OFFICAL . DOCUMENTS Supplemental Letter No. 2 BORU HATLARI ILE PETROL TA5IMA A.5. October 2, 2014 International Bank for Reconstruction and Development 1818 H Street, N.W. Washington, D.C. 20433 United States of America Re: Loan No. 8349-TR (Additional Loan for Gas Sector Development Project) Performance Monitoring Indicators Dear Sirs and Mesdames: We refer to Section II.A of Schedule 2 to the Loan Agreement of even date herewith between Boru Hatlari ile Petrol Ta§ima A.$. (the Borrower) and the International Bank for Reconstruction and Development (the Bank) for the above-referenced Project. We hereby confirm that the indicators set forth in the attachment to this letter shall serve as a basis for the Borrower to monitor and evaluate the progress of the Project and the achievement of the objectives thereof. Very truly yours, BORU HATLARI ILE PETROL TA5IMA A.5. Authgrzed Representative Attachment D 6tj kvwV /,ew_ Attachment to Supplemental Letter No. 2 (Additional Loan for Gas Sector Development Project) Performance Monitoring Indicators Annex 1: Results Framework and Monitoring TURKEY: Gas Sector Development Project Additional Financing Results Framework Revisions to the Results Framework Comments/ Status Rationale for Change PDO Current (PAD), Proposed The objective of the Project is to No change. Continued. increase the reliability and stability of gas supply in Turkey by implementing critically needed gas storage and network infrastructure; and support BOTA$ in strengthening its operations as a financially stable and commercially managed corporation. PDO indicators Current (PAD) Proposed change Change in phasing: Tuz Golu Gas Revised Functioning Gas Storage Facility Functioning Gas Storage Storage Facility will built in three phases with an Facility commissioned in two . ultimate storage capacity of phases in 2016 and 2020 with b about 0.90-0.96 bcm. an ultimate storage capacity phases of six of about 0.96 bcm. caverns each, instead of the original plan of three phases of four caverns each. Increased carrying capacity Increased carrying BOTA$ has Revised of the Turkish gas capacity of the Turkish completed the transmission system gas transmission system Corum compressor through the completion of through the completion station outside the two compressor stations. of the Erzincan project with its own compressor station. resources. Storage operates as No change. Draft amendment of Continued separate business unit. the Gas Market Law envisions storage as a separate Revisions to the Results Framework Comments/ Status Rationale for Change subsidiary. Intermediate Results indicators Current (PAD) Proposed change Change in phasing and Revised Construction of phase I of timing: Updated phasing storage capacity. Construction of phase I and completion of storage capacity. dates in view of the Storage capacity is built: delay in the Tuz Phase 1: 320 mcm (2009) Storage capacity is built: Golu project Phase 2: 640 mcm (2012) Phase 1: 480 mcm (end- implementation and Phase 3: 960 mcm (2015) 2016) projected Phase 2: 960 mcm (end- completion. Phase 3: 960 mcm (2015)_ 2020) Compressor capacity of No change. Continued system increasing.p Comprehensive costs No change. Continued available for storage on a "stand alone" basis. BOTA$ will maintain a Added as an explicit New debt service coverage indicator of the ratio of not less than 1.2. project supporting BOTA$ in strengthening its operations as a financially stable and commercially managed corporation. REVISED PROJECT RESULTS FRAMEWORK Project Development Objective (PDO): The objective of the Project is to increase the reliability and stability of gas supply in Turkey by implementing critically needed gas storage and network infrastructure; and support BOTAS in strengthening its operations as a financially stable and commercially managed corporation. Baseline Cumulative Target Values Data Responsibi Original Progress PDO Level Results Indicators , UOM' Project To Date 2013 2014 2015 2016 2017 Frequency Source/ lity for Comments a Start (2012)2 (2005) gy Collection I1. Increased Natural Gas Phase 1 0.48 bcm end- 1 bcm 0 0 0 0 0 0.48 0.48 Annual BOTA$ BOTA$ 2016. phase 2 0.96 Storage Capacity bcm end-2020. 2. Increased Capacity of Project target 40 Transmission lines to carry Z bcm/yr 22 40 40 40 40 40 40 Completed BOTA$ BOTA$ bcm/a achieved by 2012. 3. Storage operates as separate business unit to Yes/no no no no no no Yes yes Annual BOTA$ BOTA$ ensure independence and open access. 4. Achievement of agreed El Yes/no n/a no yes yes yes Yes yes Annual BOTA$ BOTA$ financial targets. Beneficiaries Number of gas Project beneficiaries Number consumers in Turkey 2 (mln.) 6.0 9.2 Annual EMRA EMRA (mostly households in terms of number of consumers). About the same Of which female ~ , o% 50 50 50 50 50 50 50 annual EMRA EMRA number of females and (beneficiaries) males in Turkish households. UOM = Unit of Measurement. 2 For new indicators introduced as part of the additional financing, the progress to date column is used to reflect the baseline value. Intermediate Results and Indicators Baseline Target Values Unit of Original Progress 21 204 21 216 07DaaSuc/Responsibility om Intermediate Results Indicators , Measur Project To Date 2013 2014 2015 2016 2017 Frequency Data Source! for Data Comme 0 ement Start (2012) Methodology Collection nts C.) _(2005) Intermediate Result 1: Storage capacity is built with completion offirst phase in 2016 (% completion). (1/2 of total capacity). 1. Completion ofphase I N % 0 35 50 65 85 100 100 quarterly BOTA$ BOTA$ Intermediate Result 2: Compressor capacity of system increasing (MW). Original 2. Compressor capacity 1 MW 0 30 70 70 70 70 70 quarterly BOTA$ BOTA$ target 11 achieved. Intermediate Result 3: Comprehensive costs available for storage on a "stand alone" basis 3. Project cost information Yes/no yes yes yes yes Yes yes yes quarterly BOTA$ BOTA$ collected. 4. Storage business E Yes/no no no no no no yes yes annual BOTA$ BOTA$ established Intermediate Result 4: Achievement of Agreed Financial Targets 5. Debt Service Coverage >1.2 n/a negative n/a n/a >1.2 >1.2 >1.2 annual BOTA$ BOTA 1 Ratio Note: after the proposed unbundling of BOTA$, responsibilities will be transferred to the appropriate successor entity/entities.