The World Bank New Delhi Office Phone: +911141479301/+911149247601 INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT 70 Lodi Estate Mailing INTERNATIONAL DEVELOPMENT ASSOCIATION O F F 1 At0 003 Address : P.0 Box 416

DOCUMENTS April 12, 2017

Public Disclosure Authorized Mr. Dinesh Kumar Chief Secretary Government of Secretariat CM's Camp Office, Opp. PWD Ground 520 002 Andhra Pradesh

Re: LVDIA: Loan No.7792-IN Andhra Pradesh and Telangana Road Sector Project Cancellation of Loan Proceeds & Project Restructuring Public Disclosure Authorized Amendment to the Andhra Pradesh Project Agreement

Dear Mr. Kumar.

I We refer to: (i) the Loan Agreement ("Loan Agreement") between India ("Borrower") and the International Bank of Reconstruction and Development ("World Bank"), dated January 22, 2010 for Andhra Pradesh and Telangana Road Sector Project ("Project"), pursuant to which the World Bank has extended the above captioned loan 7792-IN ("Loan"), as amended; (ii) the Project Agreement between the World Bank and State of Andhra Pradesh, also dated January 22. 2010 (the -AP Project Agreement"), as amended to reflect the bifurcation of the State of Andhra Pradesh pursuant to the Andhra Pradesh Reorganization Act 2014 (6 of 2014) (the "AP Public Disclosure Authorized Project Agreement"); and (iii) the supplemental letter of the same date of the AP Project Agreement regarding performance monitoring indicators agreed with the World Bank, as subsequently amended (the "Side Letter");

2. We further refer to the letter No 7/2/2004-FB-VI of March 2, 2017, from the Department of Economic Affairs, Ministry of Finance. , requesting: (i) the cancellation of twenty five million United States Dollars (USD 25,000,000) in savings from the Project; and (ii) the dropping of the Kakinada- (KRO7) package from the Project.

3. We are pleased to inform that the World Bank: (i) has acknowledged and processed the cancellation of Project savings and (ii) concurs with the exclusion of the Kakinada- Rajahmundry (KR 07) package from the scope of' the Project, and the consequential downsizing Public Disclosure Authorized of Project activities. To effect these changes while addressing the social and environmental impacts that Project activities to be discontinued might have caused, the World Bank hereby proposes to amend the AP Project Agreement as set forth in paragraph 4 below.

4. The new paragraphs "I", "J", and "K" shall be added to Section I of the Schedule to the AP Project Agreement which shall read as follows:

HeadquarterU2 Washington DC L USA Mr. Dinesh Kurnar -2- April 12, 2017

'1. ensure that: (a) basic infrastructure facilities is properly built/developed by not later than April 30, 2018 in each of the resettlements sites whereby people affected on account of the implementation of the Kakinada-Rajahmundry corridor have been relocated pursuant to the RAPs; (b) all payments due and arising out of land acquisition and/or involuntary resettlements originated as per the implementation of the Kakinada-Rajahmundry corridor have been properly settled/made by not later than April 30, 2018, in accordance with the R&R Policy Framework and the respective RAPs; (c) any outstanding R&R Assistance (including additional cash payments) owed to families/households displaced, or vulnerable land owners, on account of the implementation of the Kakinada-Rajahmundry corridor is provided/made by not later than April 30, 2018, in accordance with the R&R Policy Framework and the respective RAPs;

J. carry out, by not later than April 30, 2018, in the nearest available and viable road corridor, the compensatory plantation of trees on account of the tree-felling along the Kakinada-Rajahmundry road, as per the agreements reached with the Forest Department of the State of Andhra Pradesh; and

K. ensure that, by not later than May 31, 2017, any debris (including scarified bitumen) generated under the Kakinada-Rajahmundry corridor construction be cleared in compliance with the EMP."

5. Please kindly note, for avoidance of doubt, that the proposed exclusion of the Kakinada-Rajahmundry package from the Project will render ineligible under the Loan any expenditures incurred under such package after the date of effectiveness of this letter of amendment. Expenditures incurred on or prior to such date shall remain eligible under the Loan.

6. In light of the foregoing amendment and the downsizing of Project activities, the key performance indicators originally reflected in the Side Letter are hereby amended to read as set forth in the Attachment 1 to this letter of amendment.

7. Please confirm your agreement to the amendments provided in paragraph 3 above, by signing the form of confirmation set forth below, and returning a fully executed original of this amendment letter to us and retaining one original for your records.

8. The amendments provided in paragraph 3 of this letter of amendment shall become effective upon the receipt by the World Bank of: (i) a duly countersigned original of this letter of amendment; (ii) a duly countersigned original of the letter of amendment to the Loan Agreement; and (iii) a duly countersigned original of the letter of amendment of the Project Mr. Dinesh Kumar -3- April 12, 2017

Agreement between the World Bank and the State of Telangana, dated May 5, 2015, reflecting the above Project restructuring.

With regards,

Yours sincerely, INTERNATIONAL BANK OF RECONSTRUCTION AND DEVELOPMENT

Junaid Kamal Ahmad Country Director, India

Attachment 1: Revised Key Performance Indicators

AGREED: STATE OF ANDHRA PRADESH

By

Title fhIg$csa~ A.P. SECRETARIAT .WL W Date-,. Mr. Dinesh Kumar -4- April 12, 2017

Copy to:

Mr. Subhash Chandra Garg, Executive Director (India) Mr. Neeraj Mittal, Senior Advisor to Executive Director (India)

Government of India Mr. Bhaskar Dasgupta, Director (MI), Department of Economic Affairs

Government ofAndhra Pradesh Mrs. Sumita Dawra, Principal Secretary to Govt., Dept. of Transport, Roads & Buildings Mr. G. Jagannadha Rao, MD, AP Road Devpt. Corpn. and CE&CRN (RBD) Government of Telangana Mr. Sunil Sharma, Principal Secretary to Govt., Dept. of Transport, Roads & Buildings Mr. P. Ravinder Rao, E-in-C (R&B), State Roads, CRN & Jt. MD, RDC RESULT INDICATORS ATTACHMENTI,

End of Project Target Value Indicators Baseline Andhra Pradesh Tlangana - -_Current Revised Current Revised Outcome Indicators Full RDC still not fully operational: * GoAP provides RDC NO If RDC is formed. NO operationalization outstanding audits: Act to be with financial * GoT provides RDC with of RDC with reviewed: no independent administrative and financial, administrative adequate financial financial & operational operational powers: and operational powers; and human procedures; many staff deputed Rules and procedures Rules and procedures resources to manage from RBD adopted adopted the CRN * RDC has own staffing and adequate sources of revenue for CRN Vehicle operating Cars: f5.41 per veh km 12% reduction with NO 12% reduction with project, NO costs decline project. that is, 4.76 that is, T 4.76 per veh km relative to the per veh km without project scenario in Truck: 11.85 per veh km 8% reduction with NO 8% reduction with project, NO upgradation roads project, that is, 10.90 that is, f 10.90 per veh km per veh km Travel time for bus 10.6 hrs for travelling all 422 7.8 hrs (26% reduction) NO 7.8 hrs (26% reduction) to NO passengers declines km of upgradation roads to travel in all 422 km travel in all 422 km of relative to without of upgrading upgrading component project scenario in component upgradation roads Number of road SlI31: 16 Renigunta- Less than 0.47 fatalities NO Less than 0.36 fatalities per NO accident fatalities Rayalacheruvu Corridor, per km km nor vehicle Andhra Pradesh kilometers declines 0.47 fatalities per km on Road Demo Corridors S114: 16 - Bijapur Corridor. Telangana 0.36 fatalitiesper km

Share of CRN in 40% 80% NO 75% NO good condition increased (size of classified (size of classified network: network: 6,800 km) 4,020 km) Results Indicators for each Component Component 1: Road Corridor Improvement 427 km upgraded 0 302 km upgraded YES 125 km upgraded YES. efficiently and 230 km upgraded I 10 km upgraded environmental and RESULT INDICATORS ATTACHMENT 1

socially sustainable way 6.018 km ofroads 0 4.301 km maintained NO 1717 km maintained under Long-term NO through Long term through Long term performance based performance-based performance-based maintenance maintenance contracts maintenance contracts contract (LTPBMC) Component 2: PPP Facilitation Three roads 0 2 Roads YES. I Road NO selected for PPP I Road transactions.

Component 3: Institutional Development Milestones in ISAP * IT-MIS. HR and NO * IT-MIS, HR and met NO Training plans fully Training plans fully operational operational * Complete * Complete Preparation of Preparation of State State Network Master Network Master Plan Plan Milestones in Disclosure & NO Disclosure & complaints NO GAAP met complaints handling handling mechanism mechanism operational operational Annual * RAMS operational NO -- maintenance plans and used for annual developed through plan preparation the RMS system Component 4 : Road Safety Demonstration Complete NO * Establish Road Saletv NO projects carried out implementation Demo lead Agency and Multi- in at least one road Corridor with multi- sector team for corridor, road sector coordination and safety coordination (Dec evaluate results 2015)

* Complete implementation Demo Corridor with multi- sector coordination and evaluate results Comprehensive New Safety Policy NO New Safety Policy NO GoAP road safety approved, institutional approved; institutional functions, capacity arrangement put in arrangement put in place, RESULT INDICATORS ATTACHMENT 1 and action plan(s) place, and Action Plan and Action Plan put in place Implementation drawn Implementation drawn Black Spot Complete NO Complete implementation NO Improvement of implementation of of improvement of 10 CRN improvement of36 blackspots blackspots Land Acquisition 100% to be completed NO 100% to be completed NO

(Total: 383 Acres) (Total: 107 Acres) Resettlement and 100% to be completed NO 100% to be completed NO Rehabilitation (Total: 2,733 Nos) (Total: 314 Nos)