"A- ~6- L 1 Ct/ The World Bank OFFICtM Street N.W. (202) 477-1234 INTBAFRAD INTERNATIONAL BA'4K FOR RECONSTRUCTION AND DEVELOP C. 20433 Cable Address: INDEVAS INTERNATIONAL DEvELOPMENT ASSOCIATION Cable Address: Oct. 30, 2012 Public Disclosure Authorized The Governor Guangdong Province Guangdong Provincial Office for World Bank Project 26 Cang Bian Road Guangzhou 510030 People's Republic of China Dear Sir, Re: Second Guangdong Pearl River Delta Urban Environment Project Loan No.4856-CN Amendment to the Proiect Agreement Public Disclosure Authorized 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 May 8, 2007 (the "Loan Agreement") and the Project Agreement of the same date between the Bank and Guangdong Province (tie "Project Agreement") for the above Project (the "Project"). We also refer to the lettei dated June 13, 2012 from Mr. Chen Shixin requesting the Bank to modify Part A.2(a) of the Project, extend the Closing Date, reallocate the proceeds of the Loan allocated in the table in Section V.A.2 of Schedule 2 to the Loan Agreement and to revise the di,;ursement percentage of certain Categories in order to finance 100% of expenditures. We are pleased to inforn ycu that the Bank agrees with the request and accordingly, Public Disclosure Authorized amends, as needed to reply to yoir request, the Loan Agreement as provided in the letter of even date herewith from the Bank to the Borrower (the "Letter Amending Loan Agreement") and the Project Agreement as follows: 1. Schedule, Section 1: (a) Paragraph 5, a new sub-rarag-aph (e) is added to read as follows: "(e) Without limitati n to the provisions of the preceding sub-paragraphs, Foshan shall allocate to Chanc heng District the proceeds allocated to Foshan as per this paragraph 5 on the sam, terms and conditions as the Loan proceeds were allocated to Foshan for purposes of implementation of its Respective Part of the Project." (b Paragraph 6: Public Disclosure Authorized (i) in the first line, the words "each Project Municipality" are replaced by "Jiangmen and Chancheng Distr ct on behalf of Foshan"; and -2- (ii) in the fifth line, the words "said Project Municipality" are replaced by "Jiangmen and in the case of Foshan's Respective Part of the Project Chancheng District". (c) Paragraph 7: (i) in the first line, the words "each Project Municipality" are replaced by "Jiangmen and Chancheng District"; and (ii) in the fourth line, the words "and the Project Municipality" are replaced by "Jiangmen and Chancheng District". (d) Paragraph 9 is deleted in its entirety. 5. Annex A to Schedule: (a) Paragraph I (Terms of Availability), in the first line the words "a Project Municipality" are replaced by "Jiangmen or Chancheng District". (b) Paragraph 7, the words "and the Project Municipality concerned" are replaced by ", each of the Project Municipalities and Chancheng District". (c) Paragraph 9, sub-paragraph (c): (i) in the first line, after the words "the Project Municipality concerned", the words "and Chancheng District" are added; and (ii) in the fifth and the eighth lines, after the words "the respective Project Municipality", the words "or Chancheng District" are added. (d) Paragraph 9, sub-paragraph (d): (i) in the second line, after the words "the Project Municipality concerned", the words "and Chancheng District" are added; and (ii) in the fourth line, after the words "said Project Municipality", the words "or Chancheng District" are added. (e) Paragraph 9, sub-paragraph (e), clause (ii), after the words "its respective Project Municipality", the words "and Chancheng District" are added. (f) Paragraph 12, after the words "Each Project Municipality", the words "and Chancheng District" are added. 6. Annex B to Schedule (Key Performance Indicators) is hereby deleted and replaced with the Annex set out in the Attachment to this letter agreement. Except as specifically amended in this letter, all other terms and conditions of the Project Agreement shall remain in full force and effect. -3- Please confirm your agree men to the foregoing on behalf of the Guangdong Province by countersigning and dating the cor-esponding form of confirmation set forth below, and returning one fully countersigned original of this letter to us. The above amendment to the Project Agreement shall become effective as of the date of this letter upon receipt by the Bank of: (i) a duly countersigned original of thi. letter by the authorized representative of Guangdong Province; date and (ii) a duly countersigned original :f the Letter Amending Loan Agreement of the same by the authorized representative oF the Borrower amending the Loan Agreement. Sincerely yours, Kof Awanyo Acting Country Director, China Eas1 Asia and Pacific Region CONFIRMED: G1L ANGDONG PROVINCE By: Authorized Representative Na ne: X LA Sk60,xokvc TiLle: P,C(tJQ 9- V (jL C ov er&o4r - W Da -e: cc: Mr. Yang Yingming Deputy Director General International Department Ministry of Finance Sanlihe, Beijing 100820 People's Republic of China ATTACHMENT ANNEX B to SCHEDULE Second Guangdong Pearl River Delta Urban Environment Project Arrangements for monitoring of key performance indicators Cumulative Target Values** Responsibility Key Performance Indicators* Unit of Baseline for Data Measure Collection MTR ICR Indicator One: Reductions in pollution tons per year COD 8,175 t/y; COD 4,439.85 t/y; COD2,500 t/y PMO discharges entering the PRD river network (t/yr) NH4-N 537 t/y (30%); from Foshan NH4-N 442.58 t/y NH4-N 150 t/y lbased on 2006 (27.9%) baseline] Indicator Two: Reductions in pollution tons per year COD 16,425 t/y; COD 14,395 t/y; COD14,235 t/y PMO discharges entering the PRD river network (t/yr) NH4-N 1,643 t/y. (86%); from Jiangmen NH4-N 1,350 t/y. NH4-N 1,095 t/y (66%) Indicator Three: Evidence of improvement N/A PMO in effectiveness in operations, management and finances of wastewater utility services under the project Jiangmen- 0.556/ Jiangmen- 0.556/ (i) Unit Cash Operating Cost RMB/m3 Foshan - 0.505 Foshan - 0.505 (ii) Wastewater Volume treated per '000 m3/ Jiangmen- 1.0153/ Jiangmen- 1.9045/ Employee day/person Foshan - 1.40 Foshan - 1.27 (iii) Consumption of Electricity per Kwh/m3 Jiangmen- 0.3066/ Jiangmen- 0.2318/ TTift Foshan - 0.1418 Foshan - 0.1510 0.7/ (iv) Cost Recovery Ratio Number Jiangmen- 0.63/ Jiangmen- Foshan - 1.29 Foshan - 1.12 Jiangmen - 0.67/ Jiangmen - 0.4/ (v) Debt Service Ratio Number Foshan - 1.81 Foshan - 2.33 Indicator Four: Compliance rate for key mg/1 COD 37 mg/I, COD 34 mg/I, COD 40 mg/I, PMO indicators (COD, BOD, N and P) with river quality standards at measurement stations BOD 6.3mg/, BOD 2.5mg/, BOD 10.0mg/, in Foshan TP 0.37mg/I TP 0.i8 mg/i Ir U.'411g/il PMO Indicator Five: Compliance rate for key mg/1 COD 35 mg/I, COD 25 mg/I, COD 30 mg/I, indicators (COD, BOD, N and P) with river quality standards at measurement stations BOD 9.5mg/, BOD 4mg/, BOD 6.0mg/, in Jiangmen NH4-N 1.8mg/1, NH4-N 1.68mg/1, NH4-N 1.5mg/I, TP 0.29mg/1 TP 0.28mg/ TP 0.30mg/ - 1,954 FWGC/ JBWC Indicator Six: Volume (mass) of BOD N/A 2011 operational Jiangmen - 1,452 Jiangmen tons pollution loads removed by the treatment data from tons Foshan - 476 tons plant supported under the project FWGC/ JBWC Foshan - 234 tons (tons/year) n cc: Mr. Yang Shaolin, Executive Director, China Mr. Han Bin, Alternate Executive Director, China Mr. Yao Licheng, Director Ms. Guan Xiuzhen, Director Mr. Liu WeiJie, Deputy Director IFI Div. 1. International Department Ministry of Finance Email: [email protected], [email protected], [email protected] Mr. Zheng Chiping Director Ms. Xiao Jun, Deputy Director Division I. Foreign Fund Utilization Department National Development and Reform Commission Email: [email protected], [email protected] Mr. Huang Linshui, Principle Staff Government Debt Management Office Provincial Financial Bureau Guangdong Province Email: [email protected] Mr. Zheng Yaji, Director Guangdong PMO Guangdong Provincial Finance Bureau Email: [email protected].