OFFICIAL THE WORLD BAPCUMENTS I WORLD BANK GROUP

Hon. Manasseh D. Sogavare, Deputy Prime Minister and Minister of Finance and Treasury

Public Disclosure Authorized Ministry of Finance and Treasury P.O. Box 26 ,

Mr. Deak-Chun Han Tina Hydropower Limited C/O Primo Afeau Solicitor 1st Floor City Centre Building Mendana Avenue Point Cruz Honiara

Public Disclosure Authorized Solomon Islands

Mr. Pradip Verma Solomon Islands Electricity Authority P.O. Box 6 Honiara Solomon Islands

December 6, 2018

Public Disclosure Authorized Re: IDA Grant No. D202-SB, IDA Credit No. 6086-SB, APIP Grant TF0A4843 (Tina River Hydropower Development Project)

Honorable Minister:

Dear Mr. Han:

Dear Mr. Verma

We are referring to the Implementation Agreement ("IA") to be entered into between the Solomon Islands and Tina Hydropower Limited (THL) and the Power Purchase Agreement ("PPA") to be entered into between THL and Solomon Islands Electricity Authority (SIEA), both relating to the Tina River Hydropower Public Disclosure Authorized Plant in Province, Solomon Islands ("Plant"). We are also referring to the Government Guarantee Agreement to be entered into between the Solomon Islands and THL, with respect to the PPA ("GGA").

The International Development Association ("IDA") is about to enter into a Financing Agreement with the Solomon Islands for the financing of, among other activities, the construction of the Plant (the "IDA Financing Agreement"). IDA and the International Bank for Reconstruction and Development ("IBRD") (IDA and IBRD being collectively referred to as the "Bank"), acting jointly as the administrator of the Australian-Pacific Islands Partnership Trust Fund, are about to enter into an Australian-Pacific Islands Partnership Trust Fund Grant Agreement with the Solomon Islands for the financing of, among other activities, the access road to the site where the Plant will be constructed (the "APIP Grant Agreement"). The Bank is also preparing a potential financing (including a credit and a grant) to be funded by the Green Climate Fund for the financing of the Plant and the access road, which would be made available to the Solomon Islands by the PPA Closing Date, as such date is defined in the PPA.

We note that in clause 13.3 (Dispute Settlement by Binding Arbitration) of the IA, in clause 24.3 (Arbitration) of the PPA, and in clause 8 (Dispute Resolution) of the GGA, the respective parties thereto consent to submit claims to the International Centre for Settlement of Investment Disputes (ICSID) for settlement by arbitration pursuant to the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (the "ICSID Convention").

The World Bank Procurement Regulations for IPF Borrowers, dated July 2016 (Procurement Regulations) are incorporated by reference to the IDA Financing Agreement, the APIP Grant Agreement, and in the three Project Agreements to be entered into between IDA and THL, IDA and SIEA and the Bank and THL respectively. Once these agreements will be signed, the Solomon Islands, SIEA and THL will each have the obligation to comply with the relevant provisions of the Procurement Regulations. The term sheet for the On-lending Agreement to be entered into between the Solomon Islands and THL, pursuant to which the Solomon Islands will pass the proceeds of the IDA and Bank financing on to THL, also provides for compliance by THL with its Project Agreements with IDA and the Bank. It is expected that the On-lending Agreement to be entered into between the Solomon Islands and SIEA, pursuant to which the Solomon Islands will pass the proceeds of the IDA financing on to SIEA, will include a similar obligation to comply with the Procurement Regulations.

Please do note that Section 2.26 of the Procurement Regulations dealing with applicable law and settlement of disputes, provides:

"2.26 The Bank shall not be named arbitrator or be asked to name an arbitrator. It is understood, however, that officials of the International center for Settlement of Investment disputes (ICSID) shall remain free to name arbitrators in their capacity as ICSID officials."

The purpose of this letter is to clarify the following points:

(i) Even though ICSID is part of the World Bank Group, it is a separate legal entity distinct from IBRD, distinct from IDA, and distinct from the Bank; (ii) Pursuant to the Procurement Regulations, the Bank may not be named arbitrator: by deciding and consenting between each other to submit claims to ICSID for settlement by arbitration pursuant to the ICSID Convention, the parties to the PPA, the IA and the GGA respectively are not selecting the Bank as an arbitrator; (iii) Pursuant to Article 1 of the ICSID Convention, the purpose of ICSID is to provide facilities for conciliation and arbitration of investment disputes between Contracting States and nationals of other Contracting States. It is not to arbitrate such disputes. (iv) Pursuant to the ICSID Convention, in certain cases where the parties have not been able to appoint an arbitrator within a certain period of time, at the request of either of the parties to the dispute, the Chairman of the Administrative Council of ICSID may appoint an arbitrator: Pursuant to the Procurement Regulations, the Bank may not be asked to name an arbitrator. The appointment of any arbitrator by the Chairman of the Administrative Council of ICSID may not be interpreted as an appointment by the Bank, IDA or IBRD. For the avoidance of doubt, we are requesting, as a condition to the signature of the IDA Financing Agreement and the APIP Grant Agreement, that you acknowledge and agree to the clarifications contained in this letter, by countersigning and dating this letter, as provided for below. Once countersigned, such acknowledgement and consent would extend to any and all roles of the Bank with respect to or connected with the Plant's financing (whichever resources are used by IDA, IBRD or the Bank for such purpose).

Sincerely,

Guido Rurangwa Acting Country Director For Papua New Guinea and the Pacific Islands

This letter is acknowledged and agreed on December 6, 2018:

On behalf of the Solomon On behalf of Tina Hydropower On behalf of Solomon Islands Islands Limited Electrici

By: Manasseh D. Sogavare, By: Deak-Chu By: Pra i Deputy Prime Minister and Chairman Chief Executive Officer Minister of Finance and Treasury