18-Feb-2025 Date: ______________________ H.E. Dr. Rania A. Al-Mashat Minister of Planning, Economic Development, and International Cooperation Ministry of Planning, Economic Development, and International Cooperation Cairo, Arab Republic of Egypt Re: Arab Republic of Egypt Additional Financing for Sustainable Rural Sanitation Services Program Loan No. 8896-EG Second Amendment to the Loan Agreement Excellency, We refer to the Loan Agreement (the “Agreement”) between the Arab Republic of Egypt (the “Borrower”) and the International Bank for Reconstruction and Development (the “Bank”) dated October 13, 2018, for the abovementioned Project (“Project). Please note that capitalized terms used in this amendment letter (“Amendment Letter”) and not defined herein have the meanings ascribed to them in the Loan Agreement. Pursuant to your letter dated November 27, 2023, requesting the Bank for specific amendments to the Agreement, the Bank is pleased to inform you that the Bank hereby agrees to amend the Agreement with respect to the provisions below: 1. The table under Section IVA.2 of Schedule 2 to the Agreement is deleted and replaced in its entirety with the table in Attachment 1. 2. Paragraph 38 of the Appendix is deleted and replaced in its entirety to read follows: “38. “Program Implementing Entities” means HCWW, Damietta WSC, Gharbiya WSC, Menoufia WSC, Dakahliya WSC and Sharkiya WSC, Beheira WSC, and EWRA. 3. Paragraph 48 of the Appendix is deleted and replaced in its entirety to read as follows: “48. “WSCs” means collectively, Beheira WSC, Dakahliya WSC, Sharkiya WSC, Damietta WSC, Gharbiya WSC, and Menoufia WSC; and the term “WSC” means individually any one of said WSCs. 4. The following new paragraphs are hereby added and placed in alphabetical order under the Definitions Section of the Appendix to the Agreement and the rest of the definitions are renumbered accordingly to maintain alphabetical order. “Beheira WSC” means the “Beheira Water and Sanitation Company” established pursuant to Presidential Decree 135 for the year 2004. -2- “Sludge Management Policy” means the national level policy of the Borrower which will provide a framework for a safe and efficient management of sludge to be developed under the program and approved by MHUCC by FY26. All other provisions of the Agreement, except as amended herein, shall remain in full force and effect. Please confirm your agreement to the foregoing by signing this Amendment Letter. This Amendment Letter shall become effective as of the date of countersignature. Sincerely, INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By: __________________________ Stéphane Guimbert Country Director Middle East and North Africa Region CONFIRMED AND AGREED: ARAB REPUBLIC OF EGYPT 19-Feb-2025 By: _____________________________ Date: __________________ Authorized Representative Name: Dr. Rania A. Al-Mashat Title: Minister of Planning, Economic Development, and International Cooperation -3- Attachment 1 Amount of Percentage the Loan of Eligible Category (including Disbursement Allocated Disbursement Expenditures Disbursement Linked Linked Result (expressed Calculation to be Indicator as applicable) (as applicable) in US$) Formula Financed DLR#1.4: Final designs 30,000,000 $300 for each Not applicable completed for at least connection designed. 100,000 The minimum payment is $750,0000 for 2,500 HH connections designed up to the allocated amount. DLR#1.5: All 0 $2,970,000 for each of (1) DLI #1: Establishment construction contracts the 6 clusters for which and functioning of at awarded for the 25 all contracts for least 178,317 new clusters. construction are household (HH) awarded, up to the connections to working allocated amount of sanitation systems in $17,820,000. villages and satelites, in the Dakahliya, Sharkiya, DLR#1.5a: All 0 $932.03 for each HH Damietta, Gharbiya and construction contracts connection awarded up Menoufiya awarded for 60,545 to the allocated amount Governorates, of which HH connections not of $56,430 provided at least 10% of the DLR including contracts that the WWTP is connections are in counted for DLR#1.5. already existing, or satellites. contract awarded, if new. DLR#1.6: 0 $1,261.80 for each HH Establishment of connection established. 100,000 HH The minimum payment connections. is $6,309,000 against 5,000 HH connections established, up to the allocated amount. DLR#1.7.1: 0 $1,261.80 for each HH Establishment of connection established 40,000 HH above 100,000 HH connections over and connections. The above already minimum payment is established 100,000 $6,309,000 for 5,000 HH connections. HH connections established, up to the allocated amount. *No payments will be made until (i) at least -4- Amount of Percentage the Loan of Eligible Category (including Disbursement Allocated Disbursement Expenditures Disbursement Linked Linked Result (expressed Calculation to be Indicator as applicable) (as applicable) in US$) Formula Financed additional 8,916 new HH connections have been established in satellites out of total of the HH connections established under this Agreement; and (ii) DLR 1.6 has been achieved and allocated amount disbursed. DLR#1.7.2: 0 $1,261.80 for each HH Not applicable Establishment of connection established 38,317 HH above 140,000 HH connections over and connections. The above already minimum payment is established 140,000 $6,309,000 for 5,000 HH connections. HH connections established up to the allocated amount. *No payments will be made until (i) at least 8,916 new HH connections have been established in satellited out of total of the HH connections (cumulative of 17,832 of HH connection satellite villages) established under this Agreement (ii) DLR#1.7.1 has been achieved and allocated amount disbursed. (2) DLI#2: Annual transfer of Performance based- DLR#2.2.1 PBCGs 32,000,000 (a) $2,666,667 for each Not applicable Capital Grants (PBCGs) have been transferred Damietta WSC, by MHUUC to eligible by MHUUC to Gharbiya WSC and WSCs pursuant to the Damietta WSC, Menoufia WSC for each provisions of paragraph Gharbiya WSC, and FY20, FY21, FY22, and 6 of Section I.C of Menoufia WSC. FY23 up to the allocated Schedule 2 to this amount Agreement. -5- Amount of Percentage the Loan of Eligible Category (including Disbursement Allocated Disbursement Expenditures Disbursement Linked Linked Result (expressed Calculation to be Indicator as applicable) (as applicable) in US$) Formula Financed DLR#2.2.2 PBCGs 400,000 $133,333 for each have been transferred Damietta WSC, by MHUUC to Gharbiya WSC, and Damietta WSC, Menoufia WSC for Gharbiya WSC, and FY24. Menoufia WSC. DLR#2.2.3: PBCGs 1,600,000 $133,333 for each have been transferred Damietta WSC, by MHUUC to Gharbiya WSC, Damietta WSC, Menoufia WSC, Gharbiya WSC, Dakahlia WSC, Sharkia Menoufia WSC, WSC, and Beheira Dakahlia WSC, WSC for FY25, and Sharkia WSC, and FY26 up to the allocated Beheira WSC amount. DLR#3.4: 15,000,000 $15,000,000 Not applicable Performance (3) DLI#3: Design and Improvement Action implementation of the Plans (PIAPs) Annual Performance acceptable to the Bank Assessment (APA) prepared for Damietta system for WSCs WSCm Gharbiya achievement of the WSC, and Moufia required APA weighted WSC and the existing index scores in APA manual updated accordance with the to include, Damietta Operations Manual. WSC, Gharbiya WSC and Menoufia, WSC. DLR#3.5.1: Each of 135,000,000 (a) $11,250,000 for Damietta WSC, each of Damietta WSC, Gharbiya WSC, and Gharbiya WSC, and Menoufia WSC has Menoufia WSC for each achieved a minimum of FY20, FY21, FY22 weighted index of and FY23. APA scores, in accordance with the Operations Manual. DLR#3.5.2: Each of 400,000 $133,333 for each Damietta WSC, Damietta WSC, Gharbiya WSC, and Gharbiya WSC, and Menoufia WSC has Menoufia WSC for achieved a minimum FY24. weighted index of -6- Amount of Percentage the Loan of Eligible Category (including Disbursement Allocated Disbursement Expenditures Disbursement Linked Linked Result (expressed Calculation to be Indicator as applicable) (as applicable) in US$) Formula Financed APA scores, in accordance with the Operations Manual. DLR#3.5.3: Each of 1,600,000 $133,333 for each Damietta WSC, Damietta wSC, Gharbiya WSC, Gharbiya WSC, Menoufia WSC, Menoufia WSC, Dakahlia WSC, Sharkia WSC and Sharkia WSC and Behira WSC for FY25 Beheira WSC has and FY26 up to the achieved a minimum allocated amount. weighted index of APA scores, in accordance with the Operations Manual. DLR#5.4.1: 5,000,000 $5,000,000 for Not applicable Development and development and approval of the approval of the National National Water and Water and Sanitation Sanitation Sector Sector Strategy. Strategy. (4) DLI#5: Establishment of PMU and approval DLR#5.4.2: Develop 1,000,000 $1,000,000 for the of a National Water and an action plan with development of an Sanitation Sector timelines acceptable to action plan acceptable Strategy by MHUUC. the Bank for to the Bank. implementation of the National Water and Sanitation Sector Strategy. DLR#5.5: 2,000,000 $2,000,000 for the Development and development and approval of Sludge approval of a Sludge Management Policy Management Policy by MHUUC for FY26. Following its approval, the Sludge Management Policy will be published in MHUUC’s website. (5) DLR#6: Standard DLR#6.2: (i) the SOPs 9,250,000 $9,250,000 Not applicable Operating Procedures developed under the (SOPs) for land Program are updated acquisition developed in form and substance -7- Amount of Percentage the Loan of Eligible Category (including Disbursement Allocated Disbursement Expenditures Disbursement Linked Linked Result (expressed Calculation to be Indicator as applicable) (as applicable) in US$) Formula Financed under the Program acceptable to the updated by MHUUC Bank; and (ii) an inter- acceptable to the Bank ministerial MOU for and approved for the implementation of implementation. the updated SOPs is signed. DLR#7.1: A 4,000,000 $4,000,000 Not applicable Ministerial decree issued by MHUUC to establish a unified water and sanitation services (WSS) information system (prior result). DLR#7.2.1: Approval 3,000,000 $3,000,000 of the EWRA business plan by the EWRA Board. DLR#7.2.2: Approval 3,000,000 $3,000,000 of the EWRA’s standard business operating procedures (6) DLR#7: Strengthen by the EWRA Board the national regulatory DLR7.3.1: Approval 3,000,000 $3,000,000 for approval framework for water by the EWRA Board by the EWRA Board of and sanitation. of a design manual for a design manual for the the WSS information WSS Information system, established by System, established by EWRA in the EWRA in collaboration with the collaboration with the PMU for tracking the PMU, for tracking the performance of all the performance of all 25 25 WSCs in the WSCs in the sector. Sector. DLR#7.4: Annual 18,000,000 $6,000,000 for annual reports on the report for six program performance of all the WSCs for FY 22; 25 WSCs published by $6,000,000 for annual EWRA. report for 25 WSCs for FY 23; $3,000,000 for two bi-annual reports for all 25 WSCs for FY 24; $1,500,000 for four -8- Amount of Percentage the Loan of Eligible Category (including Disbursement Allocated Disbursement Expenditures Disbursement Linked Linked Result (expressed Calculation to be Indicator as applicable) (as applicable) in US$) Formula Financed quarterly reports for all 25 WSCs for FY 25; $1,500,000 for four quarterly reports for all 25 WSCs for FY 26. DLR#8.1: Ministerial 10,000,000 $10,000,000. Not applicable decree issued by MHUUC for the development of a financial model for the updating of the tariff (7) DLI#8: Approval of a structure that allows financial and tariff for sustainable cost model that allows for recovery of water and sustainable cost recovery sanitation services of water and sanitation (prior result) services. DLR#8.2: Approval 10,000,000 $10,000,000 of MHUUC of the financial and tariff model that allows sustainable cost recovery of water and sanitation services. (8) Goods, non-consulting 15,000,000 . 100% services, consulting services, Operating Costs and Training and Workshops under the Project. (9) Front-end Fee to be paid 750,000 Amount payable pursuant to Section pursuant to Section 2.03 2.03 of this Agreement of this Agreement in in accordance with accordance with Section 2.05(b) of the Section 2.05(b) of the General Conditions. General Condition. -9- Amount of Percentage the Loan of Eligible Category (including Disbursement Allocated Disbursement Expenditures Disbursement Linked Linked Result (expressed Calculation to be Indicator as applicable) (as applicable) in US$) Formula Financed (10) Interest Rate Cap or 0 Amount due pursuant to Interest Rate Collar Section 2.08(c) of this premium to be paid Agreement. pursuant to Section 4.05(c)of the General Conditions. TOTAL AMOUNT 300,000,000