TREATIES AND OTHER INTERNATIONAL ACTS SERIES 11-1213 

________________________________________________________________________ 

ECONOMIC ASSISTANCE 

 Millennium Challenge Compact 

 Between the 

UNITED STATES OF AMERICA 

and JORDAN 

Signed at Washington October 25, 2010 

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.” 
JORDAN 

Economic Assistance 

 Millennium Challenge Compact 

 signed at Washington October 25, 2010; 

 Entered into force December 13, 2011. 

 With annexes. 
MILLENNIUM CHALLENGE COMPACT

BETWEEN

THE UNITED STATES OF AMERICA

ACTING THROUGH

THE MILLENNIUM CHALLENGE CORPORATION

AND

THE HASHEMITE KINGDOM OF JORDAN

ACTING THROUGH

THE MINISTRY OF WATER AND IRRIGATION
MILLENNIUM CHALLENGE COMPACT

TABLE OF CONTENTS

Page

Article 1. Goal and Objectives 1

Section 1.1

Section 1.2

Section 1.3

Compact Goal 1

Program Objective 1

Project Objectives 1

Article 2. Funding and Resources 2

Section 2.1

Section 2.2

Section 2.3

Section 2.4

Section 2.5

Section 2.6

Section 2.7

Section 2.8

Section 2.9

Article 3.

Program Funding 2

Compact Implementation Funding 2

MCC Funding 3

Disbursement 3

Interest 3

Government Resources; Budget 3

Limitations on the Use of MCC Funding 4

Taxes 4

Lower Middle Income Countries 5

Implementation 5

Section 3.1

Section 3.2

Section 3.3

Section 3.4

Section 3.5

Section 3.6

Section 3.7

Section 3.8

Article 4.

Program Implementation Agreement 5

Government Responsibilities 5

Policy Performance 6

Accuracy of Information 6

Implementation Letters 6

Procurement 6

Records; Accounting; Covered Providers; Access 7

Audits; Reviews 8

Communications 9

Section 4.1

Section 4.2

Section 4.3

Article 5.

Communications 9

Representatives 9

Signatures 9

Termination; Suspension; Expiration 10

Section 5.1

Section 5.2

Section 5.3

Section 5.4

Termination; Suspension 10

Consequences of Termination, Suspension or Expiration 11

Refunds; Violation 11

Survival 11
Article 6. Compact Annexes; Amendments; Governing Law 11

Section 6.1 Annexes 11

Section 6.2 Amendments 11

Section 6.3 Inconsistencies 12

Section 6.4 Governing Law 12

Section 6.5 Additional Instruments 12

Section 6.6 References to MCC Website 12

Section 6.7 References to Laws, Regulations, Policies and Guidelines 12

Section 6.8 MCC Status 12

Article 7. Entry Into Force 13

Section 7.1 International Agreements 13

Section 7.2 Conditions Precedent to Entry into Force 13

Section 7.3 Date of Entry into Force 14

Section 7.4 Compact Term 14

Section 7.5 Provisional Application 14

Annex I: Program Description

Annex II: Multi-Year Financial Plan Summary

Annex III: Description of the Monitoring and Evaluation Plan

Annex IV: Conditions to Disbursement of Compact Implementation Funding

Annex V: Definitions

Annex VI: Tax Schedules

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 Hashemite Kingdom of Jordan ("Jordan" or the

"Government"), acting through the Ministry of Water and Irrigation (individually a "Party" and

collectively, the "Parties"). Capitalized terms used in this Compact will have the meanings

provided in Annex V.

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

Jordan to determine the priorities for the use of assistance and developed and submitted to MCC

a proposal for such assistance to achieve lasting economic growth and poverty reduction; and

Recognizing that MCC wishes to help Jordan implement the program described herein to

achieve the goal and objectives described herein (as such program description and objectives

may be amended from time to time in accordance with the terms hereof, the "Program");

The Parties hereby agree as follows:

ARTICLE I.

GOAL AND OBJECTIVES

Section 1.1 Compact Goal. The goal of this Compact is to reduce poverty through economic

growth in Jordan (the "Compact Goal").

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

to increase the effective supply of water available to the inhabitants of Zarqa Governorate

through improvements in the efficiency of water delivery, the extent of wastewater collection

and the capacity of wastewater treatment. The Program consists of the projects described in

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

Section 1.3 Project Objectives. The objectives of each of the Projects (each a "Project

Objective" and collectively, the "Project Objectives") are as follows:

(a) The objectives of the Water Network Project are to (i) improve the efficiency of

network water delivery and the condition of home water systems, and (ii) decrease certain costs

that households in Zarqa Governorate incur to satisfy their subsistence water needs.

(b) The objectives of the Wastewater Network Project are to (i) increase access to the

wastewater network, (ii) increase the volume of wastewater collected within Zarqa Governorate

for treatment and reuse, and (iii) reduce the incidents of sewage overflow.

(c) The objectives of the As-Samra Expansion Project are to (i) increase the capacity

to treat wastewater from Amman and Zarqa Governorates, (ii) increase the volume of treated
wastewater that is available as a substitute for freshwater for non-domestic use, and (iii) protect

existing agriculture from the potential consequences of pollution from untreated wastewater.

ARTICLE 2.

FUNDING AND RESOURCES

Section 2.1 Program Funding.

Upon entry into force of this Compact in accordance with Section 7.3, MCC will grant to the

Government, under the terms of this Compact, an amount not to exceed Two Hundred and

Seventy Two Million Nine Hundred and Eighty Thousand United States Dollars

(US$272,980,000.00) ("Program Funding") for use by the Government to implement the

Program. The allocation of Program Funding is generally described in Annex II.

Section 2.2 Compact Implementation Funding.

(a) Upon signing of this Compact, MCC will grant to the Government, under the

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

amount not to exceed Two Million One Hundred and Twenty Thousand United States Dollars

(US$2,120,000.00) ("Compact Implementation Funding") under Section 609(g) of the

Millennium Challenge Act of 2003, as amended (the "MCA Act"), for use by the Government to

facilitate implementation of the Compact, including for the following purposes:

(i) financial management and procurement activities;

(ii) administrative activities (including start-up costs such as staff salaries) and

administrative support expenses such as rent, computers and other information technology or

capital equipment;

(iii) monitoring and evaluation activities;

(iv) feasibility studies; and

(v) other activities to facilitate Compact implementation as approved by

MCC.

The allocation of Compact Implementation Funding is generally described in Annex II.

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

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

(c) If MCC determines that the full amount of Compact Implementation Funding

available under Section 2.2(a) exceeds the amount that reasonably can be utilized for the

purposes set forth in Section 2.2(a), MCC, by written notice to the Government, may withdraw

the excess amount, thereby reducing the amount of the Compact Implementation Funding

available under Section 2.2(a) (such excess, the "Excess CIF Amount"). In such event, the

amount of Compact Implementation Funding granted to the Government under Section 2.2(a)

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will be reduced by the Excess CIF Amount, and MCC will have no further obligations with

respect to such Excess CIF Amount.

(d) MCC, at its option by written notice to the Government, may elect to grant to the

Government an amount equal to all or a portion of such Excess CIF Amount as an increase in the

Program Funding, and such additional Program Funding will be subject to the terms and

conditions of this Compact applicable to Program Funding.

Section 2.3 MCC Funding.

Program Funding and Compact Implementation Funding are collectively referred to in this

Compact as "MCC Funding," and includes any refunds or reimbursements of Program Funding

or Compact Implementation Funding paid by the Government in accordance with this Compact.

Section 2.4 Disbursement.

In accordance with this Compact and the Program Implementation Agreement, MCC will

disburse MCC Funding for expenditures incurred in furtherance of the Program (each instance, a

"Disbursement"). Subject to the satisfaction of all applicable conditions precedent, the proceeds

of Disbursements will be made available to the Government, at MCC's sole election, by (a)

deposit to one or more bank accounts established by the Government and acceptable to MCC

(each, a "Permitted Account") or (b) direct payment to the relevant provider of goods, works or

services for the implementation of the Program. MCC Funding may be expended only for

Program expenditures.

Section 2.5 Interest. The Government will pay or transfer to MCC, in accordance with the

Program Implementation Agreement, any interest or other earnings that accrue on MCC Funding

prior to such funding being used for a Program purpose.

Section 2.6 Government Resources; Budget.

(a) Consistent with Section 609(b)(2) of the MCA Act, the Government will make a

contribution towards meeting the Program Objective and Project Objectives of this Compact.

Annex II describes such contribution in more detail. In addition, the Government will provide

all funds and other resources and will take all actions that are necessary to carry out the

Government's responsibilities under this Compact.

(b) The Government will use its best efforts to ensure that all MCC Funding it

receives or is projected to receive in each of its fiscal years is fully accounted for in its annual

budget on a multi-year basis.

(c) The Government will not reduce the normal and expected resources that it would

otherwise receive or budget from sources other than MCC for the activities contemplated under

this Compact and the Program.

(d) Unless the Government discloses otherwise to MCC in writing, MCC Funding

will be in addition to the resources that the Government would otherwise receive or budget for

the activities contemplated under this Compact and the Program.

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Section 2.7 Limitations on the Use of MCC Funding. The Government will ensure that MCC

Funding is not used for any purpose that would violate United States law or policy, as specified

in this Compact or as further notified to the Government in writing or by posting from time to

time on the MCC website at www.mcc.gov (the "MCC Website"), including but not limited to

the following purposes:

(a) for assistance to, or training of, the military, police, militia, national guard or

other quasi-military organization or unit;

(b) for any activity that is likely to cause a substantial loss of United States jobs or a

substantial displacement of United States production;

(c) to undertake, fund or otherwise support any activity that is likely to cause a

significant environmental, health, or safety hazard, as further described in MCC's environmental

and social assessment guidelines and any guidance documents issued in connection with the

guidelines posted from time to time on the MCC Website or otherwise made available to the

Government (collectively, the "MCC Environmental Guidelines"); or

(d) to pay for the performance of abortions as a method of family planning or to

motivate or coerce any person to practice abortions, to pay for the performance of involuntary

sterilizations as a method of family planning or to coerce or provide any financial incentive to

any person to undergo sterilizations or to pay for any biomedical research which relates, in whole

or in part, to methods of, or the performance of, abortions or involuntary sterilization as a means

of family planning.

Section 2.8 Taxes.

(a) Unless the Parties specifically agree otherwise in writing, the Government will

ensure that all MCC Funding is free from the payment or imposition of any existing or future

taxes, duties, levies, contributions or other similar charges (but not fees or charges for services

that are generally applicable in Jordan, reasonable in amount and imposed on a nondiscriminatory basis) ("Taxes") of or in Jordan (including any such Taxes imposed by a national,

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

without limiting the generality of the foregoing, MCC Funding will be free from the payment of

(i) any tariffs, customs duties, import taxes, export taxes, and other similar charges on any goods,

works or services introduced into Jordan in connection with the Program; (ii) sales tax, value

added tax, excise tax, property transfer tax, and other similar charges on any transactions

involving goods, works or services in connection with the Program; (iii) taxes and other similar

charges on ownership, possession or use of any property in connection with the Program; and

(iv) taxes and other similar charges on income, profits or gross receipts attributable to work

performed in connection with the Program and related social security taxes and other similar

charges on all natural or legal persons performing work in connection with the Program except

(x) natural persons who are citizens or permanent residents of Jordan; and (y) legal persons

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

purpose of implementing the Government's obligations hereunder).

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

required by Section 2.8(a) are set forth in Annex VI. Such mechanisms may include exemptions

from the payment of Taxes that have been granted in accordance with applicable law, refund or

reimbursement of Taxes by the Government to MCC, MCA-Jordan or to the taxpayer, or

payment by the Government to MCA-Jordan or MCC, for the benefit of the Program, of an

agreed amount representing any collectible Taxes on the items described in Section 2.8(a).

(c) If a Tax has been paid contrary to the requirements of Section 2.8(a) or Annex VI,

the Government will refund promptly to MCC (or to another party as designated by MCC) the

amount of such Tax in United States Dollars or the currency of Jordan within thirty (30) days (or

such other period as may be agreed in writing by the Parties) after the Government is notified in

writing (whether by MCC or MCA-Jordan) that such Tax has been paid.

(d) No MCC Funding, proceeds thereof or Program Assets may be applied by the

Government in satisfaction of its obligations under Section 2.8(c).

Section 2.9 Lower Middle Income Countries. Section 606(b) of the MCA Act restricts the

amount of assistance that MCC may provide to "lower middle income countries," a term that is

defined in the MCA Act and includes Jordan. To the extent that MCC determines, in MCC's

reasonable discretion, that the amount of Program Funding granted to the Government in this

Compact may result in a violation of Section 606(b) of the MCA Act, MCC, at any time and

from time to time upon written notice to the Government, may reduce the amount of Program

Funding, or withhold any Disbursement of Program Funding, to avoid or remedy such a

violation.

ARTICLE 3.

IMPLEMENTATION

Section 3.1 Program Implementation Agreement. The Parties will enter into an agreement

providing further detail on the implementation arrangements, fiscal accountability and

disbursement and use of MCC Funding, among other matters (the "Program Implementation

Agreement" or "PIA"); and the Government will implement the Program in accordance with this

Compact, the PIA, any other Supplemental Agreement and any Implementation Letter.

Section 3.2 Government Responsibilities.

(a) The Government has principal responsibility for overseeing and managing the

implementation of the Program.

(b) The Government hereby designates Millennium Challenge Account — Jordan

Limited Liability Company as the accountable entity to implement the Program and to exercise

and perform the Government's right and obligation to oversee, manage and implement the

Program, including without limitation, managing the implementation of Projects and their

Activities, allocating resources and managing procurements. Such entity will be referred to

herein as "MCA-Jordan," and has the authority to bind the Government with regard to all

Program activities. The designation by this Section 3.2(b) will not relieve the Government of

5
any obligations or responsibilities hereunder or under any related agreement, for which the

Government remains fully responsible. MCC hereby acknowledges and consents to the

designation in this Section 3.2(b).

(c) The Government will ensure that any Program Assets or services funded in whole

or in part (directly or indirectly) by MCC Funding are used solely in furtherance of this Compact

and the Program unless MCC agrees otherwise in writing.

(d) The Government will take all necessary or appropriate steps to achieve the

Program Objective and the Project Objectives during the Compact Term (including, without

limiting Section 2.6(a), funding all costs that exceed MCC Funding and are required to carry out

the terms hereof and achieve such objectives, unless MCC agrees otherwise in writing).

(e) The Government will fully comply with the Program Guidelines, as applicable, in

its implementation of the Program.

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

regulatory reform commitments identified in Annex I (if any), the Government will seek to

maintain and to improve its level of performance under the policy criteria identified in Section

607 of the MCA Act, and the selection criteria and methodology used by MCC.

Section 3.4 Accuracy of Information. The Government assures MCC that, as of the date this

Compact is signed by the Government, the information provided to MCC by or on behalf of the

Government in the course of reaching agreement with MCC on this Compact is true, correct and

complete in all material respects.

Section 3.5 Implementation Letters. From time to time, MCC may provide guidance to the

Government in writing on any matters relating to this Compact, MCC Funding or

implementation of the Program (each, an "Implementation Letter"). The Government will use

such guidance in implementing the Program. The Parties may also issue jointly agreed-upon

Implementation Letters to confirm and record their mutual understanding on aspects related to

the implementation of this Compact, the PIA or other related agreements.

Section 3.6 Procurement. The Government will ensure that the procurement of all goods,

works and services by the Government or any Provider to implement the Program will be

consistent with the "MCC Program Procurement Guidelines" posted from time to time on the

MCC Website (the "MCC Program Procurement Guidelines"). The MCC Program

Procurement Guidelines include the following requirements, among others:

(a) open, fair, and competitive procedures must be used in a transparent manner to

solicit, award and administer contracts and to procure goods, works and services;

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

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

(c) contracts must be awarded only to qualified contractors that have the capability

and willingness to perform the contracts in accordance with their terms on a cost effective and

timely basis; and

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(d) no more than a commercially reasonable price, as determined, for example, by a

comparison of price quotations and market prices, will be paid to procure goods, works and

services.

Furthermore, any person or entity on (i) the master list of Specifically Designated Nationals and

Blocked Persons maintained by the U.S. Department of Treasury's Office of Foreign Assets

Control, (ii) the consolidated list of individuals and entities maintained by the "1267 Committee"

of the United Nations Security Council, (iii) the list maintained on www.epls.gov , or (iv) other

lists specified by MCC will be ineligible to participate in an MCC-funded procurement or to

receive MCC Funding.

Section 3.7 Records; Accounting; Covered Providers; Access.

(a) Government Books and Records. The Government will maintain, and will use its

best efforts to ensure that all Covered Providers maintain, accounting books, records, documents

and other evidence relating to the Program adequate to show, to MCC's satisfaction, the use of

all MCC Funding and the implementation and results of the Program ("Compact Records"). In

addition, the Government will furnish or cause to be furnished to MCC, upon its request,

originals or copies of such Compact Records.

(b) Accounting. The Government will maintain and will use its best efforts to ensure

that all Covered Providers maintain Compact Records in accordance with generally accepted

accounting principles prevailing in the United States, or at the Government's option and with

MCC's prior written approval, other accounting principles, such as those (i) prescribed by the

International Accounting Standards Board or (ii) then prevailing in Jordan. Compact Records

must be maintained for at least five (5) years after the end of the Compact Term or for such

longer period, if any, required to resolve any litigation, claims or audit findings or any applicable

legal requirements.

(c) Providers and Covered Providers. Unless the Parties agree otherwise in writing, a

"Provider" is (i) any entity of the Government that receives or uses MCC Funding or any other

Program Asset in carrying out activities in furtherance of this Compact or (ii) any third party that

receives at least US$50,000 in the aggregate of MCC Funding (other than as salary or

compensation as an employee of an entity of the Government) during the Compact Term. A

"Covered Provider" is (1) a non-United States Provider that receives (other than pursuant to a

direct contract or agreement with MCC) US$300,000 or more of MCC Funding in any

Government fiscal year or any other non-United States person or entity that receives, directly or

indirectly, US$300,000 or more of MCC Funding from any Provider in such fiscal year or (2)

any United States Provider that receives (other than pursuant to a direct contract or agreement

with MCC) US$500,000 or more of MCC Funding in any Government fiscal year or any other

United States person or entity that receives, directly or indirectly, US$500,000 or more of MCC

Funding from any Provider in such fiscal year.

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

permit, or cause to be permitted, authorized representatives of MCC, an authorized Inspector

General of MCC ("Inspector General"), the United States Government Accountability Office,

any auditor responsible for an audit contemplated herein or otherwise conducted in furtherance

7
of this Compact, and any agents or representatives engaged by MCC or the Government to

conduct any assessment, review or evaluation of the Program, the opportunity to audit, review,

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

Section 3.8 Audits; Reviews.

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

Government will, on at least a semi-annual basis, conduct, or cause to be conducted, financial

audits of all disbursements of MCC Funding covering the period from signing of this Compact

until the earlier of the following December 31 or June 30 and covering each six-month period

thereafter ending December 31 and June 30, through the end of the Compact Term. In addition,

upon MCC's request, the Government will ensure that such audits are conducted by an

independent auditor approved by MCC and named on the list of local auditors approved by the

Inspector General or a United States—based certified public accounting firm selected in

accordance with the "Guidelines for Financial Audits Contracted by MCA" (the "Audit

Guidelines") issued and revised from time to time by the Inspector General, which are posted on

the MCC Website. Audits will be performed in accordance with the Audit Guidelines and be

subject to quality assurance oversight by the Inspector General. Each audit must be completed

and the audit report delivered to MCC no later than 90 days after the first period to be audited

and no later than 90 days after each June 30 and December 31 thereafter, or such other period as

the Parties may otherwise agree in writing.

(b) Audits of Other Entities. The Government will ensure that MCC-financed

agreements between the Government or any Provider, on the one hand, and (i) a United States

nonprofit organization, on the other hand, state that the United States nonprofit organization is

subject to the applicable audit requirements contained in OMB Circular A-133, "Audits of

States, Local Governments, and Non-Profit Organizations," issued by the United States Office of

Management and Budget; (ii) a United States for-profit Covered Provider, on the other hand,

state that the United States for-profit organization is subject to audit by the applicable United

States Government agency, unless the Government and MCC agree otherwise in writing; and

(iii) a non-US Covered Provider, on the other hand, state that the non-US Covered Provider is

subject to audit in accordance with the Audit Guidelines.

(c) Corrective Actions. The Government will use its best efforts to ensure that each

Covered Provider (i) takes, where necessary, appropriate and timely corrective actions in

response to audits; (ii) considers whether the results of the Covered Provider's audit necessitates

adjustment of the Government's records; and (iii) permits independent auditors to have access to

its records and financial statements as necessary.

(d) Audit by MCC. MCC will have the right to arrange for audits of the

Government's use of MCC Funding.

(e) Cost of Audits, Reviews or Evaluations. MCC Funding may be used to fund the

costs of any audits, reviews or evaluations required under this Compact.

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ARTICLE 4.

COMMUNICATIONS

Section 4.1 Communications. Any document or communication required or submitted by

either Party to the other under this Compact must be in writing and, except as otherwise agreed

with MCC, in English. For this purpose, the address of each Party is set forth below.

To MCC:

Millennium Challenge Corporation

Attention: Vice President, Compact Operations

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

875 Fifteenth Street, NW

Washington, DC 20005

United States of America

Facsimile: (202) 521-3700

Telephone: (202) 521-3600

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

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

To the Government:

Ministry of Planning and International Cooperation

P.O. Box 555

Amman 11118

Jordan

Tel: +962 6 4642246

Fax: +962 6 4642247

Section 4.2 Representatives. For all purposes of this Compact, the Government will be

represented by the individual holding the position of, or acting as, the Minister of Planning and

International Cooperation, and MCC will be represented by the individual holding the position

of, or acting as, Vice President, Compact Operations (each of the foregoing, a "Principal

Representative"). Each Party, by written notice to the other Party, may designate one or more

additional representatives (each, an "Additional Representative") for all purposes other than

signing amendments to this Compact. The Government hereby designates the Chairperson of the

Board of MCA-Jordan as an Additional Representative. A Party may change its Principal

Representative to a new representative that holds a position of equal or higher authority upon

written notice to the other Party.

Section 4.3 Signatures. Signatures to this Compact and to any amendment to this Compact

will be original signatures appearing on the same page or in an exchange of letters or diplomatic

notes. With respect to all documents arising out of this Compact (other than the Program

Implementation Agreement) and amendments thereto, signatures may, as appropriate, be

delivered by facsimile or electronic mail and in counterparts and will be binding on the Party

delivering such signature to the same extent as an original signature would be.

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ARTICLE 5.

TERMINATION; SUSPENSION; EXPIRATION

Section 5.1 Termination; Suspension.

(a) Either Party may terminate this Compact without cause in its entirety by giving

the other Party thirty (30) days' prior written notice. MCC may also terminate this Compact or

MCC Funding without cause in part by giving the Government thirty (30) days' prior written

notice.

(b) MCC may, immediately, upon written notice to the Government, suspend'or

terminate this Compact or MCC Funding, in whole or in part, and any obligation related thereto,

if MCC determines that any circumstance identified by MCC, as a basis for suspension or

termination (whether in writing to the Government or by posting on the MCC Website) has

occurred, which circumstances include but are not limited to the following:

(i) the Government fails to comply with its obligations under this Compact or

any other agreement or arrangement entered into by the Government in connection with this

Compact or the Program;

(ii) an event or series of events has occurred that makes it probable that the

Program Objective or any of the Project Objectives will not be achieved during the Compact

Term or that the Government will not be able to perform its obligations under this Compact;

(iii) a use of MCC Funding or continued implementation of this Compact or

the Program violates applicable law or United States Government policy, whether now or

hereafter in effect;

(iv) the Government or any other person or entity receiving MCC Funding or

using Program Assets is engaged in activities that are contrary to the national security interests of

the United States;

(v) an act has been committed or an omission or an event has occurred that

would render Jordan ineligible to receive United States economic assistance under Part I of the

Foreign Assistance Act of 1961, as amended (22 U.S.C. 2151 et seq.), by reason of the

application of any provision of such act or any other provision of law;

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

criteria used to determine the eligibility of Jordan for assistance under the MCA Act; and

(vii) the Government or another person or entity receiving MCC Funding or

using Program Assets is found to have been convicted of a narcotics offense or to have been

engaged in drug trafficking.

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Section 5.2 Consequences of Termination, Suspension or Expiration.

(a) Upon the suspension or termination, in whole or in part, of this Compact or any

MCC Funding, or upon the expiration of this Compact, the provisions of Section 4.2 of the

Program Implementation Agreement will govern the post-suspension, post-termination or postexpiration treatment of MCC Funding, any related Disbursements and Program Assets. Any

portion of this Compact, MCC Funding, the Program Implementation Agreement or any other

Supplemental Agreement that is not suspended or terminated will remain in full force and effect.

(b) MCC may reinstate any suspended or terminated MCC Funding under this

Compact if MCC determines that the Government or other relevant person or entity has

committed to correct each condition for which MCC Funding was suspended or terminated.

Section 5.3 Refunds; Violation.

(a) If any MCC Funding, any interest or earnings thereon, or any Program Asset is

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

Government to repay to MCC in United States Dollars the value of the misused MCC Funding,

interest, earnings, or asset, plus interest within thirty (30) days after the Government's receipt of

MCC's request for repayment. The Government will not use MCC Funding, proceeds thereof or

Program Assets to make such payment.

(b) Notwithstanding any other provision in this Compact or any other existing

agreement to the contrary, MCC's right under Section 5.3(a) for a refund will continue during

the Compact Term and for a period of (i) five (5) years thereafter or (ii) one (1) year after MCC

receives actual knowledge of such violation, whichever is later.

(c) In addition to Section 5.3(a), MCC will be entitled to any refund of Program

Funding related to the As-Samra Expansion Project to the extent such refund is contemplated by

the Program Implementation Agreement.

Section 5.4 Survival. The Government's responsibilities under Sections 2.7, 3.7, 3.8, 5.2, 5.3,

5.4, and 6.4 will survive the expiration, suspension or termination of this Compact.

ARTICLE 6.

COMPACT ANNEXES; AMENDMENTS; GOVERNING LAW

Section 6.1 Annexes. Each annex to this Compact constitutes an integral part hereof, and

references to "Annex" mean an annex to this Compact unless otherwise expressly stated.

Section 6.2 Amendments.

(a) The Parties may amend this Compact only by a written agreement signed by the

Principal Representatives (or such other government official designated by the relevant Principal

Representative).

11
(b) Notwithstanding Section 6.2(a), the Parties may agree in writing, signed by the

Principal Representatives (or such other government official designated by the relevant Principal

Representative) or any Additional Representative, to modify any Annex to (i) suspend, terminate

or modify any Project or Activity, or to create a new project; (ii) change the allocations of funds

as set forth in Annex II as of the date hereof (including to allocate funds to a new project); (iii)

modify the Implementation Framework described in Annex or (iv) add, delete or waive any

condition precedent described in Annex IV; provided that, in each case, any such modification

(1) is consistent in all material respects with the Program Objective and Project Objectives; (2)

does not cause the amount of Program Funding to exceed the aggregate amount specified in

Section 2.1 (as may be modified by operation of Section 2.2(d)); (3) does not cause the amount

of Compact Implementation Funding to exceed the aggregate amount specified in Section 2.2(a);

(4) does not reduce the Government's responsibilities or contribution of resources required under

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

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

(a) any Annex and any of Articles 1 through 7, such Articles 1 through 7, as

applicable, will prevail; or

(b) this Compact and any other agreement between the Parties regarding the Program,

this Compact will prevail.

Section 6.4 Governing Law. This Compact is an international agreement and as such will be

governed by the principles of international law.

Section 6.5 Additional Instruments. Any reference to activities, obligations or rights

undertaken or existing under or in furtherance of this Compact or similar language will include

activities, obligations and rights undertaken by, or existing under or in furtherance of any

agreement, document or instrument related to this Compact and the Program.

Section 6.6 References to MCC 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

12
States Government for all loss, damage, injury, or death arising out of activities or omissions

under this Compact, and agrees that it will not bring any claim or legal proceeding of any kind

against any of the above entities or persons for any such loss, damage, injury, or death. The

Government agrees that MCC and the United States Government or any current or former officer

or employee of MCC or the United States Government will be immune from the jurisdiction of

all courts and tribunals of Jordan for any claim or loss arising out of activities or omissions under

this Compact.

ARTICLE 7.

ENTRY INTO FORCE

Section 7.1 International Agreements. The Parties understand that each of the Compact and

the Project Implementation Agreement, upon its entry into force, will prevail over the domestic

laws of Jordan.

Section 7.2 Conditions Precedent to Entry into Force. Before this Compact enters into force:

(a) the Program Implementation Agreement must have been signed by the parties

thereto;

(b) the Government must have delivered to MCC:

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

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

MCC, confirming that the Government has completed its domestic requirements for this

Compact to enter into force and that the other conditions precedent to entry into force in this

Section 7.2 have been met;

(ii) a signed legal opinion from the Minister of Justice of Jordan (or such other

legal representative of the Government acceptable to MCC), in form and substance satisfactory

to MCC; and

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

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

to enter into force, which MCC may post on its website or otherwise make publicly available;

(c) MCC shall not have determined that after signature of this Compact, the

Government has engaged in a pattern of actions inconsistent with the eligibility criteria for MCC

Funding;

(d) the Government has delivered to MCC a plan, in form and substance satisfactory

to MCC, including any necessary adjustments to wastewater tariffs in Amman and Zarqa

Governorates, for fully funding the projected treatment charges payable as a result of the AsSamra Expansion Project;

13
(e) the Government has delivered to MCC a plan, in form and substance satisfactory

to MCC, including any necessary adjustments to water and wastewater tariffs in Zarqa

Governorate, to ensure projected revenues fully fund projected operations and maintenance costs

of the water and wastewater network in Zarqa Governorate no later than 2015; and

(f) MCC has determined in its sole discretion, after consultation with the

Government, that there has been satisfactory progress with respect to the As-Samra Expansion

Project.

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

letter from MCC to the Government in an exchange of letters confirming that MCC has

completed its domestic requirements for entry into force of this Compact and that the conditions

precedent to entry into force in Section 7.2 have been met.

Section 7.4 Compact Term. This Compact will remain in force for five (5) years after its

entry into force, unless terminated earlier under Section 5.1 (the "Compact Term").

Section 7.5 Provisional Application. Upon signature of this Compact and until this Compact

has entered into force in accordance with Section 7.3, the Parties will provisionally apply the

terms of this Compact; provided that, no MCC Funding, other than Compact Implementation

Funding, will be made available or disbursed before this Compact enters into force.

SIGNATURE PAGE FOLLOWS ON THE NEXT PAGE

14
IN WITNESS WHEREOF, the undersigned, duly authorized by their respective

governments, have signed this Compact.

Done at Washington, DC, this 25th day of October, 2010, in the English language only.

THE UNITED STATES OF AMERICA, THE HASHEMITE KINGDOM OF JORDAN

ACTING THROUGH THE MILLENNIUM ACTING THROUGH THE MINISTRY OF

CHALLENGE CORPORATION WATER AND IRRIGATION

A

I 

e: aniel . Yohannes Name: Moh. • J ajjar

Title: Chief Executive Officer Title: Minister ater and Irrigation

SIGNATURE PAGE TO MILLENNIUM CHALLENGE COMPACT

BETWEEN THE UNITED STATES OF AMERICA

ACTING THROUGH THE MILLENNIUM CHALLENGE CORPORATION

AND THE HASHEMITE KINGDOM OF JORDAN

ACTING THROUGH THE MINISTRY OF WATER AND IRRIGATION
ANNEX I

PROGRAM DESCRIPTION

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

Compact Term.

A. PROGRAM OVERVIEW

1. Background and Consultative Process.

Jordan is a highly urbanized Middle Eastern country with a population of approximately six

million people. With limited access to surface water or naturally recharged aquifers, Jordan

ranks among the world's five most water poor countries.

Jordan was deemed eligible for MCC Compact assistance in 2006. Late in 2007, the

Government established the Millennium Challenge Unit (the "MCU") to work directly with

MCC to manage the process of developing a proposed Compact program. Following a detailed

constraints analysis and sector analysis, the MCU conducted a broad consultative process that

garnered feedback from private sector representatives, civil society organizations, donors, and

ordinary citizens through large, town-hall style meetings in each of Jordan's twelve

governorates. Throughout this process, the challenge of addressing Jordan's severe water

shortages emerged as a key priority.

The MCU invited key stakeholders in the water, sewer and sanitation sector to participate in a

project design workshop that focused on the objective of making more water available to

households and commercial users. Stakeholders emphasized the need to (a) improve water

delivery systems to reduce water losses and (b) expand capacities for collecting and treating

wastewater and reusing it in agriculture, wherever appropriate.

The Government has identified specific projects related to the rehabilitation of the water

distribution system and expansion of the capacity for collecting and treating wastewater in Zarqa

Governorate, among the poorest and most urban areas in the country, and the expansion of the

capacity of an existing wastewater treatment plant that treats the majority of wastewater from

Amman and Zarqa Governorates.

2. Program Objective.

The Program Objective is to increase the effective supply of water available to the inhabitants of

Zarqa Governorate through improvements in the efficiency of water delivery, the extent of

wastewater collection and the capacity of wastewater treatment. The Program consists of the

Water Network Project, the Wastewater Network Project and the As-Samra Expansion Project,

as further described in this Annex I.
3. Environmental and Social Safeguards.

All of the Projects will be implemented in compliance with the MCC Environmental Guidelines

and the MCC Gender Policy, and any involuntary resettlement will be carried out in accordance

with the World Bank's Operational Policy on Involuntary Resettlement in effect as of July 2007

("OP 4.12") in a manner acceptable to MCC. The Government also will ensure that the Projects

comply with all national environmental laws and regulations, licenses and permits, except to the

extent such compliance would be inconsistent with this Compact. Specifically, the Government

will (a) cooperate with or complete, as the case may be, any ongoing environmental and social

impact assessments, or if necessary undertake and complete any additional environmental and

social assessments, environmental and social management plans, environmental and social

audits, resettlement policy frameworks, and resettlement action plans required under the laws of

Jordan, the MCC Environmental Guidelines, this Compact, the Program Implementation

Agreement, or any other Supplemental Agreement, or as otherwise required by MCC, each in

form and substance satisfactory to MCC; (b) ensure that Project-specific environmental and

social management plans are developed and all relevant measures contained in such plans are

integrated into project design, the applicable procurement documents and associated finalized

contracts, in each case in form and substance satisfactory to MCC; and (c) implement to MCC's

satisfaction appropriate environmental and social mitigation measures identified in such

assessments or plans or developed to address environmental and social issues identified during

implementation. Unless MCC agrees otherwise in writing, the Government will fund all

necessary costs of environmental and social mitigation measures (including, without limitation,

costs of resettlement) not specifically provided for, or that exceed the MCC Funding specifically

allocated for such costs, in the Detailed Financial Plan for any Project.

To maximize the positive social impacts of the Projects, address cross-cutting social and gender

issues such as human trafficking, child and forced labor, and HIV/AIDS, and ensure compliance

with the MCC Gender Policy, the Government will (i) develop a comprehensive social and

gender integration plan which, at a minimum, incorporates the findings of a comprehensive

gender analysis, identifies approaches for regular, meaningful and inclusive consultations with

women and other vulnerable/underrepresented groups, consolidates the findings and

recommendations of Project-specific social and gender analyses and sets forth strategies for

incorporating findings of the social and gender analyses into final Project designs, as appropriate

("Social and Gender Integration Plan"); and (ii) ensure, through monitoring and coordination

during implementation, that final Activity designs, construction tender documents, other bidding

documents, and implementation plans are consistent with and incorporate the outcomes of the

social and gender analyses and Social and Gender Integration Plan.

B. DESCRIPTION OF PROJECTS

Set forth below is a description of each of the Projects that the Government will implement, or

cause to be implemented, using MCC Funding to advance the applicable Project Objectives. In

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

including sub-activities, are also described.

ANNEX I - 2
1. Water Network Project.

(a) Summary of Project and Activities.

The objectives of the water network restructuring and rehabilitation project (the "Water Network

Project") are to (1) improve the efficiency of network water delivery and the condition of home

water systems, and (2) decrease certain costs that households in Zarqa Governorate incur to

satisfy their subsistence water needs. The Water Network Project is designed to address high

rates of water loss in the water supply network in Zarqa Governorate and provide direct

assistance to poor households in improving their household water and sanitation infrastructure.

The Water Network Project is comprised of two Activities: (A) the restructuring and

rehabilitation of the water supply systems in key areas of Zarqa Governorate (the

"Infrastructure Investment Activity"); and (B) assistance to households to improve the

plumbing, water storage, sewage connections, and general awareness of best practices for

sanitation and water efficiency (the "Water Smart Homes Activity," or "WSH Activity").

(i) Infrastructure Investment Activity.

The Infrastructure Investment Activity is designed to restructure and rehabilitate transmission

and distribution water supply systems in key areas of Zarqa Governorate. In addition to reducing

physical leaks, this Activity is designed to facilitate the transition of the water supply systems

from periodic distribution under high pressure to more frequent, gravity-fed distribution. The

Infrastructure Investment Activity consists of the following three sub-activities:

(1) Strategic Infrastructure Works. This sub-activity is designed to

install up to 65 system meters at up to 32 locations, and conduct condition assessments of the

system through mapping and geographic information systems ("GIS").

(2) Zarqa Water Supply Area ("WSA") Works. This sub-activity is

designed to rehabilitate, restructure, and upgrade works in the primary, secondary and tertiary

water supply systems in the Zarqa WSA. Primary infrastructure works to be supported by MCC

Funding include:

(A) Strategic metering in the following three distribution areas:

Zarqa High, Zarqa North, and Zarqa Mid-Batrawi (other

than the Al-Gweireyeh area) (collectively, the "Zarqa

Distribution Areas");

(B) Mapping and GIS condition assessments;

(C) Construction of primary systems from Batrawi and Zarqa

High Reservoirs to the Zarqa Distribution Areas;

(D) Creation of up to 63 district metering area ("DMA")

connection points;

ANNEX I - 3
(E) Rehabilitation and restructuring of up to 44km of primary

systems; and

(F) Upgrading the existing reservoir at Zarqa Pump Station.

Secondary infrastructure works to be supported by MCC Funding include the rehabilitation and

restructuring of up to 595km of secondary network pipelines.

Tertiary infrastructure works to be supported by MCC Funding include:

(G) Rehabilitation and restructuring of up to 37km of tertiary

network pipelines;

(H) Replacement of up to 23,737 customer meters; and

(I) Restructuring of up to 29,371 customer connection points.

(3) Ruseifa WSA Works. This sub-activity is designed to rehabilitate,

restructure, and upgrade works in the water systems in the Ruseifa WSA. Primary infrastructure

works to be supported by MCC Funding include:

(A) Strategic metering for the following distribution areas:

Ruseifa High and Ruseifa Low (collectively, the "Ruseifa

Distribution Areas");

(B) Mapping and GIS condition assessments;

(C) Creation of up to 26 DMA connection points;

(D) Construction of up to 6km of new primary network pipeline

and upgrade of up to 11km of existing primary network

pipeline; and

(E) Construction of new Basateen pumping station and

upgrading of the existing Basateen Reservoir.

Secondary infrastructure works to be supported by MCC Funding include the rehabilitation and

restructuring of up to 332km of secondary network pipelines.

Tertiary infrastructure works to be supported by MCC Funding include:

(F) Rehabilitation and restructuring of up to 219km of tertiary

network pipelines;

(G) Replacement of up to 9,786 customer meters; and

(H) Restructuring of up to 15,813 customer connection points.

ANNEX I - 4
(ii) Water Smart Homes Activity.

The WSH Activity is designed to improve the condition of home water systems and enhance the

benefits that households, particularly poor households, gain from increases in the effective

supply of water in Zarqa Governorate. The WSH Activity consists of the following two subactivities:

(1) WSH Outreach Campaign. This sub-activity is designed to

disseminate information on techniques for cleaning water storage tanks and properly maintaining

home water systems, along with the benefits of regular maintenance, to households in the

geographic areas targeted by the Infrastructure Investment Activity (the "WSH Outreach

Campaign"), and

(2) WSH Direct Assistance Program. This sub-activity is designed to

provide technical and financial assistance to poor households in Zarqa Governorate for critical

improvements in their home systems for water storage, water delivery and sanitation, in

exchange for certain cost-sharing fees (the "WSH Direct Assistance Program"). The WSH

Direct Assistance Program is expected to support replacement of water storage tanks,

replacement of pipes, installation of water-saving faucets and construction of proper connections

to the wastewater collection system, as needed. Eligible recipients for MCC Funding under this

sub-activity must first qualify for the National Aid Fund, a Ministry of Social Development

program that provides financial support to the very poor.

(b) Beneficiaries.

The Water Network Project is expected to benefit approximately 302,000 households, for a total

of 1,600,000 individuals, over twenty years. This figure represents the projected total population

of Zarqa Governorate who may benefit from the efficiency gains anticipated in the water supply

network. This figure includes an estimated 110,000 households, for a total of 600,000 people,

who will benefit directly from changes in domestic expenditure or higher consumption of water

provided through the water supply network. An estimated four percent of beneficiaries will be

among those living on less than US$2.00 per day on a purchasing power parity basis, with those

living on US$2.00 - US$4.00 per day representing another quarter of the total beneficiaries.

This figure also includes 3,500 poor households, for a total of almost 19,000 individuals, who

will benefit from direct assistance to rehabilitate their household water and sanitation systems.

(c) Environmental and Social Mitigation Measures.

Consultants responsible for the feasibility study of the Infrastructure Investment Activity

completed a preliminary environmental and social impact assessment ("PESIA") in May 2010.

In the PESIA provided to the Ministry of Water and Irrigation ("MWI"), the consultants

recommended a Category B classification under the MCC Environmental Guidelines and a

Category 2 classification under Jordanian regulations. MWI will submit this recommendation,

along with a project overview and a copy of the PESIA, to the Ministry of Environment

("MOE") for its evaluation of the classification under Jordanian law. MOE has yet to issue its

determination of the project category. Depending on the final categorization by MOE and

MCC's assessment of the final resettlement requirements, a detailed Environmental and Social

ANNEX I - 5
Impact Assessment ("ESIA") may be required. Discussions among MCC, MWI and MOE have

defined a process for the detailed ESIA that meets mutual requirements for evaluating

environmental and social impacts, conducting transparent and inclusive public consultations,

developing detailed management plans and meeting expectations for social analysis, including

gender and social issues and resettlement concerns consistent with OP 4.12. Estimates for

mitigations resulting from the ESIA have been included in the Multi-Year Financial Plan

Summary.

2. Wastewater Network Project.

(a) Summary of Project and Activities.

The objectives of the wastewater network reinforcement and expansion project (the "Wastewater

Network Project") are to (1) increase access to the wastewater network, (2) increase the volume

of wastewater collected within Zarqa Governorate for treatment and reuse, and (3) reduce the

incidents of sewage overflow. The Wastewater Network Project is designed to increase the

carrying capacity of impaired sewer main lines, reduce periodic overflows in the wastewater

collection network, and extend lateral sewer lines to urban neighborhoods in which populations

are not currently connected to the wastewater collection network.

The Wastewater Network Project is comprised of two Activities: (A) the reinforcement of

existing networks and rehabilitation of existing sewer main lines in West Zarqa (the "West Zarqa

Pumping Station Zone Activity"), and (B) the reinforcement of existing networks and

rehabilitation of existing sewer main lines in East Zarqa (the "East Zarqa Pumping Station

Zone Activity").

(i) West Zarqa Pumping Station Zone Activity. In the West Zarqa zone,

MCC Funding will support:

(1) Expanding the lateral sewers by up to 102km of pipe for collection

systems and house connections;

(2) Reinforcing the network by replacing up to 10km of main trunk

lines and constructing up to 3km of new main trunk lines; and

(3) Rehabilitating existing sewer main lines by replacing up to 7km of

blocked sewers.

(ii) East Zarqa Pumping Station Zone Activity. In the East Zarqa zone, MCC

Funding will support:

(1) Expanding the lateral sewers by up to 38km of pipe for collection

systems and house connections;

(2) Reinforcing the network by replacing up to 4km of main trunk

lines; and

ANNEX I - 6
(3) Rehabilitating existing sewer main lines by replacing up to 8km of

blocked sewers.

(b) Beneficiaries.

The Wastewater Network Project will provide direct benefits to the residents of East Zarqa and

West Zarqa, where up to 19,000 households, for a total of approximately 100,000 people, will

have opportunities to connect to new lateral sewer lines over the next twenty years and forego

the installation, maintenance and potential health risks associated with the use of cesspits in an

urban environment.

(c) Environmental and Social Mitigation Measures.

The consultant responsible for the feasibility study of the Wastewater Network Project

completed a PESIA in May 2010. In the PESIA provided to MWI, the consultants recommended

a Category B classification under the MCC Environmental Guidelines and a Category 2

classification under Jordanian regulations. MWI submitted this recommendation, along with a

project overview and a copy of the PESIA, to MOE for its evaluation of the classification under

Jordanian law. Based on the findings from the PESIA, MOE assigned the Project a Category 1

classification under Jordanian regulations. A full, detailed ESIA is currently underway.

Discussions among MCC, MWI and MOE have defined a process for the detailed ESIA that

meets mutual requirements for evaluating environmental and social impacts, conducting

transparent and inclusive public consultations, developing detailed management plans and

meeting expectations for social analysis, including gender and social issues and resettlement

concerns consistent with OP 4.12. Estimates for mitigations resulting from the ESIA have been

included in the Multi-Year Financial Plan Summary.

3. As-Samra Expansion Project.

(a) Summary of Project and Activities.

The objectives of the As-Samra Wastewater Treatment Plant expansion project (the "As-Samra

Expansion Project") are to (i) increase the capacity to treat wastewater from Amman and Zarqa

Governorates, (ii) increase the volume of treated wastewater that is available as a substitute for

freshwater for non-domestic use, and (iii) protect existing agriculture from the potential

consequences of pollution from untreated wastewater.

MCC Funding for the As-Samra Expansion Project will support a portion of the cost associated

with the construction of the expansion of the existing As-Samra Wastewater Treatment Plant.

MCC Funding will also support technical assistance for the management and supervision of the

construction.

The expansion is designed to increase the hydraulic capacity of the existing treatment plant and

its ability to handle suspended solids and biological materials, among other critical treatment

requirements. The expanded plant will use activated-sludge technology with several important

characteristics: (1) primary settling, (2) biological treatment and clarification, (3) disinfection by

chlorination, (4) energy recovery from treated water, (5) primary and biological sludge

thickening, (6) sludge digestion and biogas energy recovery, (7) digested sludge storage, (8)

ANNEx I - 7
ventilation and odor control, and (9) a mechanical dewatering process that is designed to

accelerate decomposition and reduce volumes of sludge. The average daily hydraulic capacity of

the plant is expected to increase from 267,000 cubic meters per day to 364,800 cubic meters per

day; the capacity for treating total suspended solids ("TSS") is expected to increase from

147,000 kilograms per day to 236,800 kilograms per day; and the biological oxygen demand

("BOD5") capacity is expected to increase from 174,000 kilograms per day to 232,200 kilograms

per day. The treatment, storage and disposal of sludge and the quality of the final effluent are

required to comply at all times with (A) the applicable Jordanian standards for sludge and for

water discharged to wadis and catchment areas, and (B) the minimum technical requirements

under the As-Samra Project Agreement. The expansion is expected to meet the region's

wastewater treatment needs through 2025.

(b) Beneficiaries.

Together with the Wastewater Network Project, the As-Samra Expansion Project will benefit

approximately 375,000 households, for a total of 2,020,000 people, in Amman and Zarqa

Governorates. These households will benefit from additional supplies of freshwater that can be

transferred to these areas as these Projects make larger volumes of treated wastewater available

for substitution in agricultural applications in the Jordan Valley. This includes approximately

8,500 households in the Jordan Valley, for a total of 46,000 people that are expected to benefit

from consistent supplies of high-quality treated wastewater that can be used in irrigation.

(c) Environmental and Social Mitigation Measures.

The As-Samra Wastewater Treatment Plant is located on land that is owned by MWI and located

approximately 2km from the nearest town, Khirbet As-Samra, and far from other large

population centers, including Amman and Zarqa municipalities. Under the As-Samra Expansion

Project, the plant operator will develop a detailed ESIA that will build upon the 2003

Environmental Assessment for construction of the existing plant. MCC, MWI and the plant

operator will design an approach to the ESIA that meets the requirements of the MCC

Environmental Guidelines, the International Finance Corporation's Performance Standards on

Social & Environmental Sustainability, dated April 30, 2006 ("IFC Performance Standards"),

and applicable Jordanian environmental protection laws.

The ESIA will define any necessary augmentations to current practices in place for monitoring

odor, noise, water quality, heavy metal accumulation and disease vectors, especially those

induced by sludge, as required under the existing environmental management plan.

The ESIA will also define an effective plan that clearly sets forth the roles, responsibilities and

costs associated with the management and disposal of large volumes of sludge in order to

improve the current practice of storing sludge in stabilization ponds that are present on the

project site. These stabilization ponds are expected to be filled within eight to ten years. The

sludge treatment, storage and disposal plan will accord with Jordanian law (including applicable

Jordanian standards) and the MCC Environmental Guidelines.

ANNEX I - 8
The project site includes sufficient unused adjacent land for the proposed expansion. For this

reason, there are no issues of land acquisition or resettlement and only limited social impacts

associated with the construction and operation of the plant.

4. Donor Coordination.

In relation to the Water Network Project, the Government and MCC coordinated closely with

Germany's Deutsche Gesellschaft fiir Technische Zusammenarbeit ("GTZ") and Kreditanstalt

fur Wiederaufbau ("KfW"). MCC leveraged the ongoing work of KfW and GTZ in Zarqa,

particularly in two principal areas of Compact development: (a) scoping and detailing specific

works in Zarqa based on their experiences, and (b) undertaking preliminary financial analysis of

Zarqa water and wastewater operations. KfW and GTZ are currently active in meter replacement

and network rehabilitation in Al-Gweireyeh and also have a major project to develop detailed

GIS tools for operations and management of the water systems in Zarqa Governorate. Early

outputs from this GIS system served as useful inputs to the feasibility study for the Water

Network Project.

The Program will complement other current and potential work by other donors including but not

limited to (i) the Japan International Cooperation Agency's project to improving the water

supply for the Zarqa WSA, which includes restructuring of the primary and secondary water

supply and distribution system in the areas of Zarqa, Ruseifa, Hashmeya, Sukhna and Awajan

through construction of new storage and distribution reservoirs, transmission pipelines, pumping

stations and rising mains, and disinfection facilities; (ii) China's project to replace water

networks within the Ruseifa Low distribution area; and (iii) the European Union's project to

improve the water supply network in the areas of Zarqa, Al-Gweireyeh, Awajan, Ruseifa, Bani

Hashem and Dogara.

In relation to the As-Samra Expansion Project, the Swedish International Development Agency

provided technical assistance to MWI to structure and tender the financial arrangements for the

original As-Samra Wastewater Treatment Plant, as well as loans and grants to assist MWI in

supervising the construction of the existing plant and its initial operations period through

February 2010. The Project benefits from the lessons learned in financing and constructing the

existing plant.

5. USAID.

The United States Agency for International Development ("USAID") has been active in the

water sector in Jordan for many years and has funded and executed projects throughout the

country. MCC has collaborated and coordinated closely with USAID on sector policy,

particularly with respect to Jordan's National Water Strategy and tariff scenarios. USAID is

funding a project to develop a comprehensive water and wastewater infrastructure master plan,

and to support studies related to wastewater infrastructure improvements in several areas in

Jordan, including Zarqa Governorate. MCC will continue to liaise with USAID.

For the As-Samra Expansion Project, USAID provided a grant for the construction of the

existing As-Samra Wastewater Treatment Plant.

ANNEX I - 9
6. Sustainability.

The Water Authority of Jordan ("WAJ"), through its Zarqa administrative unit, is currently

responsible for the operation and maintenance of water supply and wastewater collection

infrastructure in Zarqa Governorate. The Water Network Project is expected to provide

additional operating revenues within the Zarqa administrative unit of WAJ by increasing

collections as a result of reduced water losses and thus delivery of higher volumes of water to

end-users. The Wastewater Network Project is expected to increase the number of households

that subscribe to WAJ wastewater collection services, thereby increasing collection of service

fees.

In addition, WAJ plans to reorganize the Zarqa administrative unit of WAJ. This is expected to

increase the efficiency of operations and further improve the financial situation for the Zarqa

administrative unit.

When MWI becomes responsible for additional treatment charges payable under the As-Samra

Expansion Project, the burden of these treatment charges may worsen the financial position of

the water companies in Amman and Zarqa Governorates, collections from which will support the

payment of the treatment charges. The Government has agreed to deliver plans to (a) fully fund

these treatment charges, and (b) ensure projected revenues fully fund projected operations and

maintenance costs of the water and wastewater network in Zarqa Governorate no later than 2015.

C. IMPLEMENTATION FRAMEWORK

1. Overview.

The implementation framework and the plan for ensuring adequate governance, oversight,

management, monitoring and evaluation, and fiscal accountability for the use of MCC Funding

are summarized below. MCC and the Government will enter into the Program Implementation

Agreement, and any other agreements in furtherance of this Compact, all of which, together with

this Compact, set out certain rights, responsibilities, duties and other terms relating to the

implementation of the Program.

2. MCC.

MCC will take all appropriate actions to carry out its responsibilities in connection with this

Compact and the Program Implementation Agreement, including the exercise of its approval

rights in connection with the implementation of the Program.

3. MCA-Jordan.

MCA-Jordan was established by the Government as the accountable entity. It is a limited

liability company wholly owned by the Government and was registered on June 29, 2010, as the

Millennium Challenge Account — Jordan Limited Liability Company, in accordance with the

Jordanian Companies Law. This arrangement allows MCA-Jordan the independence to enter

into contracts, manage its own finances, and hire staff outside of the standard civil service

system. In accordance with Section 3.2(b) of this Compact and Section 1.3(a) of the Program

Implementation Agreement, MCA-Jordan will act on the Government's behalf to implement the

ANNEX I - 10
Program and to exercise and perform the Government's rights and responsibilities with respect to

the oversight, management, monitoring and evaluation, and implementation of the Program,

including, without limitation, managing the implementation of Projects and their Activities,

allocating resources, and managing procurements. The Government will ensure that MCAJordan takes all appropriate actions to implement the Program, including the exercise and

performance of the rights and responsibilities designated to it by the Government pursuant to this

Compact and the Program Implementation Agreement. Without limiting the foregoing, the

Government will also ensure that MCA-Jordan has full decision-making autonomy, including,

inter alia, the ability, without consultation with, or the consent or approval of, any other party, to

(i) enter into contracts in its own name; (ii) sue and be sued; (iii) establish an account in a

financial institution in the name of MCA-Jordan and hold MCC Funding in that account; (iv)

expend MCC Funding; (v) engage a fiscal agent who will act on behalf of MCA-Jordan on terms

acceptable to MCC; (vi) engage a procurement agent who will act on behalf of MCA-Jordan, on

terms acceptable to MCC, to manage the acquisition of the goods, works, and services required

by MCA-Jordan to implement the activities funded by this Compact; and (vii) competitively

engage one or more auditors to conduct audits of its accounts. The Government will take the

necessary actions to manage and operate MCA-Jordan, in accordance with the applicable

conditions precedent to the disbursement of Compact Implementation Funding set forth in

Annex IV to this Compact.

In accordance with Articles of Association and Memorandum of Association of MCA-Jordan,

(the "Bylaws"), MCA-Jordan will consist of the following bodies (1) a board of directors (the

"Board"), (2) a management team (the "Management Unit"), (3) a stakeholders committee (the

"Stakeholders Committee"), and (4) the general shareholders assembly (the "General

Assembly"). The governance of MCA-Jordan is set forth in more detail in the Program

Implementation Agreement and the Bylaws, which will, collectively, set forth the responsibilities

of the Board, Management Unit and Stakeholders Committee. The Bylaws were developed and

adopted in accordance with the Governance Guidelines.

(a) Board.

(i) Composition. The Board is initially comprised of the following seven

members, including four Government members and three representatives from civil society and

private sector organizations: (1) Secretary General, Ministry of Planning and International

Cooperation; (2) Secretary General, WAJ; (3) Secretary General, MOE; (4) Secretary General,

Ministry of Municipalities; (5) a nominee from the General Federation of Jordanian Women; (6)

a nominee from the Jordanian Hashemite Fund for Human Development; and (7) a nominee from

the Zarqa Chamber of Commerce. The Chief Executive Officer (the "CEO") of MCA-Jordan

and an MCC representative will serve as non-voting observers.

(ii) Roles and Responsibilities. The Board is responsible for the oversight,

direction, and decisions of MCA-Jordan, as well as the overall implementation of the Program.

The Board will hold regular meetings, at a minimum once per quarter.

ANNEX I - 11
(b) Management Unit.

(i) Composition. The Management Unit will initially include eleven key

officers, as follows: (1) CEO, (2) Deputy CEO for Administration, (3) Deputy CEO for Project

Management, (4) Finance Director, (5) Procurement Director, (6) Legal Director, (7)

Environment and Social Assessment Director, (8) Monitoring and Evaluation Director, (9)

Director for the Water Network Project, (10) Director for the Wastewater Network Project, and

(11) Director for the As-Samra Expansion Project. These key officers will be supported by

appropriate additional staff to enable the Management Unit to execute its roles and

responsibilities.

(ii) Roles and Responsibilities. With oversight from the Board, the

Management Unit will have the principal responsibility for the day-to-day management of the

Program, including those roles and responsibilities specifically set forth in the Program

Implementation Agreement and the Bylaws. The Management Unit will serve as the principal

link between MCC and the Government, and will be accountable for the successful execution of

the Program, each Project, and each Activity. MCA-Jordan will be subject to the audit

requirements under Jordanian Companies Law. As a recipient of MCC Funding, MCA-Jordan

will also be subject to MCC audit requirements.

(c) Stakeholders Committee.

(i) Composition. The Stakeholders Committee will provide input to the

Board and the Management Unit on matters that relate to the Program, promoting transparency

and ongoing consultation. The size, composition, and manner of selection of members of the

Stakeholders Committee are subject to ongoing discussions between the Government and MCC,

and will be dictated by the project areas of the Program. Membership will at least reflect the

NGOs, private sector, civil society, and local and regional governments that were consulted by

the Government in developing its proposal for the Compact.

(ii) Roles and Responsibilities. Consistent with the Governance Guidelines,

the Stakeholders Committee will continue the consultative process throughout implementation of

the Program. While the Stakeholders Committee will not have any decision-making authority, it

will, among other things, review, at the request of the Board or the Management Unit, certain

reports, agreements, and documents related to the implementation of the Program in order to

provide input to MCA-Jordan regarding the implementation of the Program.

(d) General Assembly.

(i) Composition. The General Assembly of MCA-Jordan will be comprised

of all shareholders of MCA-Jordan. The Government is the sole shareholder of MCA-Jordan.

(ii) Roles and Responsibilities. The General Assembly will hold one annual

meeting during the first four months of MCA-Jordan' s fiscal year and fulfill all obligations under

applicable Jordanian law.

ANNEX I - 12
4. Implementing Entities.

Subject to the terms and conditions of this Compact, the Program Implementation Agreement,

and any other related agreement entered into in connection with this Compact, the Government,

through MCA-Jordan, may engage one or more entities of the Government to implement and

carry out any Project or Activity (or a component thereof) in furtherance of this Compact (each,

an "Implementing Entity"). The appointment of any Implementing Entity will be subject to

review and approval by MCC. The Government will ensure that the roles and responsibilities of

each Implementing Entity and other appropriate terms are set forth in an agreement, in form and

substance satisfactory to MCC (each an "Implementing Entity Agreement").

5. Fiscal Agent.

The Government, through MCA-Jordan, will appoint a fiscal agent (a "Fiscal Agent") which

will be responsible for assisting the Government with its fiscal management and assuring

appropriate fiscal accountability of MCC Funding, and whose duties will include those set forth

in the Program Implementation Agreement and such agreement as MCA-Jordan enters into with

the Fiscal Agent, which agreement will be in form and substance satisfactory to MCC.

6. Procurement Agent.

The Government, through MCA-Jordan, will appoint a procurement agent (the "Procurement

Agent") to carry out and certify specified procurement activities in furtherance of this Compact.

The roles and responsibilities of the Procurement Agent will be set forth in the Program

Implementation Agreement or such agreement as the Government enters into with the

Procurement Agent, which agreement will be in form and substance satisfactory to MCC. The

Procurement Agent will adhere to the procurement standards set forth in the MCC Program

Procurement Guidelines and ensure procurements are consistent with the procurement plan

adopted by the Government pursuant to the Program Implementation Agreement, unless MCC

agrees otherwise in writing.

ANNEX I - 13
ANNEX II

MULTI-YEAR FINANCIAL PLAN SUMMARY

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

1. General.

A multi-year financial plan summary ("Multi-Year Financial Plan Summary") is attached

hereto as Exhibit A to this Annex II. By such time as specified in the Program Implementation

Agreement, the Government will adopt, subject to MCC approval, a multi-year financial plan

that includes, in addition to the multi-year summary of estimated MCC Funding and the

Government's contribution of funds and resources, the annual and quarterly funding

requirements for the Program (including administrative costs) and for each Project, projected

both on a commitment and cash requirement basis.

2. Government LMIC Contribution.

During the Compact Term, the Government will make contributions, relative to its national

budget and taking into account prevailing economic conditions, as are necessary to carry out the

Government's responsibilities under Section 2.6(a) of this Compact. These contributions may

include in-kind and financial contributions (including obligations of Jordan on any debt incurred

toward meeting these contribution obligations). In connection with this obligation the

Government has developed a budget over the Compact Term to complement MCC Funding

through budget allocations to water and wastewater projects, management contracts and

institutional support in Zarqa Governorate. The Government anticipates making contributions

from its national budget of approximately US$73,700,000 over the Compact Term. Such

contribution will be in addition to the Government's spending allocated toward such Project

Objectives in its budget for the year immediately preceding the establishment of this Compact.

The Government's contribution will be subject to any legal requirements in Jordan for the

budgeting and appropriation of such contribution, including approval of the Government's

annual budget by its legislature. The Parties may set forth in appropriate supplemental

agreements certain requirements regarding this Government contribution, which requirements

may be conditions precedent to the Disbursement of MCC Funding.
EXHIBIT A

MULTI-YEAR FINANCIAL PLAN SUMMARY

MULTI-YEAR FINANCIAL PLAN SUMMARY

(US$ millions)

Project CIF Year 1 Year 2 Year 3 Year 4 Year 5 Total

1.Water Network Project

Infrastructure Activity

Water Smart Homes Activity

Sub-Total 0 13.09 28.52 36.04 20.76 4.16 102.57

2. Wastewater Network Project

Sub-Total 0 6.70 16.20 20.67 12.82 1.83 58.22

3. As-Samra Expansion Project

Sub-Total 0.63 17.92 45.28 26.00 3.20 0.00 93.03

4. Monitoring and Evaluation (M&E)

Monitoring and Evaluation

Sub-Total 0.03 0.69 0.04 0.72 0.52 0.81 2.81

5. Program Administration and Audit

MCA-Jordan

Fiscal Agent

Procurement Agent

Audit

Sub-Total 1.46 3.39 3.40 3.40 3.41 3.41 18.47

Grand Total 2.12 41.79 93.44 86.83 40.71 10.21 275.10

ANNEX II - 2
ANNEX III

DESCRIPTION OF MONITORING AND EVALUATION PLAN

This Annex III generally describes the components of the monitoring and evaluation plan

("M&E Plan") for the Program. The actual content and form of the M&E Plan will be agreed to

by MCC and the Government in accordance with MCC's Policy for Monitoring and Evaluation

of Compacts and Threshold Programs posted from time to time on the MCC Website (the "MCC

Policy for Monitoring and Evaluation of Compacts and Threshold Programs"). The M&E

Plan may be modified from time to time with MCC approval without requiring an amendment to

this Annex III.

1. Overview.

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

cause to be implemented, an M&E Plan that specifies (a) how progress toward the Compact

Goal, Program Objective and Project Objectives will be monitored, ("Monitoring Component");

(b) a process and timeline for the monitoring of planned, ongoing, or completed Activities to

determine their efficiency and effectiveness; and (c) a methodology for assessment and rigorous

evaluation of the outcomes and impact of the Program ("Evaluation Component"). Information

regarding the Program's performance, including the M&E Plan, and any amendments or

modifications thereto, as well as progress and other reports, will be made publicly available on

the website of MCA-Jordan and elsewhere.

2. Program Logic.

The M&E Plan will be built on a logic model which illustrates how the Program, Projects and

Activities contribute to the Compact Goal, the Program Objective and the Project Objectives.

3. Monitoring Component.

To monitor progress toward the achievement of the impact and outcomes, the Monitoring

Component of the M&E Plan will identify (i) the Indicators (as defined below), (ii) the

definitions of the Indicators, (iii) the sources and methods for data collection, (iv) the frequency

for data collection, (v) the party or parties responsible, and (vi) the timeline for reporting on each

Indicator to MCC.

Further, the Monitoring Component will track changes in the selected Indicators for measuring

progress towards the achievement of the objectives during the Compact Term. The M&E Plan

will establish baselines which measure the situation prior to a development intervention, against

which progress can be assessed or comparisons made (each a, "Baseline"). The Government

will collect Baselines on the selected Indicators or verify already collected Baselines where

applicable and as set forth in the M&E Plan.

(a) Indicators. The M&E Plan will measure the results of the Program using

quantitative, objective and reliable data ("Indicators"). Each Indicator will have benchmarks

that specify the expected value and the expected time by which that result will be achieved
Result

Effective supply of

water increased

through improvement

in water delivery,

extension of wastewater collection, and

expansion in wastewater treatment

Pry ram Ob.

Network water

consumption per

capita (residential

and nonresidential

Total residential

water consumption

Table 1: Compact Program Objective Indicators

Indicator Definition same ear 5 Value

 Results

For Zarqa Governorate: [Annual billed

residential and non-residential (in

m3)]/[population of governorate] * 1000/365

(1/c/d)

65 96

Billed residential network water consumption

+ tankers, treatment shops, and bottled water

l/c/d

62 89

("Target"). All Indicators will be disaggregated by gender, income level and age, and

beneficiary types to the extent practicable. Subject to prior written approval from MCC, the

Government may add Indicators or refine the definitions and Targets of existing Indicators.

(i) Compact Indicators.

(1) Goal. The M&E Plan will contain the following Indicators related

to the Compact Goal and based on national statistics. The Program will contribute to progress

against poverty nationwide by contributing to a reduction of the poverty rate in Zarqa

Governorate, but the results are attributable to many factors in the economy:

(A) Official poverty rate nationwide: 13.3 percent in 2008; and

(B) Official poverty rate in Zarqa Governorate: 11.2 percent in

2008.'

(2) Objective and Outcome Indicators. The M&E Plan will contain

the Indicators listed in the following tables.

Poverty Baselines are from the Department of Statistics "The Status Report of Poverty in Jordan: Based on Household Income and

Expenditure Survey 2008" (Arabic); July 12, 2010. As of July 2010, Jordan did not have a current poverty target using its official poverty rate.

ANNEX III - 2
Table 2: Water 'Network Project Objectiv e and Outcome Indicators

Result Indicator Definition Baseline

Value

objective Level ,„

Year 5

Decrease cost to

households of meeting

subsistence water needs

Use of tanker

water

Annual average quantity of tanker water

consumed per person (1/c/d) in Water

Network Project areas 2

4.7 1.2

Use of treatment

shop water

Annual average quantity of treatment

shop water consumed per person (1/c/d)

in Water Network Project areas'

0.4 0.2

Prevalence of

waterborne

disease

Percent of children under age five who

had diarrhea in the two weeks preceding

the survey4

9% 7%

Improve efficiency of

network water delivery

Dissatisfaction

with supply

service

Percent of water utility customers "very

dissatisfied" or "quite dissatisfied" with

frequency, duration, and pressure of

supply (average of the three dimensions)

in Water Network Project areass

34% 26%

Dissatisfaction

with water quality

Percent of water utility customers "very

dissatisfied" or "quite dissatisfied" with

potability of network water in Water

Network Project areas 6

60% 40%

Outcome Level

Improve efficiency of

network water delivery

Non-revenue

water as % of

Governorate

system input

Difference between water supplied

including water imported and water sold

including exported (i.e., volume of

water "lost") expressed as a percentage

of water supplied including water

imported. [(Production + Imports) -

(Exports + Accounted

Water)1/(Production + Imports)

47% 35%

Continuity of

supply time

Hours of supply/week (during the

summer) 36 70

Condition of household

water systems improved

Households

cleaning their

water storage

facilities

Percent of households cleaning their

domestic water storage facilities in

Water Smart Homes Activity area 8

56% 65%

2 The baseline figure refers to all of urban Zarqa. The target will be measured only against areas planned for assistance under the Compact. If

the update to the baseline survey reveals a significant difference between the figure for all of urban Zarqa and the areas planned for assistance

under the Compact, an adjustment to the baseline and target will be noted in the M&E Plan ensuring that the magnitude of the improvement by

Year 5 remains consistent with that of the Compact.

3 Ibid.

4 In order to conform to MCC's Common Indicators, this indicator will be supplemented after the next baseline study with "Average number of

days of work lost by adult household members in last 2 weeks due to a water borne illness + Average number of days of school lost by schoolage children in past 2 weeks due to water borne illness."

5 The baseline figure refers to all of urban Zarqa. The target will be measured only against areas planned for assistance under the Compact. If

the update to the baseline survey reveals a significant difference between the figure for all of urban Zarqa and the areas planned for assistance

under the Compact, an adjustment to the baseline and target will be noted in the M&E Plan ensuring that the magnitude of the improvement by

Year 5 remains consistent with that of the Compact.

6 Ibid.

7 Ibid.

Ibid.

ANNEX III - 3
Volume of waste

water effluent

discharged from the

As-Samra plant

Agriculture use of

treated wastewater

Quantity of treated

wastewater for

agriculture use and

substitution increased

Table 3: Wastewater Network Project Objective and Outcome Indic: tors

Indicator Definition

BaselineYear 5

Value

Ob'ective Level

Result

Annual number of blockages that occurred in

sewers network (pumping station blockages

shall not be included)9

Outcome Level

Total volume of wastewater collected

through the sewer system and pumped via

West Zarqa and East Zarqa pumping stations

(million cubic meters/year)

Zarqa Governorate wastewater subscribers as

a percent of water subscribers

2,000

31

82%

8,500

72%

24

Incidents of sewage

overflow reduced

Quantity of

wastewater collected

from Zarqa

Governorate

increased

Sewer blockage

events

Volume of

wastewater

collected

Access to wastewater

network increased

Residential

population

connected to the

sewer s stem

Table 4: The As-Samra Expansion Project Objective and Outcome Indicators

Definition Baseline

Value Result Indicator Year 5

Ob'ective Level

Treated wastewater' used for irrigation in

Northern and Middle Jordan Valley as a

percent of all water used for irrigation in

Northern and Middle Jordan Valley

Outcome Level

Number of days during the past quarter when

effluent does not meet the applicable standar'

set out in the As-Samra Pro'ect A reement

Annual volume of wastewater treated to at

least secondary level (measured as annual

volume of wastewater effluent discharged

from the As-Samra plant, million cubic

meters ler ear

Agriculture land in the Middle and Northern

Jordan Valley using treated wastewater for at

least part of their irrigation water (1,000

hectares

Substitution of

freshwater for treated

wastewater increased

Existing agriculture

protected from

untreated wastewater

Treated wastewater

used in agriculture

Quality of AsSamra effluent

meets standard

61 70

0 0

65 99

13.7 15.9

(b) Data Collection and Reporting. The M&E Plan will establish guidelines for data

collection and reporting, and identify the responsible parties. Compliance with data collection

and reporting timelines will be conditions for Disbursements for the relevant Activities as set

9

If during the Compact Term sewage blockages become part of the GIS database, this indicator should be updated to better measure blockages

by type and location.

to "Treated wastewater" includes rainwater runoff mixed with treated wastewater in King Talal Dam reservoir.

ANNEX III - 4
forth in the Program Implementation Agreement. The M&E Plan will specify the data collection

methodologies, procedures, and analysis required for reporting on results at all levels. The M&E

Plan will describe any interim MCC approvals for data collection, analysis, and reporting plans.

(c) Data Quality Reviews. As determined in the M&E Plan or as otherwise requested

by MCC, the quality of the data gathered through the M&E Plan will be reviewed to ensure that

data reported are as valid, reliable, and timely as resources will allow. The objective of any data

quality review will be to verify the quality and the consistency of performance data across

different implementation units and reporting institutions. Such data quality reviews also will

serve to identify where those levels of quality are not possible, given the realities of data

collection.

(d) Management Information System. The M&E Plan will describe the information

system that will be used to collect data, store, process and deliver information to relevant

stakeholders in such a way that the Program information collected and verified pursuant to the

M&E Plan is at all times accessible and useful to those who wish to use it. The system

development will take into consideration the requirement and data needs of the components of

the Program, and will be aligned with existing MCC systems, other service providers, and

ministries.

(e) Role of MCA-Jordan. The monitoring and evaluation of this Compact spans three

Projects and will involve a variety of governmental, nongovernmental, and private sector

institutions. In accordance with the designation contemplated by Section 3.2(b) of this Compact,

MCA-Jordan is responsible for implementation of the M&E Plan. MCA-Jordan will oversee all

Compact-related monitoring and evaluation activities conducted for each of the Projects,

ensuring that data from all implementing entities is consistent, accurately reported and

aggregated into regular Compact performance reports as described in the M&E Plan.

4. Evaluation Component.

The Evaluation Component of the M&E Plan will contain three types of evaluations: (i) impact

evaluations, (ii) project performance evaluations, and (iii) special studies. The Evaluation

Component of the M&E Plan will describe the purpose of the evaluation, methodology, timeline,

required MCC approvals, and the process for collection and analysis of data for each evaluation.

The results of all evaluations will be made publicly available in accordance with MCC's Policy

for Monitoring and Evaluation of Compacts and Threshold Programs.

(a) Impact Evaluation. The M&E Plan will include a description of the methods to

be used for impact evaluations and plans for integrating the evaluation method into Project

design. Based on in-country consultation with stakeholders, the strategies outlined below were

jointly determined as having the strongest potential for rigorous impact evaluation. The M&E

Plan will further outline in detail these methodologies. Final impact evaluation strategies are to

be included in the M&E Plan. The following is a summary of the potential impact evaluation

methodologies:

(i) Water Network Project/Infrastructure Investment Activity. The evaluation

will focus on determining both household level impacts as well as benefits to the water utility.

ANNEX III - 5
The household level impacts of interest include reduced expenditures on water scarcity coping

mechanisms such as use of tanker and treatment shop water. Health outcomes will also be

examined. The impact is expected to be determined through quasi-experimental techniques

comparing the beneficiary households to households in similar circumstances outside the project

areas. The institutional level impacts such as reduced operating costs may be determined

through financial and operations modeling of with and without project scenarios. The without

project assumptions would be drawn from utility performance prior to the intervention as well as

concurrent performance of other comparable water utilities in Jordan.

(ii) Water Network Project/WSH Activity. The evaluation will look at the

changes in (1) maintenance/cleaning of home water systems, (2) the impact on household use of

expensive alternative sources of water, and (3) the incidence of certain waterborne diseases. The

primary methodology expected is propensity score matching. In the case of over-subscription to

the sub-component of household water system rehabilitation, an element of randomized award of

benefits among eligible beneficiaries will be considered.

(iii) Wastewater Network Project. The evaluation will include an analysis of

the health benefits achieved, particularly reduction in waterborne disease. The methodology is

expected to employ quasi-experimental techniques comparing beneficiary households (those near

rehabilitated mains or newly connected to the network) with non-beneficiary households.

(b) Final Evaluation. The M&E Plan will make provision for final Project level

evaluations ("Final Evaluations"). With the prior written approval of MCC, the Government

will engage independent evaluators to conduct the Final Evaluations at the end of each Project.

The Final Evaluations will review progress during Compact implementation and provide a

qualitative context for interpreting monitoring data and impact evaluation findings. They must at

a minimum (1) evaluate the efficiency and effectiveness of the Activities; (2) determine if and

analyze the reasons why the Compact Goal, Program Objective and Project Objective(s),

outcome(s) and output(s) were or were not achieved; (3) identify positive and negative

unintended results of the Program; (4) provide lessons learned that may be applied to similar

projects; and (5) assess the likelihood that results will be sustained over time.

(i) Special Studies. The M&E Plan will include a description of the methods

to be used for special studies, as necessary, funded through this Compact or by MCC. Plans for

conducting the special studies will be determined jointly between the Government and MCC

before the approval of the M&E Plan. The M&E Plan will identify and make provision for any

other special studies, ad hoc evaluations, and research that may be needed as part of the

monitoring and evaluating of this Compact. Either MCC or the Government may request special

studies or ad hoc evaluations of Projects, Activities, or the Program as a whole prior to the

expiration of the Compact Term. When the Government engages an evaluator, the engagement

will be subject to the prior written approval of MCC. Contract terms must ensure non-biased

results and the publication of results.

(c) Request for Ad Hoc Evaluation or Special Study. If the Government requires an

ad hoc independent evaluation or special study at the request of the Government for any reason,

including for the purpose of contesting an MCC determination with respect to a Project or

ANNEX III - 6
Activity or to seek funding from other donors, no MCC Funding resources may be applied to

such evaluation or special study without MCC's prior written approval.

5. Other Components of the M&E Plan.

In addition to the monitoring and evaluation components, the M&E Plan will include the

following components for the Program, Projects and Activities, including, where appropriate,

roles and responsibilities of the relevant parties and providers:

(a) Costs. A detailed cost estimate for all components of the M&E Plan; and

(b) Assumptions and Risks. Any assumption or risk external to the Program that

underlies the accomplishment of the Program Objective, Project Objectives and Activity

outcomes and outputs. However, such assumptions and risks will not excuse any Party's

performance unless otherwise expressly agreed to in writing by the other Party.

6. Approval and Implementation of the M&E Plan.

The approval and implementation of the M&E Plan, as amended from time to time, will be in

accordance with the Program Implementation Agreement, any other relevant Supplemental

Agreement and the MCC Policy for Monitoring and Evaluation of Compacts and Threshold

Programs.

ANNEX III - 7
ANNEX IV

CONDITIONS PRECEDENT

TO DISBURSEMENT OF COMPACT IMPLEMENTATION FUNDING

This Annex IV sets forth the conditions precedent applicable to Disbursements of Compact

Implementation Funding (each a "CIF Disbursement"). Capitalized terms used in this Annex IV

and not defined in this Compact will have the respective meanings assigned thereto in the

Program Implementation Agreement. Upon execution of the Program Implementation

Agreement, each CIF Disbursement will be subject to the terms of the Program Implementation

Agreement.

1. Conditions Precedent to Initial CIF Disbursement.

Each of the following must have occurred or been satisfied prior to the initial CIF Disbursement:

(a) The Government (or MCA-Jordan) has delivered to MCC:

(i) an interim fiscal accountability plan acceptable to MCC; and

(ii) a CIF procurement plan acceptable to MCC.

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

Disbursement).

Each of the following must have occurred or been satisfied prior to each CIF Disbursement:

(a) The Government (or MCA-Jordan) has delivered to MCC the following

documents, in form and substance satisfactory to MCC:

(i) a completed Disbursement Request, together with the applicable Periodic

Reports, for the applicable Disbursement Period, all in accordance with the Reporting

Guidelines;

(ii) a certificate of MCA-Jordan, dated as of the date of the CIF Disbursement

Request, in such form as provided by MCC;

(iii) if a Fiscal Agent has been engaged, a Fiscal Agent Disbursement

Certificate; and

(iv) if a Procurement Agent has been engaged, a Procurement Agent

Disbursement Certificate.

(b) If any proceeds of the CIF Disbursement are to be deposited in a bank account,

MCC has received satisfactory evidence that (i) the Bank Agreement has been executed, and (ii)

the Permitted Accounts have been established.
(c) Appointment of an entity or individual to provide fiscal agent services, as

approved by MCC, until such time as the Government provides to MCC a true and complete

copy of a Fiscal Agent Agreement, duly executed and in full force and effect, and the Fiscal

Agent engaged thereby is mobilized.

(d) Appointment of an entity or individual to provide procurement agent services, as

approved by MCC, until such time as the Government provides to MCC a true and complete

copy of the Procurement Agent Agreement, duly executed and in full force and effect, and the

Procurement Agent engaged thereby is mobilized.

(e) MCC is satisfied, in its sole discretion, that (i) the activities being funded with

such CIF Disbursement are necessary, advisable or otherwise consistent with the goal of

facilitating the implementation of the Compact and will not violate any applicable law or

regulation; (ii) no material default or breach of any covenant, obligation or responsibility by the

Government, MCA-Jordan or any Government entity has occurred and is continuing under this

Compact or any other Supplemental Agreement; (iii) there has been no violation of, and the use

of requested funds for the purposes requested will not violate, the limitations on use or treatment

of MCC Funding set forth in Section 2.7 of this Compact or in any applicable law or regulation;

(iv) any Taxes paid with MCC Funding through the date 90 days prior to the start of the

applicable Disbursement Period have been reimbursed by the Government in full in accordance

with Section 2.8(c) of this Compact; and (v) the Government has satisfied all of its payment

obligations, including any insurance, indemnification, tax payments or other obligations, and

contributed all resources required from it, under this Compact and any other Supplemental

Agreement.

(f) For any CIF Disbursement occurring after this Compact has entered into force in

accordance with Article 7: MCC is satisfied, in its sole discretion, that (i) MCC has received

copies of any reports due from any technical consultants (including environmental auditors

engaged by MCA-Jordan) for any Activity since the previous Disbursement Request, and all

such reports are in form and substance satisfactory to MCC; (ii) the Implementation Plan

Documents and Fiscal Accountability Plan are current and updated and are in form and substance

satisfactory to MCC, and there has been progress satisfactory to MCC on the components of the

Implementation Plan for any relevant Projects or Activities related to such CIF Disbursement;

(iii) there has been progress satisfactory to MCC on the M&E Plan and Social and Gender

Integration Plan for the Program or relevant Project or Activity and substantial compliance with

the requirements of the M&E Plan and Social and Gender Integration Plan (including the targets

set forth therein and any applicable reporting requirements set forth therein for the relevant

Disbursement Period); (iv) there has been no material negative finding in any financial audit

report delivered in accordance with this Compact and the Audit Plan, for the prior two quarters

(or such other period as the Audit Plan may require); (v) MCC does not have grounds for

concluding that any matter certified to it in the related MCA Disbursement Certificate, the Fiscal

Agent Disbursement Certificate or the Procurement Agent Disbursement Certificate is not as

certified; and (vi) if any of the officers or key staff of MCA-Jordan have been removed or

resigned and the position remains vacant, MCA-Jordan is actively engaged in recruiting a

replacement.

ANNEX IV - 2
(g) MCC has not determined, in its sole discretion, that an act, omission, condition, or

event has occurred that would be the basis for MCC to suspend or terminate, in whole or in part,

the Compact or MCC Funding in accordance with Section 5.1 of this Compact.

ANNEX IV - 3
ANNEX V

DEFINITIONS

Activity has the meaning provided in Part B of Annex I.

Additional Representative has the meaning provided in Section 4.2.

As-Samra Expansion Project has the meaning provided in paragraph 3(a) of Part B of Annex I.

As-Samra Project Agreement means the Project Agreement between the Government, represented by

MWI, and Samra Wastewater Treatment Plant Company Limited dated 28 July 2002 (as amended and

restated on 10 December 2003, as further amended on June 29, 2006, November 5, 2008 and April 8,

2010, and as amended and restated after the date hereof).

Audit Guidelines has the meaning provided in Section 3.8(a).

Baseline has the meaning provided in paragraph 3 of Annex III.

Board has the meaning provided in paragraph 3 of Part C of Annex I.

BOD5 has the meaning provided in paragraph 3(a) of Part B of Annex I.

Bylaws has the meaning provided in paragraph 3 of Part C of Annex I.

Cabinet Resolution has the meaning provided in Annex VI.

CEO has the meaning provided in paragraph 3(a)(i) of Part C of Annex I.

Certificate has the meaning provided in Schedule E to Annex VI.

CIF Disbursement has the meaning provided in Annex IV.

Compact has the meaning provided in the Preamble.

Compact Contract has the meaning provided in Schedule A to Annex VI.

Compact Goal has the meaning provided in Section 1.1.

Compact Implementation Funding has the meaning provided in Section 2.2(a).

Compact Records has the meaning provided in Section 3.7(a).

Compact Term has the meaning provided in Section 7.4.

Covered Provider has the meaning provided in Section 3.7(c).

Disbursement has the meaning provided in Section 2.4.

DMA has the meaning provided in paragraph 1(a)(i)(2)(D) of Part B of Annex I.
East Zarqa Pumping Station Zone Activity has the meaning provided in paragraph 2(a) of Part B of

Annex I

Eligible Entities has the meaning provided in Annex VI.

Eligible Individuals has the meaning provided in Annex VI.

ESIA has the meaning provided in paragraph 1(c) of Part B of Annex I.

Evaluation Component has the meaning provided in paragraph 1 of Annex III.

Excess CIF Amount has the meaning provided in Section 2.2(c).

Final Evaluations has the meaning provided in paragraph 4(b) of Annex III.

Fiscal Agent has the meaning provided in paragraph 5 of Part C of Annex I

General Assembly has the meaning provided in paragraph 3 of Part C of Annex I.

GIS has the meaning provided in paragraph 1 (a)(i)(1) of Part B of Annex I

Governance Guidelines means MCC 's Guidelines for Accountable Entities and Implementation

Structures, as such may be posted on MCC's Website from time to time.

Government has the meaning provided in the Preamble.

GTZ has the meaning provided in paragraph 4 of Part B of Annex I

IFC Performance Standards has the meaning provided in paragraph 3(c) of Part B of Annex I

Implementation Letter has the meaning provided in Section 3.5.

Implementing Entity has the meaning provided in paragraph 4 of Part C of Annex I

Implementing Entity Agreement has the meaning provided in paragraph 4 of Part C of Annex I

Indicators has the meaning provided in paragraph 3(a) of Annex III.

Infrastructure Investment Activity has the meaning provided in paragraph 1(a) of Part B of Annex I

Inspector General has the meaning provided in Section 3.7(d).

ISTD has the meaning provided in Schedule A to Annex VI.

Jordan has the meaning provided in the Preamble.

KfW has the meaning provided in paragraph 4 of Part B of Annex I

M&E Plan has the meaning provided in Annex III.

Management Unit has the meaning provided in paragraph 3 of Part C of Annex I

ANNEX V - 2
MCA Act has the meaning provided in Section 2.2(a).

MCA-Jordan has the meaning provided in Section 3.2(b).

MCC has the meaning provided in the Preamble.

MCC Environmental Guidelines has the meaning provided in Section 2.7(c).

MCC Funding has the meaning provided in Section 2.3.

MCC Gender Policy means the MCC Gender Policy (including any guidance documents issued in

connection with the guidelines) posted from time to time on the MCC Website or otherwise made

available to the Government.

MCC Policy for Monitoring and Evaluation of Compacts and Threshold Programs has the meaning

provided in Annex III.

MCC Program Procurement Guidelines has the meaning provided in Section 3.6.

MCC Website has the meaning provided in Section 2.7.

MCU has the meaning provided in paragraph 1 of Part A of Annex I

MOE has the meaning provided in paragraph 1(c) of Part B of Annex I.

MOF has the meaning provided in Annex VI.

Monitoring Component has the meaning provided in paragraph 1 of Annex III.

MOPIC has the meaning provided in Annex VI.

Multi-Year Financial Plan Summary has the meaning provided in paragraph 1 of Annex II.

MWI has the meaning provided in paragraph 1(c) of Part B of Annex I

OP 4.12 has the meaning provided in paragraph 3 of Part A of Annex I.

Party and Parties have the meaning provided in the Preamble.

PEISA has the meaning provided in paragraph 1(c) of Part B of Annex I.

Permitted Account has the meaning provided in Section 2.4.

Principal Representative has the meaning provided in Section 4.2.

Procurement Agent has the meaning provided in paragraph 6 of Part C of Annex I.

Program has the meaning provided in the Preamble.

Program Assets means any assets, goods or property (real, tangible or intangible) purchased or financed

in whole or in part (directly or indirectly) by MCC Funding.

ANNEX V - 3
Program Funding has the meaning provided in Section 2.1.

Program Guidelines means collectively the Audit Guidelines, the MCC Environmental Guidelines, the

MCC Gender Policy, the Governance Guidelines, the MCC Program Procurement Guidelines, the

Reporting Guidelines, the MCC Policy for Monitoring and Evaluation of Compacts and Threshold

Programs, the MCC Cost Principles for Government Affiliates Involved in Compact Implementation

(including any successor to any of the foregoing) and any other guidelines, policies or guidance papers

relating to the administration of MCC-funded compact programs and as from time to time published on

the MCC 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.

Projth Objective(s) has the meaning provided in Section 1.3.

Provider has the meaning provided in Section 3.7(c).

Reporting Guidelines means the MCC "Guidance on Quarterly MCA Disbursement Request and

Reporting Package" posted by MCC on the MCC Website or otherwise publicly made available.

Ruseifa Distribution Areas has the meaning provided in paragraph 1(a)(i)(3)(A) of Part B of Annex I.

Social and Gender Integration Plan has the meaning provided in paragraph 3 of Part A of Annex I

Stakeholders Committee has the meaning provided in paragraph 3 of Part C of Annex I

Supplemental Agreement means any agreement between (a) the Government (or any Government

affiliate, including MCA-Jordan) and MCC (including, but not limited to, the PIA) or (b) MCC and/or the

Government (or any Government affiliate, including MCA-Jordan), on the one hand, and any third party,

on the other hand, including any of the Providers, in each case, setting forth the details of any funding,

implementing or other arrangements in furtherance of this Compact.

Target has the meaning provided in paragraph 3(a) of Annex III.

Taxes has the meaning provided in Section 2.8(a).

TSS has the meaning provided in paragraph 3(a) of Part B of Annex I

United States Dollars or US$ means the lawful currency of the United States of America.

USAID has the meaning provided in paragraph 5 of Part B of Annex I.

VAT has the meaning provided in Schedule A to Annex VI.

WAJ has the meaning provided in paragraph 6 of Part B of Annex I.

Wastewater Network Project has the meaning provided in paragraph 2(a) of Part B of Annex I.

Water Network Project has the meaning provided in paragraph 1(a) of Part B of Annex I

ANNEX V - 4
Water Smart Homes Activity or WSH Activity has the meaning provided in paragraph 1(a) of Part B of

Annex I.

West Zarqa Pumping Station Zone Activity has the meaning provided in paragraph 2(a) of Part B of

Annex I

WSA has tht meaning provided in paragraph 1(a)(i)(2) of Part B of Annex I

WSH Direct Assistance Program has the meaning provided in paragraph 1 (a)(ii)(2) of Part B of Annex I

WSH Outreach Campaign has the meaning provided in paragraph 1(a)(ii)(1) of Part B of Annex I

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

ANNEX V - 5
ANNEX VI

TAX SCHEDULES

Introduction.

The Government will ensure that MCA-Jordan and all contractors (prime contractors and

subcontractors), consultants, and other entities and individuals that receive MCC Funding

directly or indirectly (the "Eligible Entities" or "Eligible Individuals," as appropriate) are

exempt from Taxes in accordance with Section 2.8.

The mechanism that the Government will use to implement the exemption is as follows:

1. The Ministry of Planning and International Cooperation ("MOPIC"), the Ministry

of Finance ("MOP') and MCA-Jordan will cooperate in drafting a resolution to

be presented to the Council of Ministers for approval. The draft resolution will be

subject to MCC approval before being presented to the Council of Ministers.

2. The draft resolution will, at a minimum, specify:

(a) The Projects that will benefit from the exemption;

(b) The expected timeframe of each Project;

(c) The expected cost of each Project; and

(d) A complete list of Taxes that will be exempted.

3. The Council of Ministers approves the blanket exemption for all Project and

Activities (the "Cabinet Resolution").

4. The following schedules describe the basic procedures that an Eligible Entity or

Eligible Individual should follow to ensure the proper implementation of the

exemption.
SCHEDULE A

VALUE ADDED TAX (VAT)"

Procedures.

1. The Council of Ministers issues the Cabinet Resolution, as described in the

Introduction.

2. Any MCC-funded contract or agreement with an Eligible Entity or Eligible

Individual (each, a "Compact Contract") will explicitly state that such Eligible

Entity or Eligible Individual is entitled to complete exemption from Taxes in

accordance with the Cabinet Resolution. In the event a Compact Contract is a

contract with a subcontractor, such contract will (a) explicitly state that the

subcontractor is entitled to the complete exemption from Taxes in accordance

with the Cabinet Resolution, and (b) attach the contract between the prime

contractor and MCA-Jordan.

3. When the Eligible Entity or Eligible Individual needs to purchase goods or

services, it will provide MCA-Jordan with the following:

(a) For goods: A list of the goods needed to be purchased on a tax-exempt

basis, including the total needed and the approximate cost. MCA-Jordan

will indicate its approval on the list provided by the Eligible Entity or

Eligible Individual. The Eligible Entity or Eligible Individual takes the

MCA-Jordan approved list of goods to be purchased and a copy of the

Compact Contract to the Income and Sales Tax Department ("ISTD"),

which provides its approval for the purchase on a tax-exempt basis. The

Eligible Entity or Eligible Individual provides the vendor with the abovementioned documentation and purchases the goods net of VAT.

(b) For services: The same procedure in paragraph 3(a) above is followed.

Instead of a list of items to be purchased, however, the Eligible Entity or

Eligible Individual provides a description of the services needed, the

approximate cost of such services and the period of performance of such

services.

4. MCA-Jordan follows the same procedures for its own purchases of goods and

services related to the Projects.

tt To the extent that VAT is imposed at the port of entry on imported goods, together with custom duties, the applicable tax exemption

procedures are described in Schedule B below.
SCHEDULE B

CUSTOMS DUTIES

Procedures.

Purchases of Imported Goods

1. The Council of Ministers issues the Cabinet Resolution, as described in the

Introduction.

2. When MCA-Jordan signs a Compact Contract, MCA-Jordan sends to Jordan

Customs an exemption request with the list of materials the Eligible Entity or

Eligible Individual intends to purchase for use on the relevant Project. The letter

must state the name of the Project and the Eligible Entity or Eligible Individual,

and the Cabinet Resolution must be attached.

3. The Compact Contract will explicitly state that the Eligible Entity or Eligible

Individual is exempt from paying customs duties in accordance with the Cabinet

Resolution.

4. When the imported goods arrive, Jordan Customs compares what is in the

shipment against the list it maintains and then releases them to the customs broker

working for the Eligible Entity or Eligible Individual. All Eligible Entities and

Eligible Individuals are required to use the services of a customs broker.

5. At the end of the Project, the MCA-Jordan construction manager performs a

reconciliation between goods imported for use on the Project and goods actually

used on the Project. Any goods imported for use on the Project not actually used

on the Project (for example, more goods imported than used) may be subject to

customs duties. Therefore, if an Eligible Entity or Eligible Individual knows that

more goods will be needed than originally proposed, it must work with MCAJordan to ensure that Jordan Customs has been provided with a list of the

additional materials.

6. The procedures set forth above also apply to MCA-Jordan except that MCAJordan will work directly with Jordan Customs.

Temporary Admission of Equipment, Vehicles and Household Goods, by Eligible Entities

and Eligible Individuals

1. The procedures outlined in paragraphs 1, 2, and 3 above will be followed except

that MCA-Jordan must specifically request that an Eligible Entity or Eligible

Individual performing work for the Project be permitted to bring in, on a

temporary basis, equipment for use on the Project and vehicles and household

goods of such Eligible Individual or Eligible Entity's employees working on the

Project.

2. Once the Cabinet Resolution has been issued, MCA-Jordan sends the exemption

request to Jordan Customs with the Cabinet Resolution attached.
3. When the items to receive temporary admission arrive, the goods are released to

the customs broker working for the Eligible Individual or Eligible Entity.

4. The temporary admission request must be renewed annually until the earlier of (a)

the completion of the applicable contract, (b) the end of the Compact-related

work, and (c) the expiration or termination of the Compact.

SCHEDULE B - 2
SCHEDULE C

CORPORATE INCOME TAX

Procedures.

1. The Council of Ministers issues the Cabinet Resolution, as described in the

Introduction.

2. Any Eligible Entity earning income only from MCC Funding in Jordan in any

given tax year will be exempt from Tax on such income and as such will not be

required to withhold Taxes on income earned during the tax year. At the end of

the tax year, the Eligible Entity files a tax return indicating that the income earned

on the MCC-funded Projects is not subject to Tax in accordance with the Cabinet

Resolution and the Compact Contract.

3. Any Eligible Entity earning only a portion of its income from MCC Funding in

any given fiscal year will:

(a) Maintain its books and records to segregate the financial activity related to

the Projects from those financial activities that are not related to the

Compact.

(b) At the end of any such fiscal year, file its Tax return on income that is not

related to the Compact, as applicable, providing the documentation

required in paragraph 2 above.
SCHEDULE D

INDIVIDUAL INCOME TAX

Procedures.

1. The Council of Ministers issues a Cabinet Resolution, as described in the

Introduction.

2. Any Eligible Individual earning income only from MCC Funding in Jordan in any

given tax year will be exempt from withholding any such income Taxes during

the tax year and from paying any Tax on income earned during the tax year. At

the end of the tax year, the individual files a tax return indicating that the income

earned on the MCC-funded Projects is not subject to Tax in accordance with the

Cabinet Resolution and the Compact Contract.

3. Any Eligible Individual earning income paid with MCC Funding and nonCompact-related income in any given fiscal year will be permitted to exclude the

gross amount of such Compact-related personal income for the purposes of filing

his/her year-end individual income Taxes in Jordan for any such fiscal year.
SCHEDULE E

FUEL TAX

VAT is the only Tax included in petroleum products.

Procedures.

1. The Council of Ministers issues the Cabinet Resolution, as described in the

Introduction.

2. The Government will issue a certificate, or other documentary evidence (the

"Certificate"), to the Eligible Entity or Eligible Individual that allows the holder

of such Certificate to be exempt from VAT at the point of purchase for fuel or

other petroleum products.

3. Purchases of fuel and other petroleum products will be purchased through

approved wholesalers upon presentation of the Certificate.
SCHEDULE F

SOCIAL SECURITY TAX

Procedures.

1. The Council of Ministers issues the Cabinet Resolution, as described in the

Introduction.

2. The Cabinet Resolution will state the following:

(a) Eligible Individuals are exempted from paying the employee portion of

social security Tax to the Government.

(b) Employers of Eligible Individuals are exempted from paying the employer

portion of social security Tax to the Government.

3. Neither the Eligible Individuals nor their employers will be required to file any

paperwork or returns with regard to social security Taxes.
SCHEDULE G

TAX ON FOREIGN IMPORT SERVICES

(LE., FOREIGN CONSULTANT SERVICES)

Procedures.

1. The Council of Ministers issues the Cabinet Resolution, as described in the

Introduction.

2. The Cabinet Resolution will state that MCA-Jordan will not be required to

withhold VAT on each invoice submitted by any foreign consultant that is an

Eligible Entity or Eligible Individual.

3. Any foreign consultant that is an Eligible Entity or Eligible Individual will not

charge VAT on invoices submitted to MCA-Jordan.

4. MCA-Jordan will not be required to withhold VAT on any invoice submitted by a

foreign consultant that is an Eligible Entity or Eligible Individual.
SCHEDULE H

COMPANY REGISTRATION FEE

Procedures.

1. The Council of Ministers issues the Cabinet Resolution, as described in the

Introduction.

2. The Cabinet Resolution will state that Eligible Entities that are required to register

in Jordan to perform Compact-related work will be exempt from paying the

company registration fee imposed by the Ministry of Trade and Industry.

3. At the time of registering in Jordan to perform Compact-related work, the Eligible

Entity will provide copies of (a) the Cabinet Resolution, and (b) its Compact

Contract to the Ministry of Trade and Industry.
SCHEDULE I

WORK PERMIT FEE

Procedures.

1. The Council of Ministers issues the Cabinet Resolution, as described in the

Introduction.

2. The Cabinet Resolution will state that Eligible Individuals who are required to

obtain a work permit to perform Compact-related work will be exempt from

paying the work permit fee imposed by the Ministry of Labor.

3. At the time of obtaining a work permit to perform Compact-related work, the

Eligible Individual will provide copies of (a) the Cabinet Resolution, and (b) its

Compact Contract to the Ministry of Labor.