voltage quality and stability? 

3. 	 To what extent has the increase in energy generation and/or the reduction in technical 


losses contributed to reducing the gap between the demand and supply of on-grid 


electricity? 


4. 	 To what extent are energy users changing their energy habits and sources (such as moving 

away from the use of generators, kerosene)? Have the changes (if any) resulted in cost 

savings? 

5. 	 To what extent have energy users experienced a reduction in losses (due to spoilage or 


damaged equipment) as a result of Project interventions? 


6. 	 What changes in operations have public and social service institutions experienced as a 


result of changes in the reliability or quality of energy delivered? 


(c) The Policy Reform and Institutional Strengthening Project Evaluation. 

The Policy Reform and Institutional Strengthening Project is aimed at improving the functioning 

both of SBEE as well as the functioning ofthe sector as a whole. To examine these effects, 

potential performance evaluation options are being explored. 

In addition to questions regarding the quality of Project design, the soundness ofthe Program 

logic, the fidelity of Program implementation and lessons learned (common questions for all 

evaluations), the Policy Reform and Institutional Strengthening Project Evaluation could be 

focused on answering the following questions: 

To what extent were new standards and labeling implemented during the Compact, and to 

what extent were those standards enforced? 

2. 

1. 

To what extent has there been uptake of new energy efficient products by the government 

and by households and businesses? 

To what extent were new policies and frameworks for IPPs implemented? 

2. Have new firms made investments in new generation in Benin? If not, why not? What are 

the constraints to investment that remain? 

ANNEX III-10 

Potential Research Questions 

1. To what extent has the Off-Grid Policy been implemented? 

2. From the perspectives of sector actors, how helpful has the new policy been for facilitating 

new entries to the off-grid market? And from the perspective of potentially interested 

companies/organizations? 

3. Outside of the OCEF Activity, how many new entrants are there to the off-grid market in 

Benin? What were their experiences with the new process? 

4. To what extent has access to electricity changed as a result of the OCEF Activity? 

ANNEX III-11 

To what extent has the Tariff Plan been implemented? 

2. Are the structures and procedures in place to allow recurring adjustments to the tariff, such 

that it will be able to remain cost-reflective into the future? 

3. How has the new tariff structure affected SBEE's balance sheet? What changes (if any) 

have they experienced or implemented as a result? 

1. 

2. 

Has SBEE been able to improve its level of cost recovery? 

2. How has the efficacy of overall SBEE management changed as a result of Project 

interventions? What have the changes enabled SBEE to do that it couldn't previously? 

3. Does SBEE have the technical and financial capacity to continue maintaining MCC 

investments after the Com act ends? How about non-MCC-funded infrastructure? 

1. Does the public understand policy changes in the electricity sector (e.g., on the need for 

cost-reflective tariffs?) 

2. Does the public understand and adopt energy efficient practices and appliances? 

3. Does the public understand and accept solar and other non-conventional generation 

technologies? 

( d) Off-grid Electricity Access Project. 

The Evaluation design for the Off-Grid Electricity Access Project will be determined once final 

Project design is completed. The final list of Evaluation questions will continue to be defined 

into the CIF period, but an initial list of potential research questions is below. In addition to 

questions regarding the quality of Project design, the soundness ofthe Program logic, the fidelity 

of Program implementation and lessons learned (common question for all evaluations), the 

Evaluation could be focused on answering the following questions: 
(e) Self-Evaluation. 

Upon completion ofthe Compact Term, both MCC and MCA-Benin II will comprehensively 

assess three fundamental questions: (i) did the Program meet the Program and Project 

Objectives; (ii) why did the Program meet or not meet the Program and Project Objectives; and 

(iii) what lessons can be learned from the implementation experience (both procedural and 

substantive). The MCA-Benin II staff will draft the Compact Completion Report ("CCR'~ in the 

last year ofthe Compact Term to evaluate these fundamental questions and other aspects of 

Program performance. Each MCA-Benin II department will be responsible for drafting its own 

section to the CCR for its own activities, subject to cross-departmental review. After MCABenin II staff drafts the CCR, relevant MCC staff will draft a completion report evaluating these 

same questions in the format and according to the timeline required by MCC's M&E policy. 

(f) Special Studies. 

Plans for conducting special studies will be determined jointly between the Government and 

MCC before the approval ofthe M&E Plan. The M&E Plan will identify and make provision for 

any special studies, ad hoc evaluations and research that may be needed as part ofthe monitoring 

and evaluating ofthis 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. 

The results of all evaluations will be made publicly available in accordance with the MCC M&E 

Policy. 

5. Data Quality Reviews. 

Data Quality Reviews ("DQR") are a mechanism to review and analyze the utility, objectivity, 

and integrity of performance information. DQRs are to cover: (a) quality of data; (b) data 

collection instruments; ( c) survey sampling methodology; ( d) data collection procedures; ( e) data 

entry, storage and retrieval processes; (f) data manipulation and analyses; and (g) data 

dissemination. MCC requires that an independent entity conduct the DQR, such as a local or 

international specialized firm or research organization, or an individual consultant, depending on 

the size of the Program or Project in review. The frequency and timing of data quality reviews 

must be set forth in the M&E Plan; however, MCC may request a DQR at any time. DQRs 

should be timed to occur before or early enough in the Compact Term that meaningful remedial 

measures (if any) may be taken depending on the results ofthe review. The methodology for the 

review should include a mix of document and record reviews, site visits, key informant 

interviews and focus groups. 

6. Other Components of the M&E Plan. 

In addition to the monitoring and evaluation components, the M&E Plan will include the 

following components: 

(a) 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 

ANNEX III-12 
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; and 

(b) Budget. A detailed cost estimate for all components of the M&E Plan. 

7. Responsibility for Developing the M&E Plan. 

MCC desires to "[refrain] from requesting the introduction of performance indicators that are not 

consistent with countries' national development strategies."3 For this reason, primary 

responsibility for developing the M&E Plan lies with the M&E directorate of MCA-Benin II 

with support and input from MCC's M&E and economist staff. The M&E Plan must be 

developed in conjunction with key stakeholders, including MCA-Benin II leadership and sector 

leads, the MCC Resident Country Mission, and other MCC staff (such as Environmental and 

Social Performance and Gender and Social Inclusion), as well as external stakeholders, as 

applicable. While the entire M&E Plan must be developed collaboratively, MCC and MCABenin II Project/ Activity leads are expected to guide the selection of Indicators at the process 

and output levels that are particularly useful for management and oversight of Projects and 

Activities. 

8. Approval and Implementation of the M&E Plan. 

The approval and implementation ofthe 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 M&E Policy. All M&E Plan modifications proposed by MCA-Benin 

II must be submitted to MCC for prior written approval. The M&E Plan may undergo peer 

review within MCC before the beginning ofthe formal approval process. 

9. Post-Compact M&E Plan. 

As part of the planning process for winding up the Program at the end of the Compact Term, 

MCC and MCA-Benin II will develop a post-Compact M&E Plan designed to observe the 

persistence of benefits created under this Compact. This plan should describe future monitoring 

and evaluation activities, identify the individuals and organizations that will undertake these 

activities and provide a budget framework for future monitoring and evaluation. The postCompact M&E Plan should build directly off the Compact M&E Plan. 

3 Busan Partnership for Effective Development Cooperation, Busan Outcome Document, I December 2011, p. 5. 

ANNEX Ill-13 
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 all of the terms of the Program 

Implementation Agreement, except that the conditions to each CIF Disbursement will continue 

to be those set forth in this Annex IV. 

1. 	 Conditions Precedent to Initial CIF Disbursement. 

Prior to the initial CIF Disbursement, the Government (or MCA-Benin II) must have delivered to 

MCC: 

(i) 	 an interim fiscal accountability plan acceptable to MCC; and 

(ii) 	 a CIF procurement plan acceptable to MCC. 

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

Disbursement). 

Each ofthe following must have occurred or been satisfied prior to each CIF Disbursement: 

(a) The Government (or MCA-Benin II) 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 the Government (or MCA-Benin II), 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 ofthe 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 this 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-Benin II or any Government entity has occurred and is continuing under this 

Compact or any 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 ofthis Compact or in any applicable law or regulation; (iv) 

any Taxes paid with MCC Funding through the date ninety (90) days prior to the start ofthe 

applicable Disbursement Period have been reimbursed by the Government in full in accordance 

with Section 2.8(c) ofthis 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 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-Benin 11) 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 for the Program or relevant 

Project or Activity and substantial compliance with the requirements ofthe M&E 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-Benin II have been removed or 

resigned and the position remains vacant, MCA-Benin II is actively engaged in recruiting a 

replacement. 

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, this 

Compact or MCC Funding in accordance with Section 5.1 ofthis Compact. 

ANNEXIV-2 

ANNEXV 


ADDITIONAL CONDITIONS PRECEDENT TO ENTRY INTO FORCE 

The following additional conditions precedent will apply to entry into force of the Compact: 

1. 	 The Government will have provided evidence that SBEE has improved its corporate 

governance through the following measures: 

(a) signature of a contrat plan between Government and SBEE that: (i) establishes 

the operational independence of SBEE in its daily decision-making from the Ministry of Energy, 

the Council of Ministers, or other political authorities; (ii) identifies performance benchmarks to 

be met by SBEE; and (iii) affirms the SBEE Strategic Plan 2014-2019; 

(b) installation of a Board of Directors pursuant to a procedure, approved by the 

Parties, and nomination based on factors such as technical qualifications and experience in the 

electric power sector; and 

(c) 	 competitive recruitment of a Director General. 

2. 	 The Government will have provided evidence to MCC of substantial compliance with the 

Government Arrears Payment Plan. 
ANNEX VI 


CONDITIONS PRECEDENT TO ON-GRID TRANCHE FUNDING AND OFF-GRID 


TRANCHE FUNDING 


This Annex VI sets forth the conditions precedent applicable to initial Disbursement of On-Grid 

Tranche Funding and initial Disbursement of Off-Grid Tranche Funding. For the avoidance of 

doubt, the On-Grid Tranche Funding and Off-Grid Tranche Funding are neither sequential nor 

dependent. 

1. The initial Disbursement of On-Grid Tranche Funding will be subject to the following 

conditions: 

(a) The Government will have implemented an institutional framework, in form and 

substance satisfactory to MCC, for independent power production that will include, inter alia: 

(i) clear institutional roles and responsibilities within the Government for the 

solicitation, evaluation, engagement, implementation and monitoring of IPPs; 

(ii) a formal process for the open, fair and competitive solicitation of IPPs; 

and 

(iii) the development and publication of standard power purchase agreements. 

(b) The Government will release a competitive solicitation for an IPP, in form and 

substance satisfactory to MCC, for a generation project located in Benin. 

(c) The Government will be in compliance with the Tariff Plan. 

(d) The Government will have provided evidence of substantial compliance with the 

Government Arrears Payment Plan. 

2. As a condition to the initial Disbursement of Off-Grid Tranche Funding, the Government 

will have implemented and be in compliance with the Off-Grid Policy. 
ANNEX VII 


DEFINITIONS 


Activity has the meaning provided in Part B ofAnnex I. 

Additional Representative has the meaning provided in Section 4. 2. 

AFD has the meaning provided in paragraph 1 (d) ofPart B ofAnnex I. 

ARE has the meaning provided in paragraph 1 (a) ofPart B ofAnnex I. 

Audit Guidelines has the meaning provided in Section 3.8(a). 

Audit Plan has the meaning provided in Section 3.8(a). 

Baseline has the meaning provided in paragraph 3 (i) ofAnnex Ill. 

Benin has the meaning provided in the Preamble. 

Benin Electricity Code has the meaning provided in paragraph 1 (g) ofPart B ofAnnex I. 

Benin-Togo Electricity Code has the meaning provided in paragraph 1 (g) ofPart B ofAnnex I. 

Board ofDirectors has the meaning provided in paragraph 1 (a) ofPart C ofAnnex I. 

CEB has the meaning provided in paragraph 2(d) ofPart B ofAnnex I. 

CEB ESHSMS has the meaning provided in paragraph 3(b) ofPart B ofAnnex I. 

C/F Disbursement has the meaning provided in the preamble to Annex IV 

Compact has the meaning provided in the Preamble. 


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 the Audit Guidelines. 


Disbursement has the meaning provided in Section 2. 4. 

DQR has the meaning provided in paragraph 3 ofAnnex Ill. 
Electricity Distribution Project Objective has the meaning provided in paragraph 3(a) ofPart B 

ofAnnex I 


Electricity Generation Project Objective has the meaning provided in paragraph 2(a) ofPart B 


ofAnnex I 


Energy Sector Donor Roundtable has the meaning provided in 1(d) ofPart B ofAnnex I 


ERR has the meaning provided in paragraph 2(c) ofAnnex Ill. 

ESH&S Audit has the meaning provided in 1 (b) ofPart B ofAnnex I 


ES/As has the meaning provided in paragraph 2(b) ofPart B ofAnnex I 


EU has the meaning provided in paragraph 1 (d) ofPart B ofAnnex I 


Evaluation Component has the meaning provided in paragraph 1 ofAnnex Ill. 

Excess CIF Amount has the meaning provided in Section 2.2(d). 

Facility Manager has the meaning provided in paragraph 4(a)(ii) Part B ofAnnex I 


Fiscal Agent has the meaning provided in paragraph 3 ofPart C ofAnnex I 


GIZ has the meaning provided in paragraph 1 (d) ofPart B ofAnnex I 


Governance Guidelines means MCC 's Guidelines for Accountable Entities and Implementation 


Structures. 


Government has the meaning provided in the Preamble. 


Government Arrears Payment Plan means the plan delivered by the Government to MCC on or 


about June 1, 2015, or as amended and accepted by MCC, to: (a) settle all arrears due to SBEE 


by all Selected Government Entities that have been incurred prior to the execution ofthis 


Compact, and (b) establish the procedure to maintain current all future payments to SBEE. 

Grant has the meaning provided in Section 3. 6(b). 

Hazardous Waste Management Plan has the meaning provided in paragraph 2(b) ofPart B of 


Annex I 


IFC Performance Standards means the Performance Standards on Environmental and Social 


Sustainability ofthe International Finance Corporation as such may be in force from time to 

time. 

Implementation Letter has the meaning provided in Section 3. 5. 

Implementing Entity has the meaning provided in paragraph 2 ofPart C ofAnnex I 


ANNEX VII-2 
Indicators has the meaning provided in paragraph 3 ofAnnex III 


Inspector General has the meaning provided in Section 3. 7(c). 

Intellectual Property means all registered and unregistered trademarks, service marks, logos, 

names, trade names and all other trademark rights; all registered and unregistered copyrights; 

all patents, inventions, shop rights, know-how, trade secrets, designs, drawings, art work, plans, 

prints, manuals, computer files, computer software, hard copy files, catalogues, specifications, 

and other proprietary technology and similar information; and all registrations for, and 

applications for registration of, any ofthe foregoing, that are financed, in whole or in part, using 

MCC Funding. 

/PP has the meaning provided in paragraph 1 (a) ofPart B ofAnnex I 


ITT has the meaning provided in paragraph 3 (vi) ofAnnex III 


kV means kilovolts. 

kW means kilowatts. 

kWh means kilowatt-hour. 

Management Team has the meaning provided in paragraph 1 (c) ofPart C ofAnnex I 


Master Plan means Plan directeur de developpement du sous-secteur de l 'energie electrique au 


Benin, to be finalized no later than entry into force ofthis Compact. 


M&E has the meaning provided in paragraph 1 ofAnnex III 


MCA Act has the meaning provided in Section 2.2(a). 


MCA-Benin II 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 


M&E Plan has the meaning provided in the first paragraph ofAnnex III 


in connection with such policy). 


MCC M&E Policy has the meaning provided in the first paragraph ofAnnex III 


MCC Program Closure Guidelines means the MCC Program Closure Guidelines (including any 


guidance documents issued in connection with such guidelines). 


ANNEX VII-3 
MCC Program Procurement Guidelines has the meaning provided in Section 3. 6(a). 

MCC Website means the MCC website at www.mcc.gov. 


Monitoring Component has the meaning provided in paragraph 1 ofAnnex Ill 


Multi-Year Financial Plan Summary has the meaning provided in Part 1 ofAnnex II 


MW means megawatts. 


MWh means megawatt-hour. 


National Framework has the meaning provided in paragraph 4(a)(i) ofPart B ofAnnex I. 


NDCC has the meaning provided in paragraph 3(a)(iii) ofPart B ofAnnex I. 


OCEF has the meaning provided in paragraph 4(a)(ii) Part B ofAnnex I. 


OCEF Operations Manual has the meaning provided in paragraph 4(a)(ii) Part B ofAnnex I. 


OCEF Windows has the meaning provided in paragraph 4(a)(ii) Part B ofAnnex I. 


Off-Grid Electricity Access Project Objective has the meaning provided in paragraph 4(a) of 


Part B Annex I. 


Off-Grid Policy means an institutional framework, in form and substance satisfactory to MCC, 


for off-grid electricity generation and distribution networks, that will include, inter alia: (a) 


clear institutional roles and responsibilities within the Government for off-grid electricity; (b) a 


procedural framework for licenses and/or concessions ofoff-grid electricity generation; (c) 


clarification with respect to ownership, operation and technical standards ofoff-grid electrical 


networks; and (d) tariffmethodology associated with off-grid electricity generation to provide 


incentives for private sector participation and ensure sustainability. 


Off-Grid Tranche Funding has the meaning provided in Section 2.1. 


On-Grid Tranche Funding has the meaning provided in Section 2.1. 


Outside Date means, as applicable, thirty (30) months after entry into force for the On-Grid 


Tranche Funding and twenty four (24) months after entry into force for the Off-Grid Tranche 


Funding. 


Party and Parties have the meaning provided in the Preamble. 


PCB has the meaning provided in paragraph 2(a)(ii) ofPart B ofAnnex I. 


Permitted Account has the meaning provided in Section 2. 4. 


Policy Reform and Institutional Strengthening Project Objective has the meaning provided in 


paragraph 1 (a) Part B ofAnnex I. 


ANNEX VII-4 
Power Africa has the meaning provided in 1 (a) ofPart A ofAnnex I 


Principal Representative has the meaning provided in Section 4. 2. 


Procurement Agent has the meaning provided in paragraph 4 ofPart C ofAnnex I 


Program has the meaning provided in the recitals to this Compact. 


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 Governance Guidelines, the MCC Program Procurement Guidelines, the 

Reporting Guidelines, the MCC M&E Policy, the MCC Cost Principles for Government 

Affiliates Involved in Compact Implementation, the MCC Program Closure Guidelines, the MCC 

Gender Policy, the MCC Gender Integration Guidelines, the MCC Guidelines for Economic and 

Beneficiary Analysis, the MCC Standards for Global Marking, and any other guidelines, policies 

or guidance papers relating to the administration ofMCC-funded compact programs, in each 

case, as such may be postedfrom time to time on the MCC Website. 

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 means (i) any entity ofthe Government that receives or uses MCC Funding or any 


other Program Asset in carrying out activities in furtherance ofthis Compact or (ii) any third 

party that receives at least US$50, 000 in the aggregate ofMCC Funding (other than as salary or 

compensation as an employee ofan entity ofthe Government) during the Compact Term. 

PV has the meaning provided in paragraph 2(a)(i) ofPart B ofAnnex I. 


Ramsar Convention means the Convention on Wetlands ofInternational Importance Especially 


as Waterfowl Habitat dated February 2, 1971, and as amended by Protocol on March 12, 1982 


and as further amended by the Amendments ofMay 28, 1987. 


RAPs has the meaning provided in 2(b) ofPart B ofAnnex I 


Reporting Guidelines means the MCC Guidance on Quarterly MCA Disbursement Request and 


Reporting Package. 


Resettlement Policy Framework has the meaning provided in 2(b) ofPart B ofAnnex I. 


SBEE has the meaning provided in 1 (a) ofPart B ofAnnex I. 


ANNEX Vll-5 
SBEE ESHSMS has the meaning provided in 1 (b) ofPart B ofAnnex I 

SCADA has the meaning provided in paragraph 3(a)(iii) ofPart B ofAnnex I 

Selected Government Entities means those Government entities as agreed in writing between the 

Parties. 

Stakeholders' Committee has the meaning provided in paragraph 1 (d)(i) ofPart C ofAnnex I 

Supplemental Agreement means any agreement between (a) the Government (or any 

Government affiliate, including MCA-Benin II) and MCC (including, but not limited to, the PIA), 

or (b) MCC and/or the Government (or any Government affiliate, including MCA-Benin II), on 

the one hand, and any third party, on the other hand, including any ofthe Providers, in each 

case, setting forth the details ofany funding, implementing or other arrangements in furtherance 

of, and in compliance with, this Compact. 

Target has the meaning provided in paragraph 3(ii) ofAnnex III 

Tariff Plan means the phased implementation plan to be delivered by the Government to MCC 

on or prior to the first anniversary following the entry into force ofthis Compact setting out a 

course ofaction to move SBEE to full cost recovery tariffs. This full cost recovery tariffshould 

include recovery ofoperating expenses, financing costs incurred by SBEE, capital replacement 

charges and capital expansion charges so that tariffs reflect SBEE 's long-run marginal costs. 

The TariffPlan will also ensure periodic indexation oftariffs for factors including the West 

African CFA Franc exchange rate, inflation in Benin, and the cost offuel for thermal generation 

plants. The Government also will seek to ensure access for poor and vulnerable groups through 

a !(feline tariffor other mechanism in a manner which is consistent with average total cost 

recovery and efficient utilization ofelectricity. The Government will also ensure that feed-in 

tariffs for IP P are commercially attractive. 

Taxes has the meaning provided in Section 2.8(a). 

Tranche I Funding has the meaning provided in Section 2. 1. 

United States Dollars or US$ means the lawful currency ofthe United States ofAmerica. 

USAID has the meaning provided in paragraph 1 (e) ofPart B ofAnnex I 

Window One has the meaning provided in paragraph 4(a)(ii) ofPart B ofAnnex I 

Window Two has the meaning provided in paragraph 4(a)(ii) ofPart B ofAnnex I 

Window Three has the meaning provided in paragraph 4(a)(ii) ofPart B ofAnnex I. 

Window Four has the meaning provided in paragraph 4(a)(ii) ofPart B ofAnnex I. 

ANNEX VII-6