62876 v1
                       Document of
                     The World Bank


                                                    Report No:




                  RESTRUCTURING PAPER

                          ON A

            PROPOSED PROJECT RESTRUCTURING
                          OF
RENEWABLE ENERGY FOR RURAL ECONOMIC DEVELOPMENT PROJECT
                         LOAN
                      JUNE 20, 2002


                         TO THE

       DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA


                       June 16, 2011
 Regional Vice President:        Isabel M. Guerrero
        Country Director:        Diarietou Gaye
Sector Manager / Director:       Jyoti Shukla/John Henry Stein
       Task Team Leader:         Abdulaziz Faghi
                             2
 SRI LANKA — RENEWABLE ENERGY FOR RURAL ECONOMIC DEVELOPMENT
                              P076702
IDA CREDIT NO. 3673-CE AND 3673-CE-1 AND GEF GRANT NO. TF 051248-CE
                                       Restructuring Paper

                  Extension of Closing Date and Reallocation of Proceeds

1.      The overall implementation progress of the Project has been satisfactory
throughout its lifetime, as documented in past Implementation Status Reports (the latest
dated May 2011). The Project’s development objectives have been achieved and the
performance indicators have already exceeded its target values (e.g. the capacity of grid-
connected renewable energy installations have surpassed the 135 megawatt (MW)
cumulative target, while the reduction in carbon emissions has achieved 142% of the end
project target.) There are no outstanding fiduciary issues and Financial Monitoring
Reports are submitted on time with no overdue audit reports. Environmental and social
safeguards compliance is also satisfactory.

Extension of closing Date

2.    The closing date for Sri Lanka, Renewable Energy for Rural Economic
Development, IDA Credit No. 3673-CE and 3673-CE-1 and GEF Grant No. TF 051248-
CE, P076702 will be extended from June 30, 2011 until December 31, 2011.

3.      The proposed extension is necessary to enable ongoing investments to be
completed and ensure satisfactory close-out of this successful project. The extension is
also being considered to make up for the delay in effectiveness of the Additional
Financing credit which was beyond the control of the implementing agency.

4.     The proposed six-month extension will take the Additional Financing beyond the
three-year limit of the original closing date of the project and RVP approval has been
granted for an exception to OP/BP 13.20, based on the justification of the delay in
additional loan effectiveness.

5.      This will be the first extension of the Additional Financing Credit. A previous
extension of the original IDA Credit and GEF Grant was approved in order to maintain
consistency with the latter closing date of the Additional Financing Credit.

Reallocation of Proceeds

6.   Proceeds for Sri Lanka, Renewable Energy for Rural Economic Development,
GEF Grant No. TF051248, P076702 will be reallocated as follows:

    Category of Expenditure                 Allocation (in USD)         % of Financing
                                           Current        Revised      Current Revised
(1) Investment Project Preparation
Grants:
     (a) Grants made for preparation        35,000           25,000      100        100

                                               3
    Category of Expenditure                Allocation (in USD)          % of Financing
                                          Current        Revised       Current Revised
    activities and feasibility studies
    carried out by tax-exempt
    consultants and non-
    governmental entities
    (b) Other grants for preparation     810,000         797,000         100         100
    activities and studies
(2) Sub-grants under Part A of the       5,200,000      5,200,000        100         100
Project
(3) Consultants’ services, training
and study tours:
    (a) Individual consultants           200,000         177,000         100         100
    (b) Consulting firms                 720,000         658,000         100         100
    (c) Training, workshops and          130,000         130,000         100         100
    study tours
    (d) Consultants’ services,           400,000         606,000         100         100
    training, workshops and study
    tours
(4) Goods                                150,000          69,000         100         100
(5) Support for administrative Unit      325,000         325,000         100         100
(6) Procurement-related advertising       30,000          13,000
expenses
(7) Unallocated                              0              0             -           -
        TOTAL                            8,000,000      8,000,000        100         100


7.      The proposed reallocation is necessary to allow full utilization of remaining grant
funds and meet the increasing demand for funding technical assistance activities by
utilizing unspent amounts from other categories.




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