THE WORLD BANK IBRD* IDA I WORLD BANKGROUP OFFICIAL MARA K. WARWICK Country Director, Philippines East Asia and Pacific Region DO CUM ENTS February 14, 2017 Honorable Carlos G. Dominguez Secretary Department of Finance Department of Finance Building Bangko Sentral ng Pilipinas Complex Roxas Blvd. Manila, Philippines 1004 Dear Secretary Dominguez: PHILIPPINES: Participatory Irrigation Development Project (Ln. 7709-PH) Amendment to the Loan Agreement We refer to the Loan Agreement dated August 7, 2009 between the Republic of the Philippines (the "Borrower") and International Bank of Reconstruction and Development (the "Bank") as amended to date for the above-referenced project (the "Loan Agreement"), and your letter dated January 9, 2017 requesting amendments to the Loan Agreement to ensure the continued provision of irrigation to irrigable lands and restoration of damaged irrigation facilities in the territory of the Borrower. We are pleased to inform you that the Bank has concurred with your request and hereby proposes to amend the Loan Agreement as follows: 1. The first sentence of the first paragraph of Schedule 1 (Project Description) is amended to read as follows: "The Project constitutes the first phase of a long-term program supporting irrigation reforms in the Philippines whose objective is to improve efficiency of irrigation service delivery on a technically and financially viable basis." 2. Paragraph 5(b) of Section L.A of Schedule 2 is amended to read as follows: "(b) whenever there are Indigenous Peoples present in or with collective attachment to a Project area, prior to implementation of Project activities in such area, prepare and provide to the Bank for its approval, an Indigenous Peoples Action Plan prepared in accordance with the principles and procedures set forth in the Indigenous Peoples Policy Framework and with the free, prior and informed consultation of such Indigenous Peoples, designed to ensure that Project activities adequately address the needs, cultural practices and preferences of such Indigenous People; and, thereafter, implement in a manner satisfactory to the Bank, such Indigenous Peoples Action Plan as shall have been approved by the Bank;" 26F One Global Place, Sa Avenue corner 25th Street, Bonifacio Global City, Taguig City 1634, Philippines Telephone: (632) 4652500 | Facsimile: (632) 4652505 Secretary Carlos G. Dominguez 2 February 14, 2017 3. Section II.A of Schedule 2 is amended to read as follows: "The Borrower shall monitor and evaluate the progress of the Project and prepare Project Reports in accordance with the provisions of Section 5.08 of the General Conditions and on the basis of indicators acceptable to the Bank. Each project Report shall cover the period of one (1) calendar semester, and shall be furnished to the Bank not later than sixty (60) days after the end of the period covered by such report." 4. The table at Section IV.A.2 of Schedule 2 is amended to read as follows: Amount of the Loan Allocated Percentage of Expenditures Category (expressed in USD) to be financed (1) Rationalization/ 8,690,000 100% Severance payments under Part 1.1 of the Project (2) Civil works 48,414,100 100% (3) Consultants 13,080,000 100% services, training and workshops, goods, and incremental operating costs (4) Unallocated 0 (5) Front-end Fee 175,900 Amount payable pursuant to Section 2.03 of this Agreement in accordance with Section 2.07(b) of the General Conditions TOTAL AMOUNT 70,360,000 5. Section IV.B.2 of Schedule 2 to the Loan Agreement is amended to read as follows: "2. The Closing Date is August 31, 2018." 6. Schedule 4 (Performance Indicators) to the Loan Agreement is deleted in its entirety and Schedule 5 is renumbered accordingly as the new Schedule 4. 7. Paragraph 12 of Section 1 of the Appendix to the Loan Agreement is amended to read as follows: Secretary Carlos G. Dominguez 3 February 14, 2017 "Indigenous Peoples Action Plan" means each plan to be prepared by the Borrower pursuant to Paragraph 5(b) of Section I.A of Schedule 2 to this Agreement and in accordance with the Indigenous Peoples Policy Framework and the Bank's policy on indigenous peoples, setting forth, inter alia, a summary of the social assessment undertaken to determine whether indigenous people are present in any Project implementation areas, or have collective attachment to such areas, a summary of the results of the free, prior, and informed consultation with the affected indigenous peoples' communities, a framework for ensuring free, prior, and informed consultation with the affected indigenous peoples' communities, an action plan of measures to avoid, minimize, mitigate, or compensate for adverse effects on affected indigenous peoples, cost estimates and financing, grievance mechanisms and benchmarks for monitoring, evaluating, and reporting on the implementation of the Indigenous Peoples Policy Framework." 8. Paragraph 13 of Section 1 of the Appendix is amended to read as follows: "Indigenous Peoples Planning Framework" means the framework, dated March 2009 and amended in June 2014, adopted by the Borrower and found acceptable to the Bank, which sets out: (i) the policies and procedures to ensure adequate consultations with, and the informed participation of, Indigenous Peoples who are affected by the Project; and (ii) the principles to be applied in the preparation of Indigenous Peoples Action Plans as may be required during the implementation of the Project." 9. Paragraph 17 of Section 1 of the Appendix is amended to read as follows: "Resettlement Policy Framework" means the framework dated November 2006 and amended in March 2014, adopted by the Borrower and found acceptable to the Bank, which sets out modalities for assisting communities affected by activities under the Project, such assistance to include cash assistance to affected households and wage assistance for landless laborers and fishers." and the paragraphs in this Section are sorted alphabetically and renumbered accordingly. 10. All references in the Loan Agreement to the "Land Acquisition and Resettlement Policy Framework" shall be replaced by references to the "Resettlement Policy Framework". Except as specifically amended by this amendment letter, all other provisions of the Loan Agreement shall remain in full force and effect. Please confirm your agreement to the amendments set out above by having an authorized representative of the Borrower: Secretary Carlos G. Dominguez 4 February 14, 2017 (i) countersign and date the two copies of this letter amendment signed by the Bank and return one of the two signed and countersigned original copies to the Bank; and (ii) countersign, date and transmit to the Bank the supplemental letter enclosed with this amendment letter, confirming the Performance Monitoring Indicators on which basis the Borrower shall monitor and evaluate the implementation of the Project, in accordance with Section II.A of Schedule 2 to the Loan Agreement. Upon receipt of (i) the original copy of this letter countersigned (with the date of countersignature) on behalf of the Borrower, and (ii) the original supplemental letter signed and dated on behalf of the Borrower, this amendment letter will become effective as of the date of the countersignature. Sincerely, Mara K. Warwick Country Director, Philippines East Asia and Pacific Region CONFIRMED AND AGREED: REPUBLIC OF THE PHILIPPINES By: Name: CARLOS 6. DoM1N6UE2 Title: SEIMETAtY Date: 27 FE6R%JAkY 017 Secretary Carlos G. Dominguez 5 February 14, 2017 cc: Hon. Ernesto M. Pernia, Socio-Economic Planning Secretary, National Economic and Development Authority Hon. Benjamin E. Diokno, Secretary, Department of Budget and Management Mr. Rolando G. Tungpalan, Deputy Director General, National Economic and Development Authority Ms. Laura B. Pascua, Undersecretary, Department of Budget and Management Ms. Ma. Edita Z. Tan, Assistant Secretary, Department of Finance Mr. Ruben S. Reinoso, Jr., Assistant Director General, National Economic and Development Authority Ms. Mercedita A. Sombilla, Assistant Secretary, National Economic and Development Authority Ms. Tina Rose L. Canda, Assistant Secretary, Department of Budget and Management Mr. Peter Angelo P. Lavifia, Administrator, National Irrigation Administration Ms. Estrella E. Icasiano, Deputy Administrator, National Irrigation Administration Ms. Lydia Esguerra, OIC Deputy Administrator, National Irrigation Administration Ms. Stella C. Laureano, Director, Department of Finance Ms. Violeta S. Corpus, Director, National Economic and Development Authority Mr. Jonathan L. Uy, Director, National Economic and Development Authority Mr. Lorenzo C. Drapete, Director, Department of Budget and Management Ms. Mary Anne C. Dela Vega, Director, Department of Budget and Management Mr. Eleuterio C. Luz, PIDP Project Manager, National Irrigation Administration Mr. Otaviano Canuto, Executive Director for the Philippines, World Bank Group Mr. Rommel Herrera Sr., Advisor to the Executive Director for the Philippines, World Bank Group REPUBLIC OF THE PHILIPPINES Date: ,2017 International Bank for Reconstruction and Development 1818 H Street, N.W. Washington, D.C. 20433 United States of America Re: Participatory Irrigation Development Project Loan No. 7709-PH Performance Monitoring Indicators Dear Sirs and Mesdames: This letter is in reference to Section II.A of Schedule 2 to the Loan Agreement between the Republic of the Philippines (the Borrower) and the International Bank for Reconstruction and Development (the Bank) for the above-captioned project. Unless agreed otherwise with the Bank, the Borrower shall monitor and evaluate implementation of the Project in accordance with the Performance Monitoring Indicators attached to this letter. Very truly yours, REPUBLIC OF THE PHILIPPINES Byy Authorized Representative Attachment PARTICIPATORY IRRIGATION DEVELOPMENT PROJECT Project Monitoring Indicators Project Development Objective Indicators Area provided with irrigation and drainage services (Hectare) Baseline Actual (Current) End Target Action Value 0.00 93204.00 118950.00 Revised Date 27-May-2009 31-Mar-2016 31-Aug-2018 Area provided with irrigation and drainage services - New (Hectare) Baseline Actual (Current) End Target Action Value 0.00 1430.00 3438.00 Revised Date 27-May-2009 31-Mar-2016 31-Aug-2018 Area provided with irrigation and drainage services - Improved (Hectare) Baseline Actual (Current) End Target Action Value 0.00 91774.00 115512.00 Revised Date 27-May-2009 31-Dec-2015 31-Aug-2018 Direct project beneficiaries (Number) Baseline Actual (Current) End Target Action Value 0.00 158447.00 176000.00 Revised Date 27-May-2009 31-Mar-2016 31-Aug-2018 Female beneficiaries (Percentage) Baseline Actual (Current) End Target Action Value 0.00 16.00 18.00 Revised Irrigation service fee (ISF) collection efficiency nationwide (Percentage) Baseline Actual (Current) End Target Action Value 55% 65% 72% Revised Date 27-May-2009 3 1-Dec-2015 3 1-Dec-2016 NIA financial viability index based on cash and non-cash flows and exclusive of depreciation Baseline Actual (Current) End Target Action Value 1.04 1.12 1.20 Revised Date 27-May-2009 31-Dec-2015 31-Aug-2018 PIDP lAs performing acceptably under Models 2-4 (Percentage) Baseline Actual (Current) End Target Action Value 74% 99% 85% Revised Date 27-May-2009 31-Mar-2016 31-Aug-2018 Ratio of actual to desirable operation and maintenance (O&M) costs in PIDP systems Baseline Actual (Current) End Target Action Value 0.53 0.67 0.69 Revised Date 27-May-2009 31-Dec-2015 31-Aug-2018 Cropping intensity in PIDP systems (Percentage) Baseline Actual (Current) End Target Action Value 150.00 159.00 170.00 Revised Date 27-May-2009 3 1-Dec-2015 3 1-Aug-2018 Irrigation service fee (ISF) collection efficiency in PIDP systems (Percentage) Baseline Actual (Current) End Target Action Value 61% 69% 85% Revised Date 27-May-2009 31-Dec-2015 31-Dec-2016 Annual O&M budget received by PIDP systems compared to the average annual O&M budget received during the past three years (Percentage) Baseline Actual (Current) End Target Action Value n.a. 70% New Date 01-Feb-2017 31-Aug-2018 Intermediate Indicators IA members expressing satisfactory rating for services received (Percentage) Baseline Actual (Current) End Target Action Value 60.00 91.00 85.00 Revised Date 27-May-2009 31-Mar-2016 31-Aug-2018 Staff separated under the NIA Rationalization Plan (Number) Baseline Actual (Current) End Target Action Value 0 2,523 retirees 2,523 retirees Revised Date 27-May-2009 31-Mar-2016 31-Dec-2016 Total savings from staff separated (PhP million) Baseline Actual (Current) End Target Action Value n.a. PhP390 million PhP690 million Revised Date 27-May-2009 31-Mar-2016 31-Dec-2016 NIA personnel downsized (Number) Baseline Actual (Current) End Target Action Value 6,706 3,409 3,819 Revised Date 27-May-2009 31-Mar-2016 31-Aug-2018 Funds deposited in the National Irrigation Management Fund (NIMF) from Year 1 to Year 5 (PhP million) Baseline Actual (Current) End Target Action Value 0 PhPl,409.21 million PhP690 million Revised Date 27-May-2009 31-Mar-2016 31-Aug-2018 Percentage of IAs in the NIS covered by the Project have successfully negotiated and closed IMT program contracts (Percentage) Baseline Actual (Current) End Target Action Value 75% 98% 90% Revised Date 27-May-2009 31-Mar-2016 31-Aug-2018 NIS rehabilitated with increased disaster resilience (Number) Baseline Actual (Current) End Target Action Value 0.00 0 4 Revised Date 31-Oct-2014 31-Mar-2016 31-Aug-2018 Water users provided with new/improved irrigation and drainage services (Number) Baseline Actual (Current) End Target Action Value 0.00 158447.00 176000.00 Revised Date 27-May-2009 31-Mar-2016 31-Aug-2018 Water users provided with irrigation and drainage services - female (Number) Baseline Actual (Current) End Target Action Value 0.00 24943.00 28000.00 Revised Date 27-May-2009 31-Mar-2016 31-Aug-2018 Operational water user associations created and/or strengthened (Number) Baseline Actual (Current) End Target Action Value 0.00 926.00 922.00 Revised Date 27-May-2009 31-Mar-2016 31-Aug-2018