The World Bank 1818 H Street N.W. (202)473-1000 INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Washington, D.C. 20433 Cable Address: INTBAFRAD INTERNATIONAL DEVELOPMENT ASSOCIATION U.S.A. Cable Address: INDEVAS OFFICIAL December 23, 2014

Public Disclosure Authorized DOCUMENTS

Mr. Yang Shaolin Director General International Economic and Financial Cooperation Department Ministry of Finance ,

Re: People's Republic of China - Third Medium Cities Infrastructure Project Loan No. 7524-CN Amendment to the Loan Agreement Public Disclosure Authorized Dear Mr. Yang:

We refer to the Loan Agreement between the People's Republic of China (the "Borrower") and the International Bank for Reconstruction and Development (the "Bank") dated July 1, 2008, as amended thereof (the "Loan Agreement") and the Project Agreement of the same date between the Bank and Liaoning Province, as amended thereof (the "Project Agreement") for the above-referred project (the "Project").

We also refer to the letter dated June 10, 2014, from Mr. Yang Yingming, Deputy Director- General, International Department, Ministry of Finance, requesting restructuring of the Project, including, inter alia: (i) provision of financing to two (2) new activities under the Project; and (ii) inclusion of two (2) new Categories and reallocation of the Loan proceeds among certain Categories; and (iii) extension of

Public Disclosure Authorized the Closing Date of the Project.

After due consideration of the request and further consultations with the Borrower, the Bank proposes to amend, (i) the Loan Agreement as set out below in this letter (the "Letter of Amendment to Loan Agreement"); and (ii) the Project Agreement as provided in the letter of even date herewith from the Bank to Liaoning Province (the "Letter of Amendment to Project Agreement").

1. Schedule 1 of the Loan Agreement: the "Project Description" is amended to read as follows [Emphasis Added]:

"Part A: Centralized Heating Infrastructure

Construction and rehabilitation of centralized heating systems in the Project Cities, including:

Public Disclosure Authorized 1. [Deleted and Intentionally Left Blank]

2. (Steel Central Heating Supply): construction and/or rehabilitation of waste heat recovery systems including waste heat collectors, central heating networks, and pumping stations; and provision of auxiliary equipment, and plant operation and maintenance equipment. Mr. Yang Shaolin - 2 - December 23, 2014

3. Benxi Nanfen (Central Heating Supply): construction and/or rehabilitation of boiler plants, central heating networks, group substations and building level substations; and provision of meters (including building level meters), auxiliary equipment, control and monitoring equipment, and plant management and maintenance equipment.

4. [Deleted and Intentionally Left Blank]

5. Gonchangling (Central Heating Supply): construction and/or rehabilitation of boiler plants, booster pump stations, central heating networks, group substations and building level substations; and provision of meters (including building level meters), auxiliary equipment, control and monitoring equipment, and plant management and maintenance equipment.

6. [Deleted and Intentionally Left Blank]

7. Yangjiazhangzi (Central Heating Supply): construction and/or rehabilitation of boiler plants, central heating networks, group substations and building level substations; and provision of meters (including building level meters), auxiliary equipment, control and monitoring equipment, and plant management and maintenance equipment.

8. (Central Heating Supply): construction and/or rehabilitation of boiler plants, central heating networks, group substations and building level substations; and provision of meters (including building level meters), auxiliary equipment, control and monitoring equipment, and plant management and maintenance equipment.

9. Yingkou Economic Development Zone (Central Heating Supply): construction and/or rehabilitation of booster pump stations, central heating networks, group substations and building level substations, and provision of meters (including building level meters), auxiliary equipment, control and monitoring equipment, and plant management and maintenance equipment.

10. [Deleted and Intentionally Left Blank]

11. Kangping (Central Heating Supply): construction and/or rehabilitation of central heating networks, group substations and building level substations; and provision of meters (including building level meters), auxiliary equipment, control and monitoring equipment.

12. (Central Heating Supply): improvement of desulphurization and dust removal systems for heat sources, construction and/or rehabilitation of central heating networks, group substations and building level substations; and provision of meters (including building level meters), auxiliary equipment, control and monitoring equipment.

13. Chaoyang (Central Heating Supply): construction and/or rehabilitation of central heating networks, group substations and building level substations; and provision of meters (including building level meters), auxiliary equipment, control and monitoring equipment.

14. Yixian (Central Heating Supply): construction and/or rehabilitation of central heating networks, group substations and building level substations; and provision of meters (including building level meters), auxiliary equipment, control and monitoring equipment." Mr. Yang Shaolin -3 - December 23, 2014

2. Sections IV.A and IV.B of Schedule 2 to the Loan Agreement are amended as stated in Attachment 1 to this Letter of Amendment to Loan Agreement.

3. Section I (Definitions) in the Appendix to the Loan Agreement is amended as stated in Attachment 2 to this Letter of Amendment to Loan Agreement.

Except as specifically amended in this Letter of Amendment to Loan Agreement, all other terms and conditions of the Loan Agreement shall remain in full force and effect.

Please confirm your agreement to the foregoing on behalf of the Borrower by countersigning and dating the corresponding form of confirmation set forth below, and returning one fully countersigned original of this Letter of Amendment to Loan Agreement to us. Upon receipt by the Bank of: (a) this Letter of Amendment to Loan Agreement duly countersigned by the an authorized representative of the Borrower; and (b) the Letter of Amendment to Project Agreement duly countersigned by authorized representative of Liaoning Province, the above amendments to the Loan Agreement shall become effective.

Sincerely yours,

Bert Hofman Country Director, China East Asia and Pacific Region

CONFIRMED: PEOPLE'S REPUBLIC OF CHINA

By: ___ Authorized Representative

Name:

Title:

Date: Mr. Yang Shaolin -4- December 23, 2014

Attachment 1 A. General

1 . The Borrower may withdraw the proceeds of the Loan in accordance with the provisions of Article II of the General Conditions, this Section, and such additional instructions as the Bank shall specify by notice to the Borrower (including the "World Bank Disbursement Guidelines for Projects" dated May 2006, as revised from time to time by the Bank and as made applicable to this Agreement pursuant to such instructions), to finance Eligible Expenditures as set forth in the table in paragraph 2 below.

2. The following table specifies the categories of Eligible Expenditures that may be financed out of the proceeds of the Loan ("Category"), the allocation of the amounts of the Loan to each Category, and the percentage of expenditures to be financed for Eligible Expenditures in each Category.

Amount of the Loan Percentage of Expenditures to be Allocated financed Cate2ory (expressed in Dollars) (inclusive of Taxes) (1) Part A.1 of the Project (a) Civil works 0 0 (b) Goods (including 0 0 installation)

(2) Part A.2 of the Project (a) Civil works 6,287,600 59% (b) Goods (including 0 100% installation)

(3) Part A.3 of the Project (a) Civil works 6,670,792 75% (b) Goods (including 8,470,000 100% installation)

(4) Part A.4 of the Project (a) Civil works 0 0 (b) Goods (including 0 0 installation)

(5) Part A.5 of the Project (a) Civil works 3,572,727 34% (b) Goods (including 10,290,000 100% installation)

(6) Part A.6 of the Project (a) Civil works 0 0 (b) Goods (including 0 0 installation) December 23, 2014 Mr. Yang Shaolin -5-

(7) Part A.7 of the Project 40% (a) Civil works 5,015,700 (b) Goods (including 6,610,000 100% installation)

(8) Part A.8 of the Project (a) Civil works 4,893,995 40% (b) Goods (including 12,826,100 100% installation)

(9) Part A.9 of the Project 50% (a) Civil works 15,017,886 (b) Goods (including 12,420,000 100% installation)

(10) Part A.10 of the Project 0 (a) Civil works 0 0 (b) Goods (including 0 installation)

(11) Part B of the Project 0 (a) Civil works 0 0 (b) Goods (including 0 installation)

(12) Consultants services, 100% training, workshops, and study 1,400,000 tours under Part C of the Project

(13) Part A.11 of the Project (a) Civil works 10,884,100 43% 100% (b) Goods (including 4,860,000 installation)

(14) Part A.12 of the Project 80% (a) Civil works 13,191,400 100% (b) Goods (including 9,640,000 installation)

(15) Part A.13 of the Project 80% (a) Civil works 15,255,000 100% (b) Goods (including 26,280,000 installation)

(16) Part A.14 of the Project 80% (a) Civil works 13,167,200 100% (b) Goods (including 3,770,000 installation) Mr. Yang Shaolin -6- December 23, 2014 (17) Unallocated 0

(18) Front-end Fee 477,500 Amount payable pursuant to Section 2.03 of this Agreement in accordance with Section 2.07(b) of the General Conditions

TOTAL AMOUNT 191,000,000

B. Withdrawal Conditions; Withdrawal Period

1 . Notwithstanding the provisions of Part A of this Section, no withdrawal shall be made: (a) for payments made prior to the date of this Agreement; except that withdrawals up to an aggregate amount not to exceed $21,317,000 equivalent may be made for payments made prior to this date but on or after October 15, 2007, for Eligible Expenditures under Categories of (1)(a) and (1)(b); (5)(a) and (5)(b); (8)(a) and (8)(b); (9)(a) and (9)(b); and (12);

(b) for payments under, respectively, Categories: (2)(a) and (2)(b); (3)(a) and (3)(b); (5)(a) and (5)(b); (7)(a) and (7)(b), (8)(a) and (8)(b), (9)(a) and (9)(b), 13(a) and 13(b), 14(a) and 14(b), 15(a) and 15(b), 16(a) and 16(b), until, with respect to each such case, the Bank shall have notified the Borrower and Liaoning of its receipt of a copy of the Subsidiary Loan Agreement entered into between the Project City concerned and its Respective Project Company, satisfactory to the Bank and in accordance with the provisions of paragraph 3 of Section I of the Schedule to the Project Agreement; and (c) for payments under, respectively, Categories: (2)(a) and (2)(b); (9)(a) and 13(a) and 13(b), (9)(b), 14(a) and 14(b), and 15(a) and 15(b) until, with respect to each such case, the Bank shall have notified the Borrower and Liaoning of its receipt of a copy of a long-term heating supply contract satisfactory to the Bank entered into between each of Benxi Steel (Group) Heating Development Company, Ltd., Thermal Power Company Ltd., Yingkou EDZ Huayuan Heating Company Ltd., Kangping Zhongwang Heating Company, and Chaoyang Urban Heating Company Ltd., and its respective heating supplier;

2. The Closing Date is June 30, 2016. Mr. Yang Shaolin -7 - December 23, 2014 Attachment 2 APPENDIX

Section I. Definitions

(a) "Benxi Steel (Group) Heating Development Company Ltd." means the state-owned limited liability company established and operating pursuant to its Charter dated December 25, 1998, and to Business License No. 2105001100290 dated December 25, 1998, issued by Benxi Municipality Industry and Commerce Administrative Bureau, and any successor thereto.

(b) "Category" means a category set forth in the table in Section IV of Schedule 2 to this Agreement.

established and (c) "Chaoyang Urban Heating Company Ltd" means the limited liability company operating pursuant to its Charter dated June 13, 2007, and to Business License No. 211300004046762 dated June 25, 2013 issued by Chaoyang Municipality Industry and Commerce Administrative Bureau, and any successor thereto.

(d) "Consultant Guidelines" means: (a) except as provided in subparagraph (b) below, "Guidelines: Selection and Employment of Consultants under IBRD Loans and IDA Credits and Grants by World Bank Borrowers" dated January 2011; and (b) in the case of contracts financed or to be financed, in whole or in part, out of the proceeds of the Loan, and for which the invitation to bid was issued prior to the date of this Letter of Amendment to Loan Agreement, "Guidelines: Selection and Employment of Consultants by World Bank Borrowers" published by the Bank in May 2004 (incorporating the revisions, as applicable, of October 2006 and May 2010).

(e) "Dashiqiao Hongyang Heating Company Ltd." means the limited liability company established and operating pursuant to its Charter dated September 9, 2005, and to Business License No. 2108822300362 dated July 21, 2006, issued by Dashiqiao City Industry and Commerce Administrative Bureau, and any successor thereto.

(f) "Dashiqiao Urban Construction and Investment Company" means the limited liability company established and operating pursuant to its Charter dated June 20, 2007, and to Business License No. 210882004004454 dated July 9, 2007, issued by Dashiqiao Municipality Industry and Commerce Administrative Bureau, and any successor thereto.

of the Project, have (g) "Displaced Persons" means persons who, on account of the execution experienced or would experience direct economic and social impacts caused by: (a) the involuntary taking of land, resulting in: (i) relocation or loss of shelter; (ii) loss of assets or access to assets; or (iii) loss of income sources or means of livelihood, whether or not such persons must move to another location; or (b) the involuntary restriction of access to legally designated parks and protected areas, resulting in adverse impacts on the livelihood of such persons; and a "Displaced Person" means any of such Displaced Persons.

(h) "Environmental Management Plans" means, collectively, the Environmental Management Plans each dated August 15, 2007 prepared, respectively, for Part A.2, Part A.3, Part A.5, Part A.7, Part A.8, Part A.9; November 22, 2013 for Part A. 11 and Part A.12; February 2014 for Part A.13 and January 2014 for Part A.14 of the Project, which said plans set out the environmental protection measures in respect of each said Part of the Project, 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 and "Environmental Management Plan" means, individually, any of the Environmental Management Plans. Mr. Yang Shaolin -8 - December 23, 2014

(i) "Fiscal Year" means the fiscal year of each of the Project Companies, covering the period of January 1 through December 31.

(j) "FFUPO" means the Foreign Fund Utilization Project Office established under the Liaoning Provincial Development and Reform Commission and referred to in paragraph 1 (a)(ii) of Section I of the Schedule to the Project Agreement, and any successor thereto. (k) " Guanda Heating Company Ltd" means the limited liability company established and operating pursuant to its Charter dated February 24, 2009, and to Business License No. 210727004017935 dated February 25, 2009, issued by Jinzhou Municipality Industry and Commerce Administrative Bureau, and any successor thereto.

(1) " Zhongwang Heating Company" means the state-owned enterprise established and operating pursuant to its Charter dated September 25, 2010, and to Business License No. 210123000017223 dated September 25, 2010, issued by Municipality Industry and Commerce Administrative Bureau, and any successor thereto.

(in) "General Conditions" means the "International Bank for Reconstruction and Development General Conditions for Loans", dated July 1, 2005 (as amended through February 12, 2008) with the modifications set forth in Section II of this Appendix.

(n) "Huludao Yangjiazhangzi Economic Development Zone Mudu Heating Company Ltd." means the state-owned limited liability company established and operating pursuant to its Charter dated October 12, 2007, and to Business License No. 211402004006865 dated October 1, 2007, issued by Huludao City Industry and Commerce Administrative Bureau, and any successor thereto.

(0) "Liaoning" means the Borrower's Liaoning Province, and any successor thereto.

(p) "Liaoyang Gongchangling Qianglong Heating Company Limited" means the limited liability company established and operating pursuant to its Charter dated April 19, 2007, and to Business License No. 2110001400398 dated April 29, 2007, issued by Liaoyang Municipality Industry and Commerce Administrative Bureau, and any successor thereto.

(q) "Lingyuan Antai Heating Company" means the state-owned limited liability company established and operating pursuant to its Charter dated May 15, 2011, and to Business License No. 211382004020063 dated May 24, 2011, issued by Lingyuan City Industry and Commerce Administrative Bureau, and any successor thereto acceptable to the Bank. (r) "Procurement Guidelines" means: (a) except as provided in subparagraph (b) below, the "Guidelines: Procurement of Goods, Works and Non-consulting Services under IBRD Loans and IDA Credits and Grants by World Bank Borrowers" dated January 2011; and (b) in the case of contracts financed or to be financed, in whole or in part, out of the proceeds of the Loan, and for which the invitation to bid was issued prior to the date of this Letter of Amendment to Loan Agreement, "Guidelines: Procurement under IBRD Loans and IDA Credits" published by the Bank in May 2004" (incorporating the revisions, as applicable, of October 2006 and May 2010).

(s) "Procurement Plan" means the Borrower's procurement plan for the Project, dated April 1, 2008 and referred to in paragraph 1.16 of the Procurement Guidelines and paragraph 1.24 of the Consultant Guidelines, as the same shall be updated from time to time in accordance with the provisions of said paragraphs. December 23, 2014 Mr. Yang Shaolin - 9 -

means the agreement between the Bank and Liaoning of even date herewith, (t) "Project Agreement" and as the same may be amended from time to time; and such term includes all schedules agreements supplemental to the Project Agreement.

(u) "Project Cities" means the Borrower's municipalities of , Benxi, Yingkou, Chaoyang, the Liaoyang and Huludao and county-level cities of Yingkou EDZ and Dashiqio each under jurisdiction of Yingkou municipality, Kangping under jurisdiction of Shenyang municipality, of Lingyuan under jurisdiction of Chaoyang municipality, Gongchangling under jurisdiction and Yixian Liaoyang municipality, Yangzhanjianzi under jurisdiction of Huludao municipality, under jurisdiction of Jinzhou municipality; all located in Liaoning Province, and any successors thereto; and a "Project City" means, individually, any of said Project Cities." Company (v) "Project Companies" means, collectively, Benxi Steel (Group) Heating Development Ltd., Dashiqiao Urban Construction and Investment Company, Liaoyang Gongchangling Zone Qianglong Heating Company Ltd., Huludao Yangjiazhangzi Economic Development Lingyuan District Mudu Heating Company Ltd., Yingkou EDZ Huayuan Heating Company Ltd, Urban Antai Heating Company Ltd., Kangping Zhongwang Heating Company Ltd., Chaoyang Heating Company Ltd., and Jinzhou Guanda Heating Company; and "Project Company" means, individually, any of the Project Companies. 1(a)(i) of Section I of the (w) "Project Coordination Group" means the group referred in paragraph Schedule to the Project Agreement.

Province of Liaoning and any successor (x) "Project Implementing Entity" means the Borrower's thereto. 1(a)(iii) of Section I of (y) "Project Management Offices" means the offices referred to in paragraph the Schedule to the Project Agreement.

"Resettlement Action Plans" each dated (z) "Resettlement Action Plans" means, collectively, December 2007, prepared respectively for Part A.3, Part A.7 of the Project; and November 22, Part A.14 of the 2013 for Part A.11 and A.12 of the Project; and April 22, 2014 for Part A.13 and acquisition of land Project; which said plans set out the principles and procedures governing the Persons on and other assets, and the resettlement, compensation and rehabilitation of Displaced arrangements to account of each said Part of the Project, as well as monitoring and reporting time with the prior ensure compliance with said plans, as the same may be revised from time to Action agreement of the Bank; and "Resettlement Action Plan" means any of the Resettlement Plans. 2007 adopted by (aa) "Resettlement Policy Framework" means the policy framework dated December compensation and each Project City, which sets out policies and procedures for acquisition, of resettlement action rehabilitation of Displaced Persons, and guidelines for the preparation time with the prior plans if necessary, as said policy framework may be amended from time to agreement of the Bank.

(bb) "Respective Part of the Project" means in respect of: A.3 of the Project. (i) Benxi Steel Group Heating Development Company Ltd: Part A.2 and A.5 of the Project. (ii) Liaoyang Gongchangling Qianglong Heating Company Limited: Part Heating Company (iii) Huludao Yangjiazhangzi Economic Development Zone District Mudu Ltd: Part A.7 of the Project. Mr. Yang Shaolin - 10 - December 23, 2014 (iv) Dashiqiao Urban Construction and Investment Company: Part A.8 of the Project. (v) Yingkou EDZ Huayuan Heating Company Ltd: Part A.9 of the Project.

(vi) Kangping Zhongwang Heating Company Ltd: Part A.1 1 of the Project. (vii) Lingyuan Antai Heating Company: Part A.12 of the Project.

(viii) Chaoyang Urban Heating Company Ltd: Part A. 13 of the Project.

(ix) Jinzhou Guanda Heating Company Ltd: Part A.14 of the Project.

(cc) "Respective Project Company" means in respect of: (i) Benxi Municipality: Benxi Steel (Group) Heating Development Company Ltd.

(ii) Liaoyang Municipality: Liaoyang Gongchalngling Qinglong Heating Company Ltd. (iii) Huludao Municipality: Huludao Yangjiazhangzi Economic Development Zone District Mudu Heating Company Ltd.

(iv) Yingkou Municpiality: Dashiqiao Urban Construction and Investment Company, Yingkou EDZ Huayuan Heating Company Ltd.

(v) Shenyang Municipality: Kangping Zhongwang Heating Company Ltd. (vi) Chaoyang Municipality: Lingyuan Antai Heating Company Ltd. (vii) Jinzhou Municipality: Jinzhou Guanda Heating Company Ltd.

(dd) "Subsidiary Loan Agreements" means, collectively, the agreements to be entered into between each Project City and its Respective Project Company pursuant to paragraph 3 of Section I of the Schedule to the Project Agreement, as the same may be amended from time to time, and such term includes all schedules and supplements to said agreements; and a "Subsidiary Agreement" Loan means, individually, any of said Subsidiary Loan Agreements. (ee) "Yingkou EDZ" means the Yingkou Economic Development Zone.

(ff) "Yingkou EDZ Huayuan Heating Company Ltd." means the limited liability company established and operating pursuant to its Charter dated July 2, 2007, and to Business License No. 21080000401366 dated July 13, 2007 issued by Yingkou Municipality Industry and Commerce Administrative Bureau, and any successor thereto.