UWMNT9, Am THE WORLD BANK GROUP Central Europe and the Baltic Countries Europe and Central Asia Region 17, Avenue Marnix, 2nd Floor, 1000 Brussels, Belgium Tel : (+32 2) 504 0994, Fax: (+32 2) 504 09 99 August 27, 2014 H. E. Rumen Porodzanov Or Minister of Finance Sofia, Bulgaria Bulgaria: Municipal I ifrastructure Development Project (Loan No. 7834-BG) Secot ud Amendment to the Loan Agreement Dear Mr Minister: We refer to the Loan A,,reement between Republic of Bulgaria (the Borrower) and the International Bank for Reconstruct ion and Development (the Bank) for the above-referenced Project, dated February 1, 2010 and amend:d on May 17, 2011, and your letter dated May 15, 2014 requesting certain amendments to the above mc ntioned Loan Agreement. We concur with your req jest and hereby agree to amend the Loan Agreement as follows (modifications are shown in italics): 1. Schedule 1 of the Agreemei t is amended as follows: 1.1. The objectives of the Project described in the Schedule are modified to read as follows: "The objectives of the Proj -ct are to: (a) improve bulk potable water provision in target areas, and (b) assist municipalities to improve investment-planning capacity." 1.2. Part A (a) f the Schedule 1 of the Agreement is amended to read as follows: "(a) Provision of techni:al assistance for preparing the activities described in Part B and in Part C of the Project as wei' as for preparing designs related to the construction of the Neikovtsi dam and its associated wai er treatment plant, consisting, inter alia, of the following: update of feasibility assessments, upd ite of designs, Environmental Management Plans and Environmental Impact Assessments, prepar ation of bidding documents, and construction supervision activities 1.3. Part C of t ie Schedule 1 of the Agreement is amended to read as follows: "Provision of works and goods for: (i) completion of Luda Yana dam, including its associated water treatment plant; (ii) c )mpletion of Plovdivtsi dam, including its associated water treatment plant; (iii) rehabilitation oi Studena dam; and (iv) rehabilitation of the Studena-Pernik water treatment plant." 2. Schedule 2 of the Agreemeit is amended as follows: 2.1. Section I.A.4 of Sched ale 2 of the Agreement is modified to read as follows: "4. Prior to launch the activities under Part C of the Project and in accordance with its relevant national legislation, the Bor rower, through the MRD shall undertake, the following steps for each dam and for the associated rater treatment plants: (a) update the feasibility as5 essment, as defined in the POM, to confirm that the most viable solution for the proposed do m and water treatment investments, based on the update information, remains valid; (b) complete site investigati 3n to review the integrity of the existing construction and current hydrogeology of the area; (c) update, as the case may be, the EMPs and ElAs, if necessary, and prepare the EMPfir Part C (iv) of the Project and upda e it thereafter, if necessary; (d) obtain the Bank's no ob ection to its financing based on the confirmation of the economic, technical, environmental, so cial and dam safety viability, based on related Bank's policies; and (e) review and update desig is and costs for the most viable option, as deemed necessary. 2.2. Section I.A.5 of Sc 4edule 2 of the Agreement is deleted and the remaining paragraphs of Section LA are renumbered accordingly. 2.3 A new Paragraph i; added to Section III.D of Schedule 2 to the Agreement to read as follows: "2. The Borrower, through -MRD, shall: (a) No later than June 30 and December 31 of every year during the implementation of the Project, beginning on De.-ember 31, 2014, prepare and furnish to the Bank a bi-annual procurement progress report ("Bi-annual Procurement Progress Report"), in form and substance acceptable to th? Bank, which shall include, inter alia: (i) a description of issues arising during the full precurement cycle under the Project, from design through planning, bidding, contract implemen ation and completion; (ii) a list of proposed measures and actions to be taken to resolve the issves identified under sub-paragraph (i) above; and (iii) a proposed timeline for the implementa ion of the said measures and actions. (b) No later than 15 wor .ing days following the submission of the Bi-annual Procurement Progress Report by the Boi rower, through MRD, the Borrower, through the MRD, and the Bank shall exchange views on he results of said report completed for the Borrower's previous calendar semester and the -eafter implement such recommended measures as agreed with the Bank." 3. The Table set forth in Secti an IV.A.2 of Schedule 2 to the Loan Agreement shall be amended as set forth in the attachment I hereto. 4. Part B of Section IV of Schedule 2 to the Agreement is modified to read as follows: "B. Withdrawal Cond tions; Withdrawal Period "l. Notwithstanding the prc visions of Part A of this Section, no withdrawal shall be made: (a) for payments made prior to the date of this Agreement; or (b) under Category (3) for any expenditures for Luda Yana dam, Plovdivtsi dam, Studena dam or Studena-Pernik wat !r treatment plant, unless the Borrower has carried out its obligations pursuant to Section 1.A.4 of this Schedule for each respective dam and associated water treatment plant. 2. The Closing Date i, December 31, 2017." 5. The term "Ministry of I Regional Development" replaces the term Ministry of Regional Development and Public Works" tl roughout the agreement, the acronym "MRD" replaces the acronym "MRDPW" throughout the agreem nt, and the following definition in the Appendix to the Agreement is modified to read as follows: "5. "EMPs for Part C of th,- Project" means the Environmental Management Plans for each dam and water treatment plant under Part C of the Project, satisfactory to the Bank, to be prepared and approved by the Borrower, through the MRD, pursuant to Section I.A.4 (c) of Schedule 2 to this Agreement describing the e wironmental mitigation and monitoring measures under Part C of the Project." A revised Supplemental Letter No.2 on Performance and Monitoring Indicators is provided separately. All the other terms and coi tditions of the Loan Agreement, as amended hereby, shall remain in full force and effect. Please confirm your agreement with the foregoing, on behalf of the Republic of Bulgaria, by signing, dating and returning to us t ie enclosed copy of this letter. This amendment will become effective as of the date on which the Bank re zeives notice of completion of internal approval procedures under the laws of the Republic of Bulgaria. Sincerely, Mamta Murthi Regional Director Ce itral Europe and the Baltic Countries Europe and Central Asia Region CONFIRMED AND AGREED: REPUBLIC OF BULGARI By: Name: W-O os Title: K c 1 Date: 0oc . rL Attachment I SCHEDULE 2 (Wit idrawal of the Proceeds of the Loan) Amount of the Loan Percentage of Allocated Expenditures Category (Expressed in EUR) to be Financed (1) Consultants' services fcr 8,397,500 80% Part A of the Project (2) Preparation of Master Plans 9,800,000 80% under Part B of the Project (3) Works and goods for Part C 51,600,000 80% of the Project (4) Front-end Fee 202,500 Amount payable pursuant to Section 2.03 of this Agreement in accordance with Section 2.07 (b) of the General Conditions SUB-TOTAL 70,000,000 Cancellation as of May 15, 2014 11.000,000 TOTAL AMOUNT 81,000