ie World Bank New Delhi Office Phone +911141479301/+911149247601 r. ATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT 70 Lodi Estate Mailing Address: P.0 Box 416 INTTIENATIONAL DEVELOPMENT ASSOCIATION New Delhi - 110 003 India O FFICIAL April 12, 2017 Mr. Raj Kumar DOCUMENTS Joint Secretary (MI) Department of Economic Affairs Ministry of Finance Government of India 40B North Block New Delhi 110001 Re: INDIA: Loan No. 7792-IN Andhra Pradesh and Telangana Road Sector Project Cancellation of Loan Proceeds & Project Restructuring Amendment to the Loan Agreement Dear Mr. Kumar: 1. We refer to: (i) the Loan Agreement ("Loan Agreement") between India ("Borrower") and the International Bank of Reconstruction and Development ("World Bank"), dated January 22, 2010 for Andhra Pradesh and Telangana Road Sector Project ("Project"), pursuant to which the World Bank has extended the above captioned loan 7792-IN ("Loan"), as amended; (ii) the supplemental letter of the same date regarding performance monitoring indicators agreed with the World Bank, as subsequently amended (the "Side Letter"); (iii) the Project Agreement between the World Bank and State of Andhra Pradesh, also dated January 22. 20 10. as amended (the -AP Project Agreement"); and (iv) the Project Agreement between the World Bank and the State of Telangana, dated May 5, 2015, in respect of the Project, executed as a consequence of the bifurcation of the State of Andhra Pradesh pursuant to the Andhra Pradesh Reorganization Act 2014 (6 of 2014) (the "Telangana Project Agreement"). 2. We further refer to your letter No 7/2/2004-FB-VI of March 2, 2017, requesting: (i) the cancellation of twenty five million United States Dollars (USD 25,000,000) in savings from the Project; and (ii) the dropping of the Kakinada-Rajahmundry (KRO7) package from the Project. 3. In view of the foregoing, and in accordance with the provisions of Section 7.01 of the General Conditions for Loans applicable to the Loan Agreement, the World Bank hereby cancels the unutilized loan amount of twenty five million United States Dollars (USD25,000,000), as of March 2, 2017. The withdrawal table set forth in paragraph A.2 of Section IV of Schedule 2 to the Loan Agreement is hereby revised to read as set forth in the Attachment I to this letter of amendment. 4. 1 am also pleased to inform that the World Bank hereby agrees to the proposed exclusion of the Kakinada-Rajahmundry package from the Project, as of the date of effectiveness of this letter of amendment. Any expenditures incurred under such package shall cease to be eligible under the Project as of such date. ExPenditures incurred on or prior to such date shall remain eligible under the Loan. HeadquarterUJ Washington DC ', USA Mr. Raj Kumar -2- April 12, 2017 5. Furthermore, in order to reflect the exclusion of the Kakinada-Rajahmundry package from the scope of the Project, we hereby amend Component 1. in Schedule I to the Loan Agreement to read as follows: "Upgrading and maintenance of roads in the Core Road Network through: (a) upgrading about 340 km of priority state, highways; and (b) maintenance of about 6018 km of roads in the Core Road Network under long-term performance-based maintenance contracts; including implementation of ancillary social, resettlement and environmental measures." 6. In light of the foregoing amendment and the downsizing of Project activities, the key performance indicators originally reflected in the Side Letter are hereby amended to read as set forth in the Attachment 2 to this letter of amendment. 7. Please confirm your agreement to the amendments provided in paragraphs 4 through 6 aboxe, by signing the form of confirmation set forth below, and returning a fully executed original of this amendment letter to us and retaining one original for your records. 8. The amendment provided in paragraphs 4 through 6 of this letter of amendment shall become effective upon the receipt by the World Bank of: (i) a duly countersigned original of this letter of amendment; (ii) a duly countersigned original of the letter of amendment to the AP Project Agreement; and (iii) a duly countersigned original of the letter of amendment of the Telangana Project Agreement. With regards, Yours sincerely, INTERNATIONAL BANK OF RECONSTRUCTION AND DEVELOPMENT Junaid Kamal Ahmad Country Director, India ATTACHMENTS: Attachment 1: Revised Disbursement Table Attachment 2: Revised Key Performance Indicators. AGREED: INDIA By t1~7d7 Name RAT KUMA/A Title UoitT SECRETARY, NI(tA) Date - - Mr. Raj Kumar -3- April 12, 2017 cc: Mr. Subhash Chandra Garg, Executive Director (India) Mr. Neeraj Mittal, Senior Advisor to Executive Director (India) Government of India Mr. Bhaskar Dasgupta, Director (MI), Department of Economic Affairs Government ofAndhra Pradesh Mrs. Sumita Dawra, Principal Secretary to Govt., Dept. of Transport, Roads & Buildings Mr. G. Jagannadha Rao, MD, AP Road Devpt. Corpn. and CE&CRN (RBD) Government of Telangana Mr. Sunil Sharma, Principal Secretary to Govt., Dept. of Transport, Roads & Buildings Mr. P. Ravinder Rao, E-in-C (R&B), State Roads, CRN & Jt. MD, RDC ATTACHMENT 1 Attachment to World Bank's Cancellation Letter dated April 12, 2017 Loan No.7792 Revised Withdrawal Table Amount of the Loan Percentage of Eligible Category Allocated Expenditures to be financed (expressed in USD) (inclusive of Taxes) 1) Works and R&R Assistance: (a) for Components I (a), 4(a), and 4(c) of the Project (b) for Component 1(b) 35,812,500 20% of the Project 2) Goods, Consultants' Services, 8,378,000 80% Training and Incremental Operating Costs Amount payable 800,000 pursuant to Section 3) Fot- 2.03 of this Agreement in accordance with Section 2.07(b) of the General Conditions Amount payable pursuant to 4) Premia for Interest Rate Section 2.07(c) of this Cap or Interest Rate Col 0 Agreement in accordance with lar Section 4.05(c) of the General Conditions 5) Works and R&R Assistance: (a) for Components I (a), 4(a), and 76,876,690 80% 4(c) of the Project for the State of Andhra Pradesh (b) for Component 1 (b) 14,594,500 20% of the Project for the ATTACHMENT 1 State of Andhra Pradesh (6) Goods, Consultants' Services, Training and Incremental 12,890,000 80% Operating Costs for the State of Andhra Pradesh (7) Works and R&R Assistance: (a) for Components I (a), 4(a), and 4(c) of the Project for the State of 24,153,310 80% Telengana (b) for Component 1 (b) 1,920,000 20% of the Project for the State of Telengana (8) Goods, Consultants' Services, Training and Incremental 3,320,000 80% Operating Costs for the State of Telengana 9) Cancelled as of February 56,000,000 19, 201 4 10) Cancelled as of March 2, 25,000,000 2017 TOTAL AMOUNT 320,000,000 RESULTS INDICATORS ATTACHMENT 2 End of Project Target Value Indicators Baseline Andhra Pradesh Telangana Current Revised Current Revised Outcome Indicators Full RDC still not fully operational: * GoAP provides RDC NO If RDC is formed, NO operationalization outstanding audits: Act to be with financial, * GoT provides RDC with of RDC with reviewed: no independent administrative and financial. administrative adequate financial financial & operational operational powers: and operational powers: and human procedures: many staff deputed Rules and procedures Rules and procedures resources to manage from RBD adopted adopted the CRN * RDC has own staffing and adequate sources of revenue for CRN Vehicle operating Cars: 5.41 per veh km 12% reduction with NO 12% reduction with project, NO costs decline project. that is, 4.76 that is. 4.76 per veh km relative to the per veh kin without in Truck: l 1.85 per veh kin 80 reduction with NO 8% reduction with project, NO scenario in Tuk 18 e e m 8 euto ih N %rdcinwt rjc, N u t roads project. that is, f l0.90 that is. ?10.90 per veh kmi upgradation fors 1per veh kin Travel time for bs 10.6 rs for travelling all 422(26% reduction) NO 7.8 brs (26% reduction) to NO passengers declines km of upgradation roads to travel in all 422 km travel in all 422 km of relative to without of upgrading upgrading component project scenario in component Supradation roads Number of road SIH3 1: 16 Renigunta -- Less than 0.47 fatalities NO Less than 0.36 fatalities per NO accident fatalities Rayalacheruvu Corridor. per km km per vehicle Andhra Pradesh kilometers declines 0.47fatalities per km on Road Demo Corridors SH4: 16 Hyderabad - Bijapur Corridor, Telangana 0. 36]a talities per km Share of CRN in 40% 80% NO 75% NO good condition increased (size of classified (size of classified network: network: 6.800 km) 4.020 km) Results Indicators for each Component Component 1: Road Corridor Improvement 427 kin upgraded 0 302 km upgraded YES 125 km upgraded YES. efficiently and 230 kin upgraded 110 km upgraded environmental and RESULTS INDICATORS ATTACHMENT 2 socially sustainable way 6,018 km of roads 0 4.301 km maintained NO 1717 km maintained NO under Long-term through Long term through Long term performance based performance-based performance-based maintenance maintenance contracts maintenance contracts contract (LTPBMC) Component 2: PPP Facilitation Three roads 0 2 Roads YES. I Road NO selected for PPP I Road transactions. Component 3: Institutional Development Milestones in ISAP * IT-MIS. HR and NO * IT-MIS. HR and NO met Training plans fully Training plans fully operational operational * Complete * Complete Preparation of Preparation of State State Network Master Network Master Plan Plan Milestones in Disclosure & NO Disclosure & complaints NO GAAP met complaints handling handling mechanism mechanism operational operational Annual * RAMS operational NO -- maintenance plans and used for annual developed through plan preparation the RMS system I Component 4 : Road Safety Demonstration Complete NO * Establish Road Safety NO projects carried out implementation Demo lead Agency and Multi- in at least one road Corridor with multi- sector team for road corridor, sector coordination and safety coordination (Dec evaluate results 2015) * Complete implementation Demo Corridor with multi- sector coordination and evaluate results Comprehensive New Safety Policy NO New Safety Policy NO GoAP road safety approved; institutional approved; institutional functions, capacity _arrangement putin arrangement put in place, RESULTS INDICATORS ATTACHMENT 2 and action plan(s) place. and Action Plan and Action Plan put in place iIementation drawn Implementation drawn Black Spot Complete NO Complete implementation NO Improvement of I implementation of of'improvement of 10 CRN improvement of 36 blackspots blackspots Land Acquisition 100% to be completed NO 100% to be completed NO (Total: 383 Acres) (Total: 107 Acres) Resettlement and 100% to be completed NO 100% to be completed NO Rehabilitation (Total: 2.733 Nos) (Total: 314 Nos)