THE WORLD BANK I BANKDUNIA Sharing Development Solutions 0FFICIAL for an Emerging Indonesia DOCUMENTS / Letter No. CD-085/PAMSIMAS AF/IV/2014 April 23, 2014 Mr. Robert Pakpahan Director General of Debt Management Ministry of Finance Gedung Frans Seda Jalan DR. Wahidin No. 1 Jakarta 10710 Indonesia Dear Mr. Pakpahan: Re: TF094792 - Support for the Third Water Supply and Sanitation for Low-Income Communities Project - PAMSIMAS - Fourth Additional Financing Amendment of Grant Agreement I refer to the Grant Agreement, dated August 11, 2009 (the "Original Grant Agreement"), as amended through October 31, 2012 (the "Third Additional Financing Amendment"), between the Republic of Indonesia (the "Recipient") and the International Bank for Reconstruction and Development/International Development Association (the "World Bank"), acting as administrator of grant funds provided by the Government of Australia regarding the above-mentioned project (the "Project"). I refer also to the grant discussions between representatives of the Recipient and the World Bank pursuant to which the Recipient requested additional financing and an amendment to the Grant Agreement to reflect a scale-up of activities in approximately 480 additional villages and to your letter dated February 4, 2014. The World Bank is pleased to inform you that, after due consideration, it has agreed to the request for additional financing and to the amendments set forth below (the "Fourth Additional Financing Amendment"). Except as specifically provided for in this Fourth Additional Financing Amendment, all of the terms and conditions set out in the Original Grant Agreement, as amended by the First Additional Financing Amendment, the Second Additional Financing Amendment, and the Third Additional Financing Amendment, shall apply to this Fourth Additional Financing Amendment. References to "Grant" shall, except as the context otherwise requires, include the grant provided by the Original Grant Agreement, the First Additional Financing Amendment, the Second Additional Financing Amendment, the Third Additional Financing Amendment, and this Fourth Additional Financing Amendment. References to "this Agreement" shall mean the Original Grant Agreement together with the First Additional Financing Amendment, the Second Additional Financing Amendment, the Third Additional Financing Amendment, and the Fourth Additional Financing Amendment. ISEB Tower 2, 121h Floor, JI. Jend. Sudirman Kay. 52-53, Jakarta 12190 a +6221 5299 3000 & +6221 5299 3111 O www.worldbank.org/id TF094792-ID 2 April 23, 2014 1. The first paragraph of the Grant Agreement is amended to provide for the grant of an additional sixteen million three hundred thirty seven thousand seven hundred ninety seven United States Dollars (USD16,337,797) (the "Fourth Additional Grant") as follows: "In response to the request for financial assistance made on behalf of the Republic of Indonesia ("Recipient"), I am pleased to inform you that the International Bank for Reconstruction and Development/International Development Association ("World Bank"), acting as administrator of grant funds provided by the Australian Agency for International Development under the Support for the Third Water Supply and Sanitation for Low Income Communities Project - PAMSIMAS Trust Fund proposes to extend to the Recipient a grant in an amount not to exceed sixty two million seven hundred forty nine thousand eighty nine United States Dollars (USD62,749,089) ("Grant"), of which five million six hundred eleven thousand two hundred ninety two United States Dollars (USD5,611,292) comprises the original grant ("Original Grant"), eighteen million United States Dollars (USD18,000,000) comprises the first additional grant (the "First Additional Grant"), nine million United States Dollars (USD 9,000,000) comprises the second additional grant (the "Second Additional Grant"), thirteen million eight hundred thousand United States Dollars (USDI3,800.000) comprises the third additional grant (the "Third Additional Grant"), and sixteen million three hundred thirty seven thousand seven hundred ninety seven United States Dollars (USD16,337,797) comprises the fourth additional grant (the "Fourth Additional Grant"), on the terms and conditions set forth or referred to in this letter agreement ("Agreement"), which includes the attached Annex, to assist in the financing of the project described in the Annex ("Project"). This Grant is funded out of the abovementioned trust fund for which the World Bank receives periodic contributions from the Donor to the trust fund. In accordance with Section 3.02 of the Standard Conditions (as defined in the Annex to this Agreement), the World Bank's obligations in connection with this Agreement are limited to the amount of funds made available to it by the Donor under the abovementioned trust fund, and the Recipient's right to withdraw the Grant proceeds subject to the availability of such funds." 2. Section 1.02 of the Annex to the Grant Agreement is amended to reflect the amendments to the Financing Agreement of the Original Project as follows: "1.02. Definitions. Unless the context requires otherwise, the capitalized terms used in this Agreement have the meanings ascribed to them in the Standard Conditions or in the Financing Agreement for the Third Water Supply and Sanitation for Low-Income Communities Project - PAMSIMAS, between the Recipient and the Association, dated December 27, 2007, as amended (Credit No.4204-IND)." 3. Section 2.01 of the Annex to the Grant Agreement is amended and restated to reflect the revised Project objective and revised Project description as set out below (amended language is italicized for ease of references): "2.01. Project Objectives and Description. The objective of the Project is to increase the number of under-served and low income rural and per-urban populations accessing improved and sustained water and sanitation services and practicing improved hygiene behaviors as part of the Recipient's efforts to achieve WSS-MDG Targets through programmatic mainstreaming and scaling-up of a nationwide community-driven approach. ISEB Tower 2, 12th Floor, JI. Jend. Sudirman Kay. 52-53, Jakarta 12190 a+6221 5299 3000 *+6221 5299 3111 O www.worldbank.org/id TF094792-ID 3 April 23. 2014 The Project consists of the following parts: Component 1 - Community Empowerment and Local Institutional Development Provision of technical assistance to support the implementation of Parts A.2, A.3 and B of the Original Project, including: (a) program-specific training to community facilitators in the field, through the selection recruitment, and training of a cadre of trainers, who deliver the training to the community facilitators; (b) the provision of technical training expertise to support the training of trainers in Methodology Participatory of Assessment/Participatory Hygiene and Sanitation Transformation (MPA/PHAST), Community Led Total Sanitation Program (CLTS); and (c) training for Stakeholders Committee at the District level on village selection and monitoring. Component 2 - Village Incentives Grants Support for the implementation of Parts C and D.2 of the Original Project through the provision of grants to Participating Villages, including those under a replication program. Component 3 - Implementation Support and Program Management Support for the implementation of Part E of the Original Project through provision of technical assistance and capacity building for quality assurance of PAMSIMAS including: (a) PAMSIMAS implementation and management advisers; (b) a procurement and safeguards adviser; (c) a monitoring and evaluation baseline survey and impact evaluation consultant; (d) a community hygiene and sanitation behavior change specialist; (e) a management information systems/knowledge management specialist; (f) a MPA/PHAST and sustainability expert; (g) a community-led total sanitation program specialist; (h) community facilitators; and (i) Provincial coordinators and District STBM.jacilitators." 4. Section 2.03 of the Annex to the Grant Agreement is amended to reflect the amendments to the Financing Agreement of the Original Project as follows: "2.03. Institutional and Other Arrangements. The provisions of Sections lA. I.B, and I.C of Schedule 2 to the Financing Agreement of the Original Project, as amended, are incorporated herein as if fully set forth." 5. Section 2.04(a) of the Annex to the Grant Agreement is amended as follows: "(a) The Recipient shall monitor and evaluate the progress of the Project and prepare Project Reports in accordance with the provisions of Section 2.06 of the Standard Conditions and on the basis of the indicators set forth below. Each Project Report shall cover the period of one calendar quarter, and shall be furnished to the World Bank not later than one month after the end of the period covered by such report. ISEB Tower 2, 12th Floor, JI. Jend. Sudirman Kay. 52-53, Jakarta 12190 2 +6221 5299 3000 & +6221 5299 3111 0 www.worldbank.org/id TF094792-ID 4 April 23, 2014 1 Number of additional people with sustainable access to 1, 420,000 improved water facilities, differentiated by socioeconomic status 2 Number of additional people with sustainable access to 602,000 improved sanitation facilities, differentiated by socioeconomic status. 3 Number of villages developing community action plans 1.775 4 % of target communities free of open defecation 60% 5 % of targeted schools that have improved sanitation 70% facilities and hygiene programs 6 % of villages with improved water supply systems that 75% are effectively managed and financed 6. Section 2.04 (b) of the Annex to the Grant Agreement is amended as follows: "(b) The Recipient shall prepare the Completion Report in accordance with the provisions of Section 2.06(b)(ii) of the Standard Conditions. The Completion Report shall be firnished to the World Bank not later than February 28, 2018." 7. The World Bank hereby reallocates the proceeds of the Grant allocated in the Table in Section 3.01(c) of the Annex to the Grant Agreement as set out below: Category Amount of the Grant Percentage of Allocated Expenditures to be (expressed in USD) Financed (Exclusive of Taxes) (a) Component 1: 23,566,292 100% Community Empowerment and Local Institutional Development; and Component 3: Implementation Support and Project Management (b) Component 2: Village 39,182,797 100% of grant amount Incentive Grants disbursed to Participating Villages TOTAL AMOUNT 62,749,089 ISEB Tower 2, 12th Floor, J. Jend. Sudirman Kay. 52-53, Jakarta 12190 a+6221 5299 3000 0 +6221 5299 3111 0 www.worldbank.org/id TF094792-ID 5 April 23. 2014 8. The World Bank has established September 30, 2017 as the later date for purposes of Section 3.03 of the Annex to the Grant Agreement. 9. Except as specifically amended by the provisions of this Fourth Additional Financing Amendment, all terms and conditions of the Grant Agreement otherwise remain in full force and effect. The World Bank will disclose this letter agreement and related information on this Project in accordance with the World Bank Policy on Access to Information. By entering into this agreement, the Recipient consents to disclosure of this agreement and related information on this Project. Please confirm your agreement to the foregoing by signing and dating both enclosed copies of this letter in the space provided and returning one signed copy to us. The above amendment will become effective as of the date of the Recipient's countersignature of this letter. Sincerely, Cristobal Ridao-Cano Acting Country Director, Indonesia AGREED: REPUBLIC OF INDONESIA By: Name: Robert Pakpahan Title: Director General of Debt Management Date: April 30, 2014 ISEB Tower 2, 12th Floor, Ji. Jend. Sudirman Kay. 52-53, Jakarta 12190 2+6221 5299 3000 *+6221 5299 3111 0 www.worldbank.org/id