The World Bank 1818 H Street N.W. (202) 477-1234 INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Washington, D.C. 20433 Cable Address: INTBAFRAD INTERNATIONAL DEVELOPMENT ASSOCIATION U.S.A. Cable Address: INDEVAS

DRAFT 12/10/03

Public Disclosure Authorized December 19, 2003

Mr. Roberto Lavagna Minister of Economy and Production Ministry of Economy and Production Hipólito Irigoyen 250 1310 ,

Re: ARGENTINA –Buenos Aires Urban Transport Project (Loan No. 4163-AR)

Amendment to Loan Agreement Public Disclosure Authorized

Dear Minister Lavagna:

Please refer to the Loan Agreement (Loan No. 4163-AR) entered into between the Argentine Republic (the Borrower) and the International Bank for Reconstruction and Development (the Bank), as amended, and the Implementation Letter entered into between the Borrower and the Bank, both dated December 10, 1997.

In response to the Borrower’s requests of December 8, 2003 to, inter alia: (a) amend the Project activities as a result of the reallocation of US$50 million of Loan proceeds to permit the financing of public health activities under the Borrower’s social emergency program; (b) create a new disbursement category to finance operating costs; (c) raise the threshold of prior review for consulting firms from US$100,000 to

Public Disclosure Authorized 200,000; and (d) increase the percentage of expenditures to be financed under the Loan with respect to: (i) the rehabilitation of Line A (from 65% to 70%) and the improvements or conversions of transfer centers and rail-road crossings, respectively (from 40% to 48%), the Bank hereby agrees to amend the Loan Agreement and the Implementation Letter mentioned above, as follows:

I. Loan Agreement:

1. The definition of the term “Monitoring System Arrangement” set forth in Section 1.02 (j) is hereby deleted, and said paragraph is hereby deliberately left blank.

2. The provisions of Section 3.08 are hereby deleted, and Section 3.08 is hereby deliberately left blank.

Public Disclosure Authorized 3. The table in paragraph 1 of Schedule 1 is hereby amended in its entirety as set forth in Attachment I to this Amendment Letter.

4. Paragraphs 4 and 5 of Schedule 1 are hereby amended to read in its entirety as follows:

- 2 -

“4. The Bank may require withdrawals from the Loan Account to be made on the basis of statements of expenditure for expenditures under contracts costing $8,000,000 equivalent or less (in the case of civil works, but not including civil works covered by the first two contracts under the Project procured pursuant to Section I, Part C.1 (b) of Schedule 4 to this Agreement), $350,000 equivalent or less (in the case of goods, but not including goods covered by the first two contracts under the Project procured pursuant to Section I, Part C.1 (a) of Schedule 4 to this Agreement), less than $200,000 equivalent (in the case of consulting firms) and less than $50,000 equivalent (in the case of individual consultants), all under such terms and conditions as the Bank shall specify by notice to the Borrower. For purposes of withdrawals from the Loan Account in respect of Part A.1 of the Project, statements of expenditure shall consist of both the items referred to in paragraph 2 (a) and (b) of this Schedule.

5. For purposes of this Schedule:

(a) the term "foreign expenditures" means expenditures in the currency of any country other than that of the Borrower for goods supplied from the territory of any country other than that of the Borrower;

(b) the term "local expenditures" means expenditures in the currency of the Borrower or for goods supplied from the territory of the Borrower; and

(c) the term “Operating Costs” means reasonable expenditures that would not have been incurred by the UEP absent the Project for: (i) office equipment and related maintenance of said equipment; (ii) refurbishment of office space, office utilities and office supplies; (iii) travel and per diem of its personnel; and (iv) salaries of its temporary contractual staff (but excluding salaries of the Borrower and UEP’s regular staff), all needed for the supervision of the Project.”.

5. Schedule 2 is hereby amended to read in its entirety as set forth in Attachment II to this Amendment Letter.

6. Paragraph 2 of Section II of Schedule 4 to read in its entirety as follows:

“2. Notwithstanding the provisions of paragraph 1 of this Section, the provisions of the Consultant Guidelines requiring prior Bank review or approval of budgets, short lists, selection procedures, letters of invitation, proposals, evaluation reports and contracts, shall not apply to contracts for the employment of consulting firms estimated to cost less than $200,000 equivalent each and contracts for the employment of individual consultants estimated to cost less than $50,000 equivalent each. However, said exceptions to prior Bank review shall not apply to: (a) the terms of reference for such contracts; (b) single-source selection of consulting firms; (c) assignments of a critical nature, as reasonably determined by the Bank; (d) amendments to contracts for the employment of consulting firms raising the contract value to $200,000 equivalent or above; and (e) amendments to contracts for the employment of individual consultants raising the contract value to $50,000 equivalent or above.”.

II. Implementation Letter:

Tables D.1 (Implementation Schedule), D.2 (Summary of Objectives and Key Performance Indicators) and D.3 (Quantitative Performance Targets) attached to the Implementation Letter are hereby amended to read in their entirety as set forth in Attachments III, IV and V, respectively.

- 3 -

III. Effectiveness:

Please confirm your agreement to the foregoing amendments by signing and dating this letter in the spaces provided below. This amendment will be executed in two counterparts, each of which shall be an original. Upon your confirmation, please return one fully executed original to us. The provisions of this Amendment Letter will become effective as of the date first above written upon dispatch of a notice from the Bank to the Borrower indicating the Bank’s receipt of one fully executed original of this Amendment Letter:

Notwithstanding the above, if: (a ) the Amendment Letter of September 19, 2003 (duly countersigned by you on November 17, 2003) shall not have become effective by January 30, 2004, the provisions of said Amendment Letter and all the obligations of the parties thereunder shall terminate, unless the Bank, after consideration of the reasons for delay, shall establish a later date; and (b) this Amendment Letter shall not have become effective by April 30, 2004, the provisions of this Amendment Letter and all the obligations of the parties thereunder shall terminate, unless the Bank, after consideration of the reasons for delay, shall establish a later date.

INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT

Axel van Trotsenburg Director Country Management Unit Argentina, Chile, Paraguay and Uruguay Latin America and the Caribbean Region

AGREED AND CONFIRMED: ARGENTINE REPUBLIC

By: ______Authorized Representative

Name: Mr. Roberto Lavagna

Date: March 19, 2004 - 4 -

ATTACHMENT I

Loan No. 4163 AR

Amount of the Loan Allocated % of (Expressed in Expenditures Category Dollars) to be Financed

(1) Metrovías concession 50,000,000 35% of the expenditures payments for Part A.1 covered by each Work of the Project Certificate

(2) Civil works for Part 63,000,000 70% A.2 of the Project

(3) Civil works (including 7,300,000 48% Integration Subprojects) under Part B of the Project

(4) Civil works (including 15,000,000 48% Traffic Safety Subprojects) under Part C.1 of the Project

(5) Goods for Part C.2 of 0 the Project

(6) Goods for Parts A.2, B 100,000 70% and C.1 of the Project

(7) Technical assistance 8,400,000 83% and training (except as covered under Category (8) below)

(8) Technical assistance for 4,812,642 100% Part D.3 (b) of the Project

(9) Refunding of Project 1,137,358 Amounts due pursuant Preparation Advance to Section 2.02 (c) of this Agreement

(10) Unallocated 0

- 5 -

Amount of the Loan Allocated % of (Expressed in Expenditures “Category Dollars) to be Financed

(11) Medical drugs and supplies 15,000,000 100 % of foreign expenditures and iron-fortified milk and 83% of local expenditures under Part E of the Project

(12) Medical drugs and supplies, 35,000,000 100 % of foreign expenditures vaccines, pesticides and and 83% of local expenditures other medical goods under Part F of the Project

(13) Operating Costs for Parts A through D of the Project 250,000 83%

TOTAL 200,000,000.”. ======

- 6 -

ATTACHMENT II

Loan No. 4163 AR

SCHEDULE 2

Description of the Project

The objectives of the Project are to: (a) support joint private sector-public sector initiatives to improve the service quality and coverage of mass transit in the AMBA; (b) support the carrying out of the infrastructure improvement obligations assumed by private concessionaires with respect to the AMBA passenger rail system; (c) assist in improving traffic safety and urban transport-related environmental quality in the AMBA; (d) contribute towards the development of an integrated urban transport (road and rail) system for the AMBA; and (e) improve maternal and child health through the delivery of quality services, and to strengthen disease surveillance and control activities, all for purposes of reducing the acute risk of disease in the Borrower’s territory.

The Project consists of the following parts, subject to such modifications thereof as the Borrower and the Bank may agree upon from time to time to achieve such objectives:

Part A: Buenos Aires Subway Infrastructure Improvement

1. Rehabilitation (including civil works supervision) of lines B, C, D and E of the Buenos Aires subway system, as well as of the Urquiza suburban rail line, by replacing portions of their track without deviating from the original existing track bed, renovating their electric substations and electric transmission systems, installing automatic signals and an operations control center for the lines, improving their passenger stations (such as by installing or rebuilding escalators), improving their mechanical workshops, ventilation systems and drainage systems and reconstructing approximately eight Urquiza line electric coaches.

2. Rehabilitation (including civil works supervision) of Buenos Aires subway system line A by completely replacing its track without deviating from the original existing track bed, installing three new electric substations for the line, renewing the line’s power transmission system, renovating its signal and communications system, expanding the subway operations control center to include control of the line, replacing the line’s drainage pumps and ventilation system and installing or rebuilding its station escalators.

Part B: Urban Transport System Integration

1. Major improvements (including civil works supervision) of road/rail transfer facilities by carrying out Integration Subprojects (consisting of, e.g., building or improving bus terminals, transfer centers and car parks) at selected major AMBA subway and/or rail stations.

2. (a) Minor improvements (such as, e.g., installation of bus-only lanes and other traffic flow enhancements, traffic signals, walkways, sidewalks and bicycle parking facilities) at outlying AMBA subway and/or rail stations, so as to ease bus, car, pedestrian and bicycle access to such stations; and (b) this subparagraph is hereby deliberately left blank.

- 7 -

Part C: Traffic Safety Enhancement and Environmental Monitoring

1. (a) Conversion (including civil works supervision) of approximately eight road/rail grade crossings in the AMBA into non-grade road/rail crossings, at or near the same sites as the original grade crossings (by carrying out Traffic Safety Subprojects involving tunnel or bridge construction); (b) this subparagraph is hereby deliberately left blank; (c) carrying out of a study to develop a comprehensive strategy to improve the safety of road/rail grade crossings in the AMBA; and (d) implementation of other traffic safety measures in the AMBA, acceptable to the Bank.

2. This paragraph is hereby deliberately left blank.

Part D: Institutional Strengthening

1. Carrying out of an integrated urban transport study for the AMBA, which study shall include a transport survey and, on the basis of the results of said survey, subsequent preparation of a transport model suitable for quantitatively assessing the feasibility and comparative merits of alternative transportation strategies for the AMBA.

2. Carrying out of studies to develop an AMBA traffic and public space improvement program.

3. Provision of technical assistance to ST on: (a) technical, financial, environmental and social aspects of urban transport in general, as well as on the preparation, appraisal and carrying out of Integration Subprojects and Traffic Safety Subprojects in particular; and (b) general Project administration.

4. Provision of training, in the fields of urban transport planning and economics, environmental management, traffic engineering and traffic safety management, to Argentine professionals working, or likely to work, in said fields with respect to the AMBA.

5. Establishment, maintenance and operation, throughout at least the period of implementation of the Project, of a public unit for AMBA urban transport planning.

Part E: Emergency Drugs and Supplies

Improvement of services related to women’s reproductive health care and prenatal controls, including anemia prevention, child delivery, newborn reception, post-partum and child health care, through the acquisition and distribution of medical drugs and supplies and iron-fortified milk.

Part F: Strengthening of Disease Control

1. Carrying out of a program of actions for disease monitoring, control and prevention of tuberculosis, dengue and other vector disease control, and hospital infections, through the acquisition and distribution of medical drugs and supplies, vaccines and pesticides.

2. Carrying out of a program of actions for disease monitoring, control and prevention of HIV/AIDS and other sexually transmitted diseases, through, inter alia, the provision of antiretroviral therapy and critical diagnostic supplies for blood banks and other diagnostic centers.

* * *

The Project is expected to be completed by June 30, 2005.”. ATTACHMENT III

Loan No. 4163 AR

PROYECTO DE TRANSPORTE URBANO DE BUENOS AIRES - PRESTAMO BIRF 4163 - AR

año 2003 año 2004 año 2005 año 2006

Duración trimestre trimestre trimestre trimestre trimestre trimestre trimestre trimestre trimestre trimestre trimestre trimestre trimestre trimestre trimestre trimestre Id Tareas componentes del crédito en días 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4

1 Rehabilitación de línea A 0 2 Renovación contrato 0 25-Sep 3 Reactivación de la obra 0 1-Dec 4 Renovación de vias y aparatos de vía 522 5 Obras civiles 414 6 Instalaciones eléctricas 523 7 Señalamiento y radiocomunicación 414 8 Supervisión de obra (línea A) 782 9 Centros de transbordo 0 10 Moreno 283 11 Hurlingham 195 12 Centros de transbordo a definir 262 Supervisión de obra (centros de 13 transbordo) 588 14 Pasos a distinto nivel 0 15 Paso bajo nivel Ituzaingo 392 16 Paso bajo nivel Berazategui 262 17 Paso alto nivel Avellaneda 328 18 Paso bajo nivel San Isidro 262 19 Paso a distinto nivel a definir 261 20 Supervisión de obra pasos a distinto nive7l 83

21 Planificación de transporte en el AMBA458 ATTACHMENT IV

Loan No. 4163 AR

Table D2: Summary of Objectives and Key Performance Indicators

Objectives Outputs Assumptions Impacts . Support the private- . Complete . Timely availability . Successful disbursement of public partnership in Rehabilitation of Line A of counterpart funds in the Loan related to Line A. improving the service (signaling, tracks, 2004 and 2005. quality and coverage of ventilation, stations . Number of train cancellations mass transit. upgrading, electric . Efficient regulation on Line A < 2% of the planned. substations, contact line, and conflict resolution . Contribute to the power transmission system. . Subway ridership equals or financial obligations system) . exceeds year 2001 levels. which the Borrower has . Metrovías to assumed under the . Successful continuance continue with the . Subway car-km increases as concession agreements of Metrovías concession. concession. governed by ridership. with the private sector. . Disbursement of Bank . Borrower and . Subway service interruptions loan. Metrovías to maintain down to the levels specified in common the concession agreement. understanding on concession conditions. . Assist in improving the . Construction of 6-8 . Coordination . Decrease in the suburban conditions of traffic road/rail grade between the railway related number of safety. separations. participating entities traffic fatalities . (municipalities, rail . Improving rail/bus concessionaires, transfer conditions in 3 national and stations. provincial governments). . Help in developing an . Completion of the . Full coordination . Increased professional integrated urban AMBA surveys and with all the capacity in the Transport transport (roads and rail) transport analysis. municipalities in the Secretariat. system for AMBA. AMBA, the province of Buenos Aires, and . Existence of a solid data base the Borrower. on travel patterns in the AMBA

. Institutional capacity . Calibration of travel demand within the UEP. forecast model for the AMBA

. First steps towards . Fine-tuning of the travel the establishment of a demand forecasts for the Metropolitan subway network extension Authority for urban (new lines and extensions of transport in the existing ones). AMBA are made through the State . Elaboration of strategic urban Modernization Loan plan for the AMBA, including (Loan No. 4423-AR). the development of a network of segregated busways integrated with the subway. ATTACHMENT V

Loan No. 4163 AR Cuadro D3: Objetivos Cuantitativos de Cumplimiento (Año Calendario) Proyectos 1999 2000 2001 2002 2003 2004 2005

Modernización Línea A Modernización Línea "A": Renovación de Vía y ADV 7.93% 23.71% 0.00% 0.00% 0.00% 27.34% 41.02%

Modernización Línea "A": Obras Civiles 2.80% 11.00% 2.88% 0.00% 0.00% 10.00% 73.32%

Modernización Línea "A": Instalaciones Electricas 0.00% 27.31% 8.55% 0.00% 0.94% 41.13% 22.07%

Modernización Línea "A": Señalamiento 0.00% 0.00% 0.00% 0.00% 0.00% 15.00% 85.00%

Interrupción servicio min. (Línea A Subterráneos) 1,940 2,305 6,539 1,892 2,000 2,000 1,800

Coche - km (Subterráneos) 34,588 36,618 36,841 32,381 32,182 34,328 36,618

NPV de Concesión @ 12% >=0 >=0 >=0 >=0 >=0 >=0 >=0

NPV de Línea "A" @ 12% >=0 >=0 >=0 >=0 >=0 >=0 >=0

2004-1 2004-2 2004-3 2004-4 2005-1 2005-2 2005-3 2005-4 Pasos a Desnivel Paso a dif. Nivel, Municipalidad de Ituzaingó 3.33% 18.90% 26.67% 24.40% 14.40% 12.30%

Paso a dif. Nivel, Municipalidad de Berazategui 16.70% 44.40% 32.20% 6.70%

Paso a dif. Nivel, Municipalidad de Avellaneda 10.00% 15.00% 27.00% 28.00% 20.00%

Paso a dif. Nivel, Municipalidad de San Isidro 20.00% 30.00% 30.00% 20.00%

Paso a diferente Nivel a definir 15.00% 25.00% 35.00% 25.00%

Centros de Trasbordo Centro de Transbordo est. Moreno, F.C. Sarmiento 20.00% 20.00% 25.00% 25.00% 10.00%

Centro de Transbordo est. Hurlingham, F.C. Urquiza 25.00% 45.00% 30.00%

Centros de Transbordo a definir 18.00% 18.00% 37.00% 35.00% 20.00% - 11 -

Reynaldo Pastor M:\ARGENTIN\Amendments\4163-AR (2-2003).doc December 5, 2003 12:12 PM - 12 -