OFFICIAL , 8 (0 'A DOCUMENTS The World Bank New Delhi Office Telephone: 24617241/24619491 INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT 70 Lodi Estate Mailing Address: P.0 Box 416 INTERNATIONAL DEVELOPMENT ASSOCIATION New Delhi - 110 003 India May 23, 2016 Mr. Raj Kumar Joint Secretary (MI) Department of Economic Affairs Ministry of Finance Government of India North Block New Delhi 110 001 Dear Sir: INDIA: Second Karnataka State Highway Improvement Project (Loan No. 8022-IN) Amendment to the Loan Agreement We refer to the Loan Agreement dated May 30, 2011 between India (the "Borrower") and the International Bank for Reconstruction and Development (the "Bank") (the "Loan Agreement"); the Project Agreement between the Bank and the State of Karnataka of the same date (the "Project Agreement"); and the supplemental letter of the same date from the Borrower to the Bank regarding the results framework and monitoring indicators, agreed further to the Loan Agreement (the "Supplemental Letter"), all for the Second Karnataka State Highway Improvement Project (the "Project"). We also refer to your letter dated April 26, 2016 requesting a restructuring of the Project involving amendments to the Loan Agreement and the Project Agreement to facilitate implementation of the Project. We are pleased to inform you that after due consideration, the Bank has agreed with your request and hereby proposes to amend the Loan Agreement as follows: (A) The table in Section IV.A.2 of Schedule 2 is amended to read as set out in Attachment I to this amendment letter. (B) Section IV.B.2 of Schedule 2 is amended to read as follows: "2. The Closing Date is December 28, 2018." The attachment to the Supplemental Letter regarding Results Framework and Monitoring Indicators agreed further to Section II.A of Schedule 2 to the Loan Agreement, is revised to read as set forth in Attachment 2 hereto. HeadquarterC Washington DC LJ USA Mr. Raj Kumar -2- May 23, 2016 Except as specifically amended hereby, all other provisions of the Loan Agreement shall remain in full force and effect. The Project Agreement is similarly being amended as reflected in an amendment letter to the Project Agreement of even date. Please confirm your agreement to the foregoing by signing and dating the form of confirmation set forth below, and returning one fully countersigned original of this letter to us. Upon receipt by the Bank of: (i) a duly countersigned original of this amendment letter by the authorized representative of the Borrower; and (ii) a duly countersigned original of the amendment letter to the Project Agreement by the authorized representative of the State of Karnataka, this amendment letter shall become effective as of the date of the last countersignature of the above two amendment letters (except for the provision related to the extension of the Closing Date under paragraph (B) above, which becomes effective upon dispatch of this amendment letter). Yours sincerely, Michael Haney Acting Country Director, India CONFIRMED: INDIA By: Name:_____ Title: TOrNT SECRETA01 Date: 01- O7 - o Encl. Mr. Raj Kumar -3- May 23, 2016 cc: Mr. Subhash Chandra Garg, Executive Director, The World Bank Mr. Neeraj Mittal, Sr. Advisor to Executive Director, The World Bank Department of Economic Affairs, Ministry of Finance, Government of India Mr. Bhaskar Dasgupta, Director, MI Division Mr. S. G. Dastidar, CAA &A, DEA, Ministry of Finance, New Delhi Ministry of Road Transport and Highways, New Delhi Mr. D. 0. Tawade, Chief Engineer (Coordinator II) Government of Karnataka Mr. M. R. Kamble, Principal Secretary, Public Works Department Mr. I. S. N. Prasad, Principal Secretary, Finance Department Mr. Manivannan. P, Chief Project Officer, KSHIP Project Implementation Unit Mr. K. S. Krishna Reddy, MD, Karnataka Road Development Corporation Ltd. Mr. Tyagaraja, Project Director, KSHIP Project Implementation Unit ATTACHMENT 1 Revised Withdrawal Table under Section IV.A.2 of Schedule 2 to the Loan Agreement Amount of the Loan Percentage of Expenditures to Allocated be financed Category (expressed in USD) (inclusive of Taxes) (1) Consultants' services, 27,520,000 80% training, studies, Incremental Operating Costs under Parts A.1, A.2, C, and D of the Project (2) Consultants' services, 4,255,000 80% training, studies, Incremental Operating Costs under Parts B.1, B.2, and B.3 of the Project (3) Goods and works under Parts 225,940,000 80% A.1, C, and D of the Project (4) Goods and works under Part 57,720,000 100% A.2 of the Project (5) Goods and works under Part 33,690,000 100% B.2 of the Project (6) Front-end Fee 875,000 Amount payable pursuant to Section 2.03 of this Agreement in accordance with Section 2.07(b) of the General Conditions (7) Premium for Interest Rate 0 Amount payable pursuant to Cap or Interest Rate Collar Section 2.07(c) of this Agreement and Section 4.05(c) of the General Conditions TOTAL AMOUNT 350,000,000 ATTACHMENT 2 INDIA: Second Karnataka State Highway Improvement Project Annex 1: Revised Results Framework and Monitoring Project Development Objective (PDO): To accelerate the development of the Core Road Network through leveraging public sector outlays with private sector financing, and improving the institutional effectiveness of the road sector agencies to deliver effective and safe roads to users. Cumulative Target Values** Respon Description Unit_of Data sibility (indicator definition PDO Level Results E Unit of Freque Source/ for etc.) o Measur Baseline Indicators* e YR I YR 2 YR3 YR 4 YR5 YR6 YR7 ncy Method Data ology Collecti on Achievement by GOK US$ 200.00 200.00 400 Every PWD PWD, The indicator will in generating at least milli (Currently (KRDC (KRDC two Annual KRDCL measure private sector US$400 million in on raised by LKSHI L + years Report, debt and equity raised new private sector KRDCL) P 11) KSHIP KRDCL as part of the capital for CRN 11) Annual DBFOMT concession improvement and Report and by KRDCL as management by end- part of the co- of-project (EOP). financing, and by KRDCL on its own through parallel transactions. 15 percent reduction US$ VOC: VOC: When Asset PWD Will measure the in Vehicle Operating per US$0.26 US$0.2 the road Manage impact of the project Costs and 25 percent vehic TT: 0 construc ment on road users reduction in Travel le- US$0.074 TT: tion is Unit Time Cost on project Kms US$0.0 complet corridors by EOP 6 ed 30 percent reduction Num 30 (on 30 27 21 Every M&E PWD Will measure ability in road-accident ber Belgaum two Report of the project to show related fatalities on of to years on safe measureable results on safe corridor pilots by fatali Hungund corridor road safety EOP. ties corridor)* s pilot per year Roads in good and Km 50% 50% 65% Every Asset PWD Will measure fair condition as a (%) two Manage expansion of road share of total years ment quality and expansion classified roads Unit in the state INTERMEDIATE RESULTS Intermediate Result (Component One): Road Improvement Component Roads Constructed, Km 0 1198 Every Project PWD V non-rural Year Progress Report Completion of Km / Contracts 100 269 534 Every Project PWD upgrading and Procure awarded kms km Year Progress widening of about ment road road Report 534 km. through mileston constr constr es. uction uction item-rate contracts substa comple ntially ted compi eted Completion of Km,/ RFQ Devel 301 O&M Every Project PWD upgrading, widening Procure issued opers Km phase Year Progress of about 301 km. ment hired Constr started Report through DBFOMT mileston uction es COMPI (Annuity) eted Concessions Land acquisition Percenta 0% 100% Every Project PWD/KR and resettlement ge Year Progress DCL Implementation Report (a) Land acquisition completed Land acquisition Percenta 0% 100% Every Project PWD/KR and resettlement ge Year Progress DCL Implementation Report (b) Key R&R assistance provided (alternative housing and livelihood support) Land acquisition Percenta 0% 80% Twice in R&R PWD/KR and resettlement ge the Impact DCL Implementation L (c) Improve the project Assessme living standards period nt Report (measured percent PAFs with increased/restore d income in real terms Environmental Every Project PWD Management Year Progress Report Implementation No. O As of EMP as award PIU(HQ I field agreed. 0 ed ) division (b) ISO 14001 certified certified certification obtained for operational units _ _ I I I I I_I Intermediate Result (Component Two): Highway Financing Modernization Component KRDCL generates Passing KRDC Tolling Every Project KRDCL additional road user of L started on Year Progress revenues and commits Policy Tolling etor eeed Report them for mobilizing and Policy develo debt financing (via Instituti ps PPP securitization) and/or onal transac making payments for Action tion PPP transactions backed by toll revenu es Completion of Km / Screening DPR Co- Construct Every Project KRDCL upgrading, widening commenc complet financi ion Year Progress and 0 & M of 363 km Procure ed ed; and ng Complete Report . ment Transac arrange d through co-financig mileston tion ment arrangements es Adviser establis engage hed, d Intermediate Result (Component Three): Road Safety Improvement Component Policy Lead Consul Multi- Multi- Miimu Every M&E PWD/ and Agency tant sector sector m 3 star Year Report Road Instituti Established service interv interve rating on Safe Safety Effective onal . pilot s ention ntion achieved Corridors Cell implementation of Actions corridor procur imple comple through Pilot Safemeio Plot identified ed me ted iRAP Safe Corridor Pilot mentat investigat Annual ion ion Report of started Road safety Cell Intermediate Result (Component Four): Road Sector Policy and Institutional Development Component Policy IDSAP and Key Studie Assessme and GAAP consult s nt of Satisfactory Instituti Endorsed ant Compl IDSAP implementation of ctons services eted: AAP agreed Action Plan d and results for institutional Reco made development and mmen governance ded improvement action s taken