CONFORMED Letter No. 2

PEOPLE’S REPUBLIC OF PROVINCE Public Disclosure Authorized

December 12, 2003

International Bank for Reconstruction and Development 1818 H Street, N.W. Washington, D.C. 20433

Re: Loan No. 7183 CHA (Second Anhui Highway Project) Performance Indicators

Public Disclosure Authorized Ladies and Gentlemen:

We refer to the Loan Agreement of even date herewith between the People’s Republic of China (the Borrower) and the International Bank for Reconstruction and Development (the Bank) for the above- captioned Project (the Project), and to the Project Agreement of same date between the Bank and Anhui Province for the Project.

For purposes of paragraph 10 (a) of Schedule 2 to the Project Agreement, Anhui shall monitor and evaluate the carrying out of the Project and the achievement of the Project’s objectives in accordance with the indicators set forth in the Annex to this Letter

Please confirm your agreement to the foregoing by signing on the form of confirmation below.

Public Disclosure Authorized Sincerely yours,

ANHUI PROVINCE

/s/ Zou Jiayi Authorized Representative

AGREED:

INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT

Public Disclosure Authorized By /s/ Yukon Huang Authorized Representative

Annex

1. Key Performance and Development Indicators

Attainment of Project CY 2002 CY 2005 CY 2006 CY 2008 Monitoring Indicators Objectives Baseline Benchmark Benchmark Benchmark Provide an efficient, Travel time in the TTH Corridor safe and cost (min.) 230 255 265 85 effective highway infrastructure ADT on TTH (veh./day in absolute number) - Xiaxichong 7,900 Xiaxichong - Qingyang 7,900 Qingyang - Yangmei 7,900 Yangmei - Gantang 7,700 Gantang - Tanjiaqiao 7,700 Tanjiaqiao - Shancha 6,800 ADT on existing S103 and G205 (veh./day in absolute number) Tongling - Qingyang 6,800 7,700 8,000 5,500 Qingyang - Yangmei 6,800 7,700 8,000 5,500 Yangmei - Gantang 6,600 7,400 7,700 5,400 Gantang - Tanjiaqiao 6,600 7,400 7,700 5,400 Tanjiaqiao - Shancha 6,100 6,400 7,200 6,700 ADT on RRIP roads (veh. /day in MTE)) Shitai - Qiaotoudian 1,900 2,200 2,300 2,400 Jingxian - Maolin 1,700 1,900 2,000 2,200 Xianyuan -Xinming-Sanxi 1,900 2,200 2,300 2,400 Hongmen - Jinde 1,600 1,800 1,900 2,000 Xinqiao – Dabeifu 1,700 1,900 2,100 2,200 Household incomes in affected (2001) areas (yuan) Qingyang 2,194 2,600 2,700 3,000 Shitai 1,152 1,400 1,500 1,600 Jingxian 2,384 2,800 3,000 3,200 Huangshan 1,510 1,800 1,900 2,100 Jinde 2,436 2,900 3,000 3,300 Ningguo 2,506 3,000 3,100 3,400 Qimen 2,042 2,500 2,600 2,800 Accident rates (times/km/yr) on (2001) - G206 1.80 2.28 1.46 1.53 Maanshan-Nangling G205 1.49 1.89 1.21 1.26 Number of poor population (2001) Qingyang 48,500 36,000 33,400 20,186 Shitai 57,700 42,800 39,700 24,886 Jingxian 58,400 43,400 40,300 25,551 Huangshan 14,700 11,600 10,900 7,158 Jinde 13,700 10,900 10,300 6,419 Ningguo 26,000 22,000 21,100 13,857 Qimen 18,500 14,100 13,200 9,883

2. Implementation Indicators

CY 2003 CY 2004 CY 2005 CY 2006 CY 2007 CY 2008

% of civil works completed on TTH 35 66 90 100

% of highways improved/ 60 95 100 rehabilitated under RRIP

Highway safety: 50 100 % of improved blackspots/segments

% of preparation of action plans (two 15 45 35 5 studies)

% of person-months of completed 20 40 60 80 100 training