The World Bank 1818 H Street N.W. 4 -00 INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Washington, D.C. 204 3 Cable Address: INTB ,I F D INTERNATIONAL DEVELOPMENT ASSOCIATION U.S.A. ab1l Address: [NDE .'0

n 15, 2015

Mr. Yang Shaolin Director General International Economic and Financial Cooperation Departme,nt Ministry of Finance San Li He Street, Xicheng Beijing 100820 People's Republic of

People's Republic of China: Yuni tan Urban Environment Project (Loan No. 7692-CN) and ni litional Financing for the Yiinnan Urban Environment Project (Loan No. 7937-CN) Amendments to Loan Agreements

Dear Mr. Yang:

I refer to the Loan Agreerrent between the People's Republic of China (the "Borro er ) and the International Bank for Reconstruction and Development (the "Bank") dated July 22, 2009 (the - ) -i inal Loan Agreement") and the Project Agreemei it of the same date between the Bank and Province t i. "Original Project Agreement") for the Yunnan Urban Environment Project (the "Project"), and the Lo, greement between the Borrower and the Bank dted August 23, 2010 (the "Additional Loan Agreement") a I1 1e Project Agreement of the same date between the Bank and Yunnan Province (the "Additional Project Agree re :") for the Additional Financing for the Project (c Alectively, the "Legal Agreements"). I also refer to your let ( r ated May 29, 2015 requesting certain amendment s to the Legal Agreements to facilitate implementation of the [:- ect.

I am pleased to inform you that after due consideration, the Bank has agreed with yot rn quest and hereby proposes to amend the Origina I Loan Agreement and the Additional Loan Agreement (cc I ively, the "Loan Agreements") as follows:

A. Amendment to the Original Loin Agreement

1. Part 1 of the Project Desc ription in Schedule 1 is amended to read as set out in Atacl IIC t 1 to this letter.

2. Section II.A.1 of Schedu e 2 is amended to read as follows:

"1. The Borrower shall monitor and evaluate, and cause the Project Implemer,i:. Entity to monitor and evaluate the progress of the Project and prepare Project Reports ii cordance with the provisic ns of Section 5.08 of the General Conditions and on the basi; : indicators set forth in the Results Framework. Each Project Report shall cover the per c d )f one (1) calendar semest,,r, and shall be furnished to the Bank not later than \ I r. 1 15 and September 15 in each year, starting on September 15, 2010."

RCA 248423. : WUI 64145 ' FAX (202) 477-6391 M Yang Shaolin -2- June 15, 2015

3. The withdrawal table in Section IV.A.2 of Schedule 2 is amended to read as set out in Attachment 2 to this letter.

4. The definition of "EMPs" in paragraph 6 of Appendix I is amended to read as follows:

"6. The acronym "EMPs" means, collectively, the following plans which set out, with respect to the Project, measures for: the protection of the environment; conservation of, and mitigation against adverse impact on, natural habitats or their functions; and avoidance of, or mitigation against, adverse impact on physical cultural resources, as well as administrative and monitoring arrangements to ensure the implementation of said plans, as said plans may be revised from time to time with the agreement of the Bank:

(a) the three (3) Environmental Impact Assessments and Environmental Management Plans for investments under Parts 1 and 2 of the Project in Municipality; and the plan for control of water pollutants in Lake Dianchi Basin in Kunming Municipality; all dated December 22, 2007;

(b) the five (5) Environmental Impact Assessments and Environmental Management Plans for investments under Part 1 of the Project in Municipality, all dated December 22, 2007;

(c) the eight (8) Environmental Impact Assessments and Environmental Management Plans for investments under Part 1 of the Project in Wenshan Prefecture, all dated December 22, 2007; and

(d) the Environmental Impact Assessment and Environmental Management Plan for additional investments under Part 1 of the Project in Lijiang Municipality dated February 1, 2015.

The acronym "EMP" means, individually, any such plan."

5. Part of the definition of "RAPs" in sub-paragraph 18(b) of Appendix 1 is amended to read as follows:

"(b) the five (5) Resettlement Action Plans, all dated September 12, 2007, and the Resettlement Action Plan dated February 1, 2015, for investments under Part 1 of the Project to be carried out in Lijiang Municipality;"

6. A new paragraph 23 is inserted in Appendix 1 in alphabetical order as follows, and the subsequent paragraphs are renumbered accordingly:

"23. "Results Framework" means the framework, dated June 15, 2015 and agreed with the Bank, setting forth the indicators and targets for purposes of monitoring and evaluation of the progress of the Project, as the same may be modified from time to time with the prior written agreement of the Bank." Ms. Yang Shaolin -3- June.15 '0 5

7. Part 3 of Appendix 2 is a nended to read as follows:

Name of Name of Type of Name of Project Project Company is establish( i a d Project Project Company Company operating pursuant to its Cha I Jiand Municipality County / Business License as follows: / Prefecture City Date of Business License )ate of Charter Number ;usiness icense 3. Wenshan Qiubei Utility Water September 5326261100068 aly 26, Prefecture County Supply Corporation 10, 2007 006 Non-u ility Puzhehei Tourism June 20, 5326261100181 .ly 3, Development 2006 006 Corporation Limited Funing Non-u ility Funing County Urban November 53262800000136( )ecember County and Rural Investment 6, 2012 , 2012 and Development Company Limited Guangnan Utility September 5326271100246 spril 27, County Water Supply and 8, 2000 006 Drainage Company Limited Yanshan Utility Yanshan County June 6, 532622000004972 )ecember County Yongtong Sewerage 2013 , 2012 Company Limited

B. Amendment to the Additional Loan Agreement

1. Part 1 of the Project Description in Schedule 1 is amended to read as set out in Attacl ii e t 3 to this letter.

2. Section II.A.1 of Schedu e 2 is amended to read as follows:

"1. The Borrower shtall monitor and evaluate, and cause the Project Implemen i . Entity to monitor and evaluate the progress of the Project and prepare Project Reports i cordance with the provisions of Section 5.08 of the General Conditions and on the basi; ndicators set forth in the Fesults Framework. Each Project Report shall cover the per Ed >f one (1) calendar semest-r, and shall be furnished to the Bank not later than 1N r. 1 15 and September 15 in each year, starting on September 15, 2011."

3. The withdrawal table in Section IV.A.2 of Schedule 2 is amended to read as set out in / t. chment 4 to this letter.

4. A new paragraph 17 is inserted in the Appendix in alphabetical order as follows, and t Ibsequent paragraphs are renumber d accordingly:

"17. "Results Framework" means the framework, dated June 15, 2015 and ag ee. with the Bank, setting for th the indicators and targets for purposes of monitoring and v uation of the progress of tie Project, as the same may be modified from time to time A the prior written agreemet t of the Bank."

Except as specifically amenced by this amendment letter, all other provisions of the Loa i yreements shall remain in full force and effect. The Original Project Agreement and the Additional Projc .greement Yang Shaolin -4- June 15, 2015

(collectively, the "Project Agreements") are similarly being amended as reflected in an amendment letter to the Project Agreements of even date.

Please confirm your agreement to the amendments set out above by having an authorized representative of the Borrower sign and date the form of confirmation set forth below, and returning one fully countersigned original of this letter to us. This amendment letter shall become effective as of the date of the last countersignature of the following two amendment letters: (a) a duly countersigned original of this letter by the authorized representative of the Borrower; and (b) a duly countersigned original of the amendment letter to the Project Agreements by the authorized representative of Yunnan Province.

Sincerel

Bert Hofman Country Director, China East Asia and Pacific Region

Confirmed and agreed: PEOPLE'S REPUBLIC OF CHINA

By: Authorized Representative

Name: -at. "(O .A fM [0 b! Title: b2-0er1141

Date:

cc: Ms. Li Jiang Executive Vice Governor Yunnan Province People's Republic of China Ms. Yang Shaolin -5- June 15, 2( 15

ATTACHMENT 1

Part 1 of the Project Des,ription in Schedule 1 to the Original Loan Agreement (Loan No. 7692-CN)

Part 1 Urban Environmental Infrast: ucture Development

Develop critical urban envirc rmental infrastructure in the Project Counties/Cities as follow, :

(a) Development of solid waste nanagement services systems, including construction and ex ) i ion of sanitary landfills and leachate tr,eatment stations, associated collection, transportation and iz )sal facilities and access roads; and closui e and remediation of existing dump sites.

(b) Development of wastewater and water supply systems, including construction and expa i I i of wastewater treatment plants; construction and rehabilitation of sewage collection and drainage n -ks; and expansion and rehabilitation of ex.:isting water supply treatment plants and networks.

(c) Carrying out infrastructure investments in Lion Mountain area, which adjoins the i iral heritage site of Lijiang Ancient Town in Lijiang Municipality, including construction of a trar; ner sub-station and ecological parking lot; greening, landscaping and night lighting; solid waste c 1,e -ors and equipment; restoration of buil6ings and signage; and provision of technical assistance, .i a ing courses and study tours to enhance th, cultural conservation policies and practices of responsible lies in Lijiang Municipality.

(d) Carrying out investments to improve management of the river environment, it c t ing construction and rehabilitation of river embankments, dredging of rivers, planting of vegetati ):,. and construction of roads along rivers (tc provide access along the embankment) and bridges (to enal 1, i ver crossing), all to mitigate against erosion and floods; and construction of latrines and cpmposting f, cili ies, biogas ponds and artificial wetlands it lake discharge points, all to control and scale down pollu (a and restore the river eco-system.

(e) Provision of support for the inplementation of Project activities, including:

(i) with respect to Wen han Prefecture, provision of technical assistance and equipt i:r for supervision of environmental infrastructure construction and for environmental monitorin ; a d

(ii) with respect to other implementing agencies and entities, provision of technical as,::. ice, training courses and study toi rs to assist in:

(A) detailed enginee ring design, design review, procurement management and .(i -act supervision;

(B) operation and m; knagement of wastewater and solid waste facilities; and

(C) building capacity for Project management and operation. Ms. Yang Shaolin -6- June 15, 2015

ATTACHMENT 2

Withdrawal table under Section IV.A.2 of Schedule 2 to the Original Loan Agreement (Loan No. 7692-CN)

Amount of the Loan Percentage of Category Allocated Expenditures to be (expressed in Dollars) financed (inclusive of Taxes) (1) Works under Part 1 of the Project to be implemented in: (a) Kunming Municipality (a) 5,060,380 (b) Lijiang City and in (b) 23,752,935 Lijiang Municipality (c) 0 79% (c) Yulong County in Lijiang (d) 10,953,525 Municipality (d) Wenshan Prefecture

(2) Works under Part 2 of the Project

0 0

(3) Goods under Part 1 of the Project to be implemented in: (a) Kunming Municipality (a) 2,673,990 100% (b) Lijiang Municipality (b) 1,759,770 (c) Wenshan Municipality (c) 344,290

(4) Goods under Part 2 of the Project

408,165 100%

(5) Consultants' services under Part I of the Project to be provided for: (a) Lion Mountain Park investments in (a) 0 Lijiang City (b) 763,690 (b) Supporting Project implementation

(6) Consultants' services under Part 2 of the Project

1,166,395 100% Ms. Yang Shaolin -7- June 15, 21 15

Amount of the Loan Percentage o F Category Allocated Expenditures I e (expressed in Dollars) financed (inclusive of IT:t ) (7) Front-end Fee Amount payable pt roL nt to Section 2.03 of this 225,000 Agreement in accoi d i :e with Section 2.07(t(I i the General Conditions

(8) Premium for Interest Rate Cap or interest Rate Collar Amount payable pt nL nt to Section 2.07(c) of t s 0 Agreement and Sec i: 4.05(c) of the Gene z Conditions

(9) Works under Parts 1 and 2 of the Project

35,831,405 85%

(10) Goods under Parts 1 and 2 of the 1roject

5,896,545 100%

(11) Consultants' services under Parts and 2 of the Project

1,163,910 100%

TOTAL AMOUNT 90,000,000 Ms. Yang Shaolin -8- June 15, 2015

ATTACHMENT 3

Part 1 of the Project Description in Schedule I to the Additional Loan Agreement (Loan No. 7937-CN)

Part 1. Urban Environmental Infrastructure Development

Develop critical urban environmental infrastructure in of Municipality as follows:

(a) Development of wastewater and water supply systems, including expansion of wastewater treatment plants; construction of sewage collection and drainage networks; construction of water supply treatment plants and networks and construction of water transmission mains.

(b) Carrying out of investments to improve management of the river environment, including construction and rehabilitation of river embankments, and dredging of rivers, all to mitigate against erosion and floods and control and scale down pollution and restore the river eco-system.

(c) Provision of support for the implementation of Project activities, including:

(i) with respect to Zhaoyang District of Zhaotong Municipality, provision of technical assistance and equipment for environmental infrastructure construction, environmental monitoring and flood risk management; and

(ii) with respect to other implementing agencies and entities, provision of technical assistance, training courses and study tours to assist in:

(A) detailed engineering design, design review, procurement management and contract supervision;

(B) operation and management of water supply, wastewater and river management facilities; and

(C) building capacity for Project management and operation. Ms. Yang Shaolin -9- June 15, 21 15

ATTACHMENT 4

Withdrawal table under Section IV.A.2 of Schedule 2 to the Additional Loan Agref r t: it (Loan No. 7937-CN)

CategorV Amount of the Loan Exedtrso1Percentage of to I< AlloatedfinancedAlloatedExpenditures (inclusive if (expressed in Dollars) aes Taxes)_ _ (1) Works under Part 1 of the Pr(ject to 22,850,730 65% be implemented in Zhaoyang District of Zhaotong Municipality (2) Goods under Part 1 of the Prcject to 396,010 100% be implemented in Zhaoyang District of Zhaotong Municipality (3) Consultants' services under Fart 1 of 566,570 100% the Project to be provided for Zhaoyang District of Zhaotorig Municipality (4) Front-end Fee 150,000 Amount payable purs ini to Section 2.03 of thi, Agreement in accord; r c with Section 2.07(b) 1 the General Conditio: s (5) Premium for Interest Rate Ca 3 or 0 Amount payable purs i ii Interest Rate Collar to Section 2.07(c) of Agreement and Sectii i 4.05(c) of the Genera Conditions (6) Works under Part 1 of the Project to 33,953,600 85% be implemented in Zhaoyang District of Zhaotong Municipality (7) Goods under Part 1 of the Project to 946,660 100% be implemented in Zhaoyang District of Zhaotong Municipality (8) Consultants' service under Pirt I of 1,136,430 100% the Project to be provided for Zhaoyang District of Zhaotorig Municipality TOTAL AMOUNT 60,000,000 Ms. Yang Shaolin -10- June 15, 2015

ATTACHMENT 5 RESULTS FRAMEWORK CHINA: Yunnan Urban Environment Project and Additional Financing

Unit of Base Cumulative Target Values Frequ Data Source/ Responsibility Results Indicators line for Data Measure (2009) 2013 2014 2015 2016 2017 ency Methodology Collection

PO-1 People in urban areas with access to wastewater services (cumulative) [ l Number 350,000 610,000 642,000 675,000 748,000 806,000 Yearly Report PMO and PIU PO-2 People in urban areas with access to solid waste management services O] persons 182,000 250,000 350,000 400,000 448,000 448,000 Yearly Report PMO and PIU (cumulative) [2] PO-3 People in urban areas provided with PMO and PIU access to water services (cumulative) [31 E] persons 319,000 330,000 335,000 356,000 380,000 404,000 Yearly Report P0-4 Improved capacity for Dianchi Lake Draft Online Lessons Basin management 0 Qualitative Limited - integrated monitoring included in Yearly Report PMO and PIU master systems in sector 1 3 t plan place FYP

10 - 1 Volume (mass) of COD pollution load removed by the treatment plant under Z ton/yr 1800 1800 1850 1960 2090 2100 Yearly Report PMO and PIU the Project 10- 2 Volume of municipal solid waste disposed at sanitary landtill L Ton/yr 143 330 443 460 478 480 Yearly Report PMO and PlU 10- 3 Length of river section L km 0 0 0 25.7 44.7 49.7 Yearly Report PMO and PIU rchabilitated[4] 10 - 4 Increase in visitor numbers on Lion 0 Progress PMO and Mountain Park l number (no 0 60,000 65,000 70,000 75,000 Yearly Report Lijiang PIU access) Flood risk Flood risk 10 - 5 Flood Risk Management System Qualitative None - - - management Yearly Progress Zhaotong for Zhaotong system anagee Report PMO and PIU prepared [1] Number of people in urban areas of: (i) Lijiang City (including Shuhe Town), Huaping, Qiubei, Guangna, and Yanshan Counties under YUEP-1 and (ii) Zhaoyang District under YUEP-AF provided with access to wastewater collection and treatment. [2] Number of people in urban areas of Songming, Xundian, Luquan Counties and Lijiang City provided with access to regular solid waste collection. [3] Number of people in urban areas of (i) Qiubei County under YUEP-l; (ii) Zhaoyang District under YUEP-AF provided with access to safe water. [4] Length of river sections rehabilitated in (i) Putting River under YUEP-1; (ii) Tuwei and Liji Rivers under YUEP-AF. Ms. Yang Shaolin 11 June 1 . 115

cc: Mr. Yao Licheng, Director Mr. Peng Xiang, Deputy Dir ctor IFI Div. I, International Econ omic and Financial Cooperation Department Ministry of Finance Email: [email protected]; pengxianggmof.gov.cn;

Mr. Li Junyuan, Director Mr. Feng Baoshan, Director Foreign Loans Division, Fort ign Fund Utilization Department National Development and Reform Commission Email: lijyndrc.gov.cn; [email protected]:

Ms. Li Jiang, Executive Vice Governor Yunnan Province People's Republic of China

Mr. Chen Jianguo, Director General Yunnan Provincial Finance Department Kunming, Yunnan Province Fax: 0871-6363 1025

Mr. Rao Wei, Deputy Director Yunnan Provincial Developn ent and Reform Committee Kunming, Yunnan Province Fax: 0871-6311 3311

Mr. Yao Guohua, Director G -neral Yunnan Provincial Environmental Protection Department Kunming, Yunnan Province Fax: 0871-6411 0819

Mr. Tao Yi, Governor Zhaoyang District Zhaotong Municipality Yunnan Province Ms. Yang Shaolin 12 June 15, 2015

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