Supplemental Letter STATE ROAD AGENCY OF UKRAINE UKRAVTODOR November 19, 2015 International Bank for Reconstruction and Development 1818 H Street, N.W. Washington, D.C. 20433 United States of America Re: Loan 8549-UA (Road Sector Development Project) Performance Monitoring Indicators Dear Sirs and Mesdames: Referring to the provisions of Section II.A. 1 of the Schedule to the Project Agreement between the International Bank for Reconstruction and Development ("Bank") and State Road Agency Of Ukraine Ukravtodor ("Ukravtodor") for the above-captioned Project, Ukravtodor hereby confirms to the Bank that the indicators set out in the attachment to this letter shall serve as a basis for Ukravtodor to monitor and evaluate the progress of the Project and the achievement of the objectives thereof. Very truly yours, STATE ROAD AG CY OF UKRAINE UKRA ODOR By Authorized epresentative Attachment Attachment to the Supplemental Letter Road Sector Development Project Performance Monitoring Indicators These results are at Project Level Project Development Objective Indicators Cumulative Target Values Indicator Name Baseline YRI YR2 YR3 YR4 YR5 End Target Reduction in travel time between Poltava and 140 120 96 96 Kharkiv (min) Reduction in traffic accidents involving injury 139 96 85 85 and fatalities on Poltava to (tcl. 26 (18) (16) (16) Kharkiv road fatalities) Condition in IRI of M-03, Yes M-6 and M-07 corridors IRI Range Yes Yes Yes sustained at IRI <2 (Yes/No) 1.3-1.8 Road network management modernized measured by: (i) percentage reduction in accidents caused by over- 39 30 20 20 20 speeding (ii) percentage reduction in number of over-weight 30 30 25 20 15 trucks Intermediate Results Indicators Cumulative Target Values Indicator Name Baseline YRI YR2 YR3 YR4 YR5 End Target Component 1: Road Rehabilitation and Safety Improvement Roads constructed on M-03, non-rural (kilometers) - 0 26 64 100 100 (Core) Component 2: Maintenance of Core National Road Corridors Roads maintained using long term performance based 0 838 838 838 contracts (number) Component 3: Network Management and Development First phase implementation of modem network management tools: (i) weigh-in-motion control No Yes Yes Yes Yes system (yes/no) (ii) national system of automatic speed enforcement No Yes Yes Yes Yes (yes/no) Tolling strategy, system specification and bidding No Yes Yes Yes Yes documents prepared and adopted (yes/no) Strategy for maintenance reform prepared and adopted No Yes Yes Yes Yes (yes/no) Digital Passport implemented on National 0 5,000 10,000 21,000 21,000 Roads (with up-to-date conditions and traffic data) km Feasibility and detailed design completed in km 0 200 300 400 500 500 (number) Cross-cutting issues Direct project beneficiaries (number), of which female (percentage): Short term construction jobs: 0 400 (30%) 1,000 (30%) 2,000 (30%) 2,000 (30%) 2,000 (30%) Long term maintenance jobs: 0 800 (40%) 1600 (40%) 1600 (40%) 1600 (40%) 1600 (40%) Direct daily road user beneficiaries: 0 30,000 40,000 40,000 Indirect beneficiaries in Poltava and Kharkiv Oblasts: 0 4.4 million 4.4 million 4.4 million Beneficiaries that feel project investments reflected 0 65 80 80 their needs (%) gender disaggregated Ukravtodor publishes annual report on GRM and how issues were resolved No Yes Yes Yes Yes Yes [including resolution rates] (Yes/No) Indicator Description Project Development Objective Indicators Indicator Name Description (indicator definition etc.) Frequency Data Source / Responsibility for Data Methodology Collection Reduction in travel time This indicator measures the average travel time Annual Project Progress UAD between Poltava and reduction along the M-03 corridor between Reports Kharkiv (minutes) Poltava and Kharkiv. This indicator will be measured at the end of the project and will be monitored annually for the roads improved under the project. Reduction in traffic This indicator will measure the reduction of Annual Project Progress Traffic Police accidents involving injury road crashes injuries and fatalities along the M- Reports and fatalities on Poltava to 03 corridor between Poltava and Kharkiv. Kharkiv road Condition in IRI of M-03, This indicator will measure the overall Annual Project Progress UAD M-6 and M-07 corridors condition of the 3 main corridors that will be Reports sustained maintained under the project. The corridors are already in good or fair condition and the objective is to sustain this condition at a level of <2 IRI national roads based on the average IRI of the network. Modernization of road This indicator will measure the outcomes of key Annual Project Progress Mol/ UAD network management steps in the provision of a modem system of Reports (i) reduction in accidents network management. This will include in caused by over-speeding particular the reduction in accidents caused by (%) over-speeding following the implementation of (ii) reduction in number of speed cameras and the reduction in number of over-weight trucks (%) over-weight trucks following the introduction of weigh-in-motion control. The baseline of this second indicator is the number observed in M06 and may not reflect perfectly the situation on M03. Intermediate Results Indicators Data Source / Responsibility for Data Indicator Name Description (indicator definition etc.) Frequency Methodology Collection Roads constructed on M- This indicator will measure the distance of the Quarterly Project Progress UAD 03, non-rural (kilometers) - M-03 corridor between Poltava and Valky that Reports (Core) will be improved under this project. This is a core indicator of the World Bank. . This indicator will measure the number of km Annual Project Progress UAD Roads maintained usmng maintained under Output and Performance- Reports long term performance based Road Contracts (OPRC) financed by the based contracts (number) oeain operation. This indicator will measure progress in the steps Quarterly Project Progress UAD/ Traffic Police to be taken to achieve the successful roll out of Reports a system of weigh-in-motion control and the First phase of progress with implementation of initial phase of implementation of modem national speed enforcement system along the network management tools: Kiev to Kharkiv road corridor as evidenced by (i) weigh-in-motion control the installation of automatic speed enforcement system (yes/no) and cameras, associated processing center and (ii) national system of intensity of speed controls using mobile automatic speed enforce- equipment. The first phase will imply a limited ment (yes/no) implementation of the weight in motion and speed enforcement in one road section to be defined in the initial specification of the works. This indicator will measure the progress Annual Project Progress UAD towards readiness for e-tolling or alternative Reports revenue generating system (such as e-vignette). Preparation of e-tolling It will in particular focus on the preparation of strategy (yes/no) FS to assess viability and develop functional specifications and the preparation of bidding documents. This indicator will measure the steps towards Annual Project Progress UAD Strategy for maintenance the implementation of the maintenance reform Reports reform prepared (yes/no) program, from capacity assessment to implementation of key reforms, in particular the decentralization of DAKs. This indicator will measure the implementation Annual Project Progress UAD Digital Passport of Digital Passports, i.e. system of databases Reports implemented on National with up-to-date data on condition of the roads Roads (with up-to-date and maintenance plans. The system will also be conditions and traffic data) used to share information with the public via km internet. This indicator will measure progress in the Quarterly Project Progress UAD preparation of feasibility studies and detailed Reports Feasibility and detailed design for Lviv-Kherson corridor. The objective g cis the preparation of high quality projects to be financed in the future by the Bank or other financiers. Direct project beneficiaries This indicator measures the number of direct Annual Project Progress UAD (number), of which female project beneficiaries and percentage of female Reports (percentage) beneficiaries among them. Beneficiaries that feel This indicator measures the share of Annual starting from Project progress UAD project investments beneficiaries (men and women) reporting that the second year of reports reflected their needs (%) their concerns have been taken into account implementation gender disaggregated during project design and implementation Ukravtodor publishes This indicator measures the existence of an Annual Project progress UAD annual report on GRM and annual report on GRM and how issues were reports how issues were resolved resolved [including resolution rates] [including resolution rates] (Yes/No)