Maryam Salim Country Director for Eritrea, Ethiopia, South Sudan and Sudan Tel: (251 11) 5176000 Eastern and Southern Africa Region Fax: (251 11) 6627717 26-Jul-2024 Date:__________________ H.E. Ato Ahmed Shide Minister Ministry of Finance P.O. Box 1037 or 1905 Addis Ababa Federal Democratic Republic of Ethiopia Your Excellency, Subject: Federal Democratic Republic of Ethiopia; IDA Credit 5816-ET Third Amendment to the Financing Agreement for the Transport Systems Improvement Project Cancelation of Undisbursed Funds by the Recipient ` We refer to the Financing Agreement (the “Financing Agreement”) between the Federal Democratic Republic of Ethiopia (the “Recipient”) and the International Development Association (the “Association”), dated June 15, 2016, for the Transport Systems Improvement Project (the “Project”), pursuant to which the Association has extended the above captioned credit (the “Credit”). We also refer to your letter dated July 2, 2024 (Ref. No I.F.R.E. 4/2/731) requesting: (a) the cancellation of all outstanding and undisbursed amounts under the Credit; and (b) the advancement of the closing date for the Credit to July 31, 2024. The letter further acknowledges the need to proceed with a Project restructuring to revisit (downsize) activities as a consequence of the foregoing cancellation and advancement of closing date. In view of the foregoing, and in accordance with the provisions of Section 6.01 of the General Conditions for Credits and Grants applicable to the Financing Agreement, the Association hereby notifies the Recipient of the cancellation effective as of July 2, 2024, of an amount out of the Credit equal to one hundred thirty-nine million ninety thousand eight-hundred and seventy one Special Drawing Rights (SDR 139,090,871). Accordingly, the table in Section IV.A.2 of Schedule 2 to the Financing Agreement is hereby adjusted to reflect the forgoing cancellation and shall hereinafter read as follows: H.E. Ahmed Shide 2 Amount of the Percentage of Financing Expenditures to be Category Allocated Financed (expressed in SDR) (inclusive of Taxes) (1) Goods, works, non-consulting services, 65,442,529 100% consultants’ services, Training and Operating Costs under AACATB’s Respective Parts of the Project (2) Goods, works, non-consulting services, 8,000,000 100% consultants’ services, Training and Operating Costs under MoTL’s Respective Parts of the Project 466,600 Amount payable pursuant to Section (3) Refund of Preparation Advance 2.07 of the General Conditions (4) Amount Cancelled as of July 2, 2024 139,090,871 n/a TOTAL AMOUNT 213,000,000 Furthermore, the commitment charges on the cancelled amount have ceased to accrue as of July 2, 2024. Additionally, and in accordance with the Recipient’s request the Association hereby: (a) establishes July 31, 2024, as the new date for purposes of paragraph 2 in Section IV.B of Schedule 2 to the Financing Agreement; and (b) proposes that the relevant provisions of the Financing Agreement be amended, including that Project activities in Schedule 1 to the Financing Agreement be revised as set forth in Annex 1 to this letter (the “Letter of Amendment”). We are also pleased to note the Recipient’s commitment to undertake the required comprehensive corrective actions, including the adoption and implementation of the necessary safeguards instruments, an audit to identify and redress any adverse environmental and social impacts, and provision of adequate compensation for all Project affected people (“PAP”), who have been impacted by the Recipient’s priority works within the Project area. In this regard, we request the Recipient’s formal agreement to the post- closing action plan discussed among the Recipient’s and the Association’s technical teams. Finally, in light of the foregoing, the Association requests that the Recipient ensure that demolitions and construction stop immediately on Junction 01 of the Corridor 1 (as defined in the Financing Agreement). No further displacement of PAPs should take place until a resettlement action plan has been prepared by the Recipient, approved by the Bank, and PAPs have been compensated, in accordance with the Financing Agreement and the Resettlement Policy Framework for the Project. Until then, PAPs should be allowed to continue living and working in place as usual. H.E. Ahmed Shide 3 Please note that the Association will disclose this Letter of Amendment and any ancillary and/or related information in accordance with the World Bank’s Policy on Access to Information. Kindly confirm your agreement with the proposed amendments, on behalf of the Recipient, by countersigning and dating this Letter of Amendment. This Letter of Amendment shall become effective as of the date of issuance, and Annex 1 to this Letter of Amendment shall become effective as of the date of countersignature. Should you need any further clarification or additional information on this Letter of Amendment, do not hesitate to contact us. Yours sincerely, INTERNATIONAL DEVELOPMENT ASSOCIATION Maryam Salim Country Director for Eritrea, Ethiopia, South Sudan, and Sudan Eastern and Southern Africa Region AGREED: FEDERAL DEMOCRATIC REPUBLIC OF ETHIOPIA By: _________________________________ H.E. Ato Ahmed Shide Name: ______________________________ Minister of Finance Ethiopia Title:________________________________ 28-Jul-2024 Date: _______________________________ cc: H.E. Dr. Alemu Seme Minister Ministry of Transport and Logistics H.E. W/o Adanech Abiebie Mayor City Government of Addis Ababa H.E. Ms. Semerita Sewasew State Minister Ministry of Finance H.E. Ahmed Shide 4 Ato Berhanu Anbesa A/Head, International Financial Institutions Cooperation Department Ministry of Finance Ato Solomon Ayalew Advisor to the Minister Ministry of Transport and Logistics W/o Ehitayehu Melesse Project Implementation Unit, Project Manager Ministry of Transport and Logistics Ato Mitiku Asmare Bureau Head Addis Ababa City Administration Transport Bureau Eng. Tsegaye Borse Deputy Director General Addis Ababa City Roads Authority Dr. Dadi Wodajo Senbatu Commissioner Addis Ababa City Plan and Development Commission Ato Tinsae Woldegebreal Project Implementation Unit, Head Addis Ababa Road and Transport Bureau Ato Gebeyehu Wake Tekle General Manager Anbessa City Bus Enterprise Chief Inspector Tiruneh Berta Federal Traffic Police Addis Ababa Floribert Ngaruko Executive Director The World Bank Washington, DC H.E. Ahmed Shide 5 ANNEX 1 THIRD AMENDMENT TO THE FINANCING AGREEMENT 1. The Project description under Schedule 1 of the Financing Agreement is deleted in its entirety and replaced with the following description: “SCHEDULE 1 Project Description The objective of the Project is to improve urban mobility and traffic management in Addis Ababa, Ethiopia. The Project consists of the following parts: Part A: Traffic Management and Road Safety in the City of Addis Ababa 1. Improving the traffic and safety management practices in the City of Addis Ababa, through: (a) Development and implementation of an intelligent transport system (ITS) for the City of Addis Ababa, including improvement of the traffic operations center; and provision of traffic lights and enforcement cameras along Section 1 of Corridor 1. (b) Developing a city-wide parking strategy. (c) [Purposely left in blank.] (d) [Purposely left in blank.] (e) Improving traffic enforcement and traffic safety measures through the provision of appropriate equipment and traffic enforcement training for Addis Ababa traffic police. 2. Improving traffic and road safety on Corridor 1 and strengthening the capacity of Addis Ababa City Roads Authority (AACRA), through: (a) [Purposely left in blank.] (b) Designing comprehensive improvements on Corridor 1 and implementing the improvement measures on Section 1 of Corridor 1. (c) [Purposely left in blank.] (d) [Purposely left in blank.] (e) Strengthening institutional capacity of AACRA for, inter alia: (i) developing asset management and pavement management systems; (ii) developing an improved maintenance and funding strategy; (iii) supporting the restructuring of AACRA and providing related capacity building activities. H.E. Ahmed Shide 6 3. Improving public transport services and systems and strengthening the capacity of the Addis Ababa City Bus Service Enterprise (AACBSE), through: (a) [Purposely left in blank.] (b) Assisting in planning and establishing an integrated public transport system, including, inter alia: implementing related regulatory reforms to rationalize the provision of public transport services and strengthen the management of public transport operations. (c) Assisting in modernizing bus operations of AACBSE to improve management, business and operational information systems, including, inter alia: designing and implementing an ITS and management systems for electronic fare collection, automatic vehicle location, depots, crew and bus scheduling, inventory and spares and bus network systems, and installation of on-board equipment for public transit buses. (d) Financing of a new fleet of buses for AACBSE. (e) Strengthening the capacity of AACBSE to enable it to deliver its mandates and services effectively. 4. Supporting Addis Ababa City Administration Transport Bureau (AACATB) and the Transport Programs Management Office (TPMO) to improve their urban transport oversight, business planning and implementation, through: (a) Strengthening the capacity of AACATB and TPMO in urban transport planning and overseeing the implementation of urban transport reforms in the City of Addis Ababa. (b) Strengthening the capacity of TPMO staff to carry out their responsibilities, including monitoring and evaluation of the Project, and preparing future development initiatives. (c) Strengthening the capacity of TPMO in Project management. Part B: Improvement of Integrated Urban Planning and Transport System [Purposely left in blank.] Part C: Road Safety Interventions and Institutional Strengthening of Selected Federal Transport Institutions 1. Improving compliance with road transport rules and regulations nationally, through improved driver training, developing an integrated driver licensing and vehicle registration system, and strengthening MoTL’s capacity. 2. Improving federal traffic enforcement capability and strengthening the capacity of federal traffic police through provision of training, capacity building and institutional strengthening. 3. Strengthening the oversight capacity of MoTL and MoUI, through provision of: (i) training, capacity building and institutional strengthening for MoTL in urban transport management; and (ii) supporting MoUI in developing regulations and procedures for managing construction sites and enhancing its oversight responsibilities through training and capacity building.” H.E. Ahmed Shide 7 2. A new Section V is added under Schedule 2 to the Financing Agreement to read as follows: “Section V. Other Undertakings 1. Without limitation to the provisions of this Schedule 2, the Recipient shall prepare and adopt not later than the Closing Date, a post-closing action plan in form and substance satisfactory to the Association, setting forth, inter alia, the Recipient’s obligation to carry out its responsibilities under the Safeguards Instruments in a determined timeframe beyond the Closing Date (the “Post-Closing Action Plan”). 2. The Recipient shall not assign, amend, abrogate, or waive, or permit to be assigned, amended, abrogated, or waived, the Post-Closing Action Plan or any provision thereof, without the prior written agreement of the Association.” 3. Item 1 of the Definitions Appendix on “AACATB” is deleted in its entirety and replaced with the following: ‘1. “AACATB” means the Addis Ababa City Administration Transport Bureau, established and operating pursuant to the Recipient’s Addis Ababa City Government Proclamation No. 84/2023, or its legal successor acceptable to the Association.’ 4. Item 5 of the Definitions Appendix on “Anbessa City Bus Enterprise” or “ACBE” is deleted in its entirety and replaced with the following: ‘5. “AACBSE” means the Addis Ababa City Bus Service Enterprise, the enterprise established to operate public bus services for the City of Addis Ababa pursuant to the Recipient’s Addis Ababa City Regulation No.144/2023, or its legal successor acceptable to the Association.’ 5. A new item 10 is added to the Definitions Appendix, and the subsequent items are re-numbered accordingly: ‘10. “Corridor 1” means the corridor identified under the Safeguards Instruments for the implementation of activities under the Project; namely the corridor comprising the Togo Street and the Djibouti Street between the British Embassy and Africa Avenue.’ 6. A new item 34 is added to the Definitions Appendix, and the subsequent items are re-numbered accordingly: ‘34. “Section 1 of Corridor 1” means the corridor identified under the Safeguards Instruments for the implementation of activities under the Project, namely the section of Corridor 1 between the British Embassy and the Golagol Roundabout.’