OFFICIAL DOCUMUMTS The World Bank 1818 H Strebt N.W. 1 (202) 473-1000 INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT a hinninn E -243 Cable Address: INTBAFRAD INTERNATIONAL DEVELOPMENT ASSOCIATION U.S.A Cable Address: INDEVAS January 13, 2016 Honourable Minister 'Aisake Eke Minister of Finance and National Planning Ministry of Finance and National Planning P.O. Box 87 Vuna Road Nuku'alofa KINGDOM OF TONGA Dear Honourable Minister, Tonga: Restructuring of the Tonga Energy Roadmap Institutional and Regulatory Framework Strengthening Project. PRIF Grant Number: TF012699 We refer to the grant agreement ("PRIF Grant Agreement"), dated August 3, 2012 between the International Bank for Reconstruction and Development and the International Development Association (collectively, "World Bank") acting as an administrator of grant funds provided under the Pacific Region Infrastructure Facility Multi-Donor Trust Fund, and the Kingdom of Tonga ("Recipient"). We also refer to your letter dated December 15, 2015 requesting some amendments to the Tonga Energy Roadmap Institutional and Regulatory Framework Strengthening Project ("Project"), and the discussion between the World Bank and the Recipient in Tonga on November 26 and 27, 2015, as recorded in the World Bank aide memoire circulated December 14, 2015, during which the Recipient requested some amendments to the PRIF Grant Agreement. The World Bank concurs with your request for restructuring and accordingly proposes to amend the PRIF Grant Agreement as follows: 1. The objectives of the Project set forth in paragraph 1 of Section 2.01 of the Annex to the PRIF Grant Agreement is hereby amended to read as follows: "2.01 Project Objectives and Description. The objective of the Project is to support the strengthening of the institutional and regulatory framework of the Tonga Energy Roadmap (TERM) and facilitate the implementation of future renewable energy projects." 2. Component 2 of the Project set forth in Section 2.01 of the Annex to the PRIF Grant Agreement is hereby amended by adding a new sub-component (v) as follows: Kingdom of Tonga -2- PRIF Grant Number: TF012699 "Component 2: Preparing TPL for Renewable Energy Supply. Support the Project Implementing Entity to strengthen its capacity to: (i) carry out power system modeling to determine the most cost effective way to diversify energy generation, with a focus on achieving a high long-term renewable and distributed energy penetration; (ii) design and specify upgrades to monitor, control, and protect systems to ensure a reliable and secure supply of energy through the electricity system with high levels of renewable energy generation; (iii) develop standards and procedures for connection to the power system by independent power producers; (iv) develop (in conjunction with TERM-IU and to be approved by TERM-C) a power system plan for a period of five (5) years focusing on specific renewable energy technology projects such as solar, wind, biomass and biofuels, but also covering energy storage options and demand side management; and (v) carry out a program of activities designed to increase the renewable energy share, such activities to include construction of new distribution lines." 3. Section 3.01 of the PRIF Grant Agreement is hereby amended to read as follows: "3.01. Eligible Expenditures. The Recipient, through its Minister for Finance and National Planning or its Secretary for Finance and National Planning may withdraw the proceeds of the Grant in accordance with the provisions of: (a) Article III of the Standard Conditions; (b) this Section; and (c) such additional instructions as the World Bank may specify by notice to the Recipient (including the "World Bank Disbursement Guidelines for Projects" dated May 2006, as revised from time to time by the World Bank and as made applicable to this Agreement pursuant to such instructions), to finance 100% of Eligible Expenditures consisting of goods, works, non-consultant services, consultants' services, Training and Workshops, and Operating Costs, all inclusive of taxes." 4. The Closing Date set forth in Section 3.03 of the Annex to the PRIF Grant Agreement is hereby amended to read as follows: "3.03. Withdrawal Period. The Closing Date referred to in Section 3.06(c) of the Standard Conditions is December 31, 2016." Please confirm the Recipient's agreement to the foregoing by having an authorized official of the Recipient sign and date the enclosed two copies of this Letter of Amendment, and returning one copy to the World Bank. All capitalized terms used in this Letter of Amendment have the same meaning assigned to them in the PRIF Grant Agreement. All the terms of the PRIF Grant Agreement not hereby amended will remain in full force and effect. Kingdom of Tonga -3- PRIF Grant Number: TFO 12699 This Amendment of the PRIF Grant Agreement will become effective upon receipt of the Recipient's countersignatures which have been duly authorized or ratified by the Recipient and is legally binding upon the Recipient in accordance with its terms. Sincerely, Franz R. Drees- ross Country Director Timor-Leste, Papua New Guinea & Pacific Islands East Asia and Pacific Region AGREED: Kingdom of Tonga By: M Authorized Representative Title: _________________c__hw& 4r Date: __ _ _ _ _ _ _ _ _