OFFICIAL DOCUMENTS THE WORLD BANK IBRD*IDA I WORLDMNKGROUP ~2oJf~~3,2017 Mr. Mosbah Helali Pr6sident Directeur G6ndral Socidtd Nationale d'Exploitation et de Distribution des Eaux Avenue Sliman Ben Slimane El-Manar ' 1 , Tunis - 2092 Republic of Tunisia Re: Republic of Tunisia: Urban Water Supply Project (Loans No. 7339-TN and No.8395-TN) Fourth Amendment to the Loan Agreement and second amendment to the Supplemental Letter regarding the performance indicators for Loan No. 7339-TN; and first Amendment to the Loan Agreement for Loan No. 8395-TN Dear Mr. Helali: We refer to: (a) the Loan Agreement between the International Bank for Reconstruction and Development (the Bank) and Socitd Nationale d'Exploitation et de Distribution des Eaux (the Borrower), dated December 5, 2005 as amended on June 7, 2010, February 7, 2012 and August 19, 2014 (Loan Agreement for Loan No.7339-TN); (b) the Supplemental Letter No. 2 regarding the performance monitoring indicators for Loan No. 7339-TN, dated December 5, 2005 as amended on August 19, 2014 (Supplemental Letter No.2); and (c) the Loan Agreement between the Bank and the Borrower, dated August 19, 2014 (Loan Agreement for Loan No.8395-TN); all for the above-mentioned Project (collectively, Legal Documents). The capitalized terms used in this amendment letter and not defined herein have the meanings ascribed to them in the Loan Agreement for Loan No.7339-TN and Loan Agreement for Loan No.8395-TN. Pursuant to your letter of October 12, 2017 and follow-up discussions with the Bank, we are pleased to concur with your request of: (a) cancellation of some Project activities, including partial cancellation of EUR8,352,000 from Loan No 8395-TN; (b) reallocation of unallocated Loan proceeds to Category (1) under Loan No 8395-TN; and (c) reallocation of Loan proceeds among existing Categories under Loan No. 7339-TN. Accordingly, the Legal Documents are hereby amended as follows: A. Loan Agreement for Loan No.7339-TN 1. The description of activities under Schedule I is hereby amended and replaced in its entirety to read as set forth in Attachment I to this amendment letter. 2. The disbursement table in paragraph I of Schedule I is hereby amended and replaced in its entirety to read as follows: RCA 248423. LJ WUI 64145 L FAX (202) 477-6391 -2- % of Category Amount of the Loan Expenditures Allocated To be Financed (expressed in Euros) (inclusive of Taxes) (1) Treatment Works 11,600,000 100% (Turnkey, design-build) (2) Works 8,400,000 100% (3) Goods 8,400,000 100% (4) Technical Assistance and 2,522,500 100% training (5) Front-end Fee 77,500 (6) Premia for Interest 0 Amount due under Section Rate Caps and Interest 2.09(c) of this Rate Collars Agreement TOTAL AMOUNT 31,000,000 B. Loan Agreement for Loan No.8395-TN 3. The description of activities under Schedule 1 is hereby amended and replaced in its entirety to read as set forth in Attachment I to this amendment letter. 4. The disbursement table in Section IV.A.2 of Schedule 2 is hereby amended and replaced in its entirety to read as follows: -3- Category Amount of the Loan Percentage of Expenditures to Allocated be financed (expressed in Euro) (inclusive of Taxes) (1) Goods, works and non- 6,000,000 100% consulting services for Parts A.1 and C of the Project (2) Goods, works and non- 3,000,000 100% consulting services for Part A.2 of the Project (3) Goods, works and non- 1,600,000 100% consulting services for Part B of the Project (4) Front-end Fee 47,500 Amount payable pursuant to Section 2.03 of this Agreement in accordance with Section 2.07 (b) of the General Conditions (5) Unallocated 0 TOTAL AMOUNT 10,647,500 Cancelled Loan amount as of 8,352,500 October 13, 2017 Total Loan amount before 19,000,000 cancellation C. Supplemental Letter No.2 5. The Annex to the Supplemental Letter No. 2 is hereby amended to read in its entirety as set forth in Attachment 2 to this amendment letter. All the terms and conditions of the Legal Documents that have not been amended hereby shall remain unchanged and in full force and effect. Please confirm your agreement with the foregoing amendment, on behalf of the Borrower, by signing, dating and returning to the Bank the enclosed copy of this amendment letter. This amendment letter shall become effective as of the date of its countersignature upon receipt by the Bank of a countersigned copy of this letter. Furthermore, in accordance with the provisions of section 7.01 of the General Conditions, the Bank hereby cancels, as of October 13, 2017, the total amount of EUR8,352,500 allocated to the Categories set forth in Section IV.A.2 of Schedule 2 to the Loan Agreement for Loan No.8395-TN, as follows: * An amount equal to EUR4,452,500 from Category (1) * An amount equal to EUR 2,300,000 from Category (2) * An amount equal to EUR 1,600,000 from Category (3) -4- Finally, please also note that the Restructuring Paper dated November 13, 2017 will be disclosed on the Bank's external website as per the Bank's policy on Access to Information. Sincerely, INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Marie Frangoise Marie-Nelly Country Director for Tunisia Middle East and North Africa Region CONFIRMED AND AGREED: SOCIETE NATIONALE D'EXPLOITATION ET DE DISTRIBUTION DES EAUX By: Authorized Representative Name: Mr. Mosbah Helali Title: Pr6sident Directeur G6n6ral Date: L7 11c 2617 -5- Attachment 1 Part A: Improvements to the Greater Tunis Water Supply System Carrying out civil works and provision of equipment and technical assistance to strengthen the Greater Tunis Region water supply system through improvements to the water treatment, transmission, and distribution infrastructure, including: (1) construction and expansion of capacity of a new water treatment plant (ST4) in Ghdir El Golla to increase its water and sludge treatment and storage capacities; (2) rehabilitation of pumping station SPI in Ghdir El Golla; (3) rehabilitation of the water supply transmission pipeline between Ghdir El Golla and Ras Tabia; (4) upgrading the distribution network and construction of a water pumping station with associated electromechanical equipment in Mornag; (5) upgrading the distribution network, construction of a water pumping station with associated electromechanical equipment and the construction of a water storage tank in Borj Touil; (6) construction of a water storage tank in La Gazelle; and (7) construction of a water storage tank in each of Ghdir El Golla and Bir El Kassa. Part B: Improvements to Water Supply Systems in Urban Centers of the Eastern, Northern and Central Regions Carrying out of civil works and provision of equipment and technical assistance to strengthen the Eastern, Northern and Central Regions' water supply systems through the upgrading of water production, storage, transmission and distribution infrastructure, including: (1) installation of a ductile iron pipe at Belli water treatment plants, serving cities on the Easter coastline; (2) construction of a water storage tank in Ain Draham; (3) construction of a water storage tank, drilling of one new borehole, rehabilitation of an existing borehole and two borehole protection structures, and installation of associated electromechanical equipment in Ghardimaou; (4) construction of two water storage tanks, upgrading the water transmission network, and drilling of a borehole in Rouhia; - AL -6- (5) construction of a water storage tank, and retrofitting an existing borehole with a new power supply and electrometrical systems in Nasrallah; (6) upgrading the distribution network in Kalaa Kbira; (7) construction of a pumping station, including the provision of associated power supply and electromechanical equipment, and upgrading the distribution network in Jammel; and (8) construction of a water storage tank and a pressure regulation tank in Ouerdanine. Part C:Manazement Capacity Building 1 . Strengthening the Borrower's financial situation through the acquisition and installation of approximately 70,000 customer meters. 2. Carrying out of technical and managerial studies and provision of technical assistance and training, decision-making tools, and establishment of management information systems to enhance the Borrower's management, planning and service performance, including: (a) Customer Service Information System: Provision of technical assistance, computer software, and associated hardware to improve the management of the customer relations and billing activities of the Borrower. (b) Human Resources Management Information System: Provision of technical assistance and computer software to facilitate the Borrower's efficient management of labor resources and costs. (c) Monitoring of EMP: Provision of technical assistance and training to assist the Borrower in carrying out the EMP. -7- Attachment 2 REVISED PROJECT RESULTS FRAMEWORK Project Development Objective (PDO): To ensure the continuity of water service (24 hours per day, 7 days a week) to the population in Greater Tunis and other targeted cities, and improve the financial viability of SONEDE Unit ofActual Valu es Target Unit Baseline Data Source Responsibility PDO Level Results Indicators measu- 2013 2014 2015 2016 2017 2018 Frequency for Data Comments (2006) Methodology rement Collection Net operational SONEDE continues revenues to be in compliance, divided by (net and based on 1. Working ratio Percent 121% 116% 114% 122% 116% 114% 100% Annual operational SONEDE financial projections costs minus for 2018, expects to depreciation remain so until p nterest project closing. SONEDE Cumulative. Refers 5.0 Institut to beneficiaries in 2. Direct project beneficiaries of million 6. 00 6.36 6.67 6.82 6.98 Total National de la areas targeted by whc fml Number 0 (original millio mlin ilon ilon ilon Annual pop ulation in Saitqe rehabilitation and which female Project n million million million million project areas Statistique expansion works, of and AF) (INS) which 50% are women. Continuous Water shortage operational events are monitoring by unscheduled SONEDEof interruptions due to scheuledwater supply 3. Water shortage events Number 0 0 0 0 0 0 0 Monthly service SONEDE constraints (not interruptions on scheduled its distribution interruptions in the networks (for network e.g. for maintenance or repair purpose) repair) RCA 248423. W WUI 64145 L FAX (202) 477-6391 -8- Intermediate Results and Indicators Unit of Actual values Target Responsibility Intermediate Results Indicators (0measu- Base 2013 { 2014 2015 2016 2017 2018 Frequency Data source for data Comments rement (collection Component 1: Improvements to the Greater Tunis water supply system Piped household water connections that are benefiting from rehabilitation X Number 0 0.67 0.69 0.72 0.74 0.76 0.78 Annual Monitoring SONEDE and upgrading works undertaken under (million) reports the project Volume of water sold Million 104 129 130 131 135 138 141 Annual Monitoring SONEDE m3/year reports Completion rate of expansion works of Contract Completed ST4 potable water plant in Greater % 0% 100% 100% 100% 100% 100% 100% 6 months supervision SONEDE Complete superisionin 2013. Tunis (2 m3/s) 100% of the AF La Completion rate of expansion Contract works will be works of ST4 potable water plant in % 0% 0% 0% 0% 0% 30% 90% 6 months SONEDE completed by Greater Tunis (I m'/s expansion) August 31, 2018. Completion rate of reinforcement of % 0% 0% 0% 40% 90% 100% 100% 6 months Contract SONEDE Completed power supply supervision Completion rate of replacement of raw % 0% 0% 0% 0% 50% 100% 100% 6 months Contract SONEDE Completed water intake pumps supervision Component 2: Improvements to water supply systems in urban centers of the Eastern, Northern and Central Regions Piped household water connections Monitoring that are benefiting from rehabilitation X Number 0 0.41 0.41 0.42 0.44 0.45 0.48 Annual reports SONEDE and upgrading works North and Center regions: Volume of Million 44.9 58.7 59.2 62.0 65.1 68.5 72.2 Annual Monitoring SONEDE water sold in targeted cities m'/year reports All works were completed between 2010 North and Center regions: Completion% 0% 100% 100% 100% 100% 100% 100% 6 months Contract SONEDE and 2012. rate of works in other cities supervision North. Ain Drahem, Ghardimaou, Rouhia. -9- Intermediate Results and Indicators Unit of Actual values Target Responsibility Intermediate Results Indicators g measu- Baseline 2013 2014 2015 2016 2017 2018 Frequency Data source for data Comments rement (2006) collection South: Kalaa Kdbira, Jamm el Ouardanine, N asrallah, Sbib, Jedliene Component 3: Management capacity building 100% Rate of completion of the joint Contract completion customer management system (joint % 0 0 0% 100% 100% 50% 90% Annual supervision SONEDE expected SONEDE-ONAS) August 31, 2018. The model was developed under the parallel Financial Rate of completion of financial % 0% 0% 0% 0% 0% 0% 0% Annual Contract SONEDE Equilibrium planning model supervision Study funded by a separate grant and which was completed in 2016. Rate of completion of HR system % 0 100% 100% 100% 100% 100% 100% Contract SONEDE Completed in supervision 2011. The Corporate Plan and Organizational Audit was developed Rate of completion of the Corporate Contract under the Rat of Ompletion t rt % 0% 0% 0% 0% 0% 0% 0% Annual Contract SONEDE Organizational Plan and Organizational Audit supervision Audit for SONEDE financed by the European Union in 2016. -10- Intermediate Results and Indicators Unit of B Actual values Target Responsibility Intermediate Results Indicators g measu- aseline 2013 2014 2015 2016 2017 2018 Frequency Data source for data Comments rement collection Achieved in May- November 2015. SONEDE Centre Region (19,700 Number of meters purchased and Number 0 0 0 0 93,800 93,800 126,800 Annual Contract Bank-financed meters); North installed (cumulative) supervision region (26,250 Audit November meters); South 2017 region (29,250 meters); Greater Tunis region (18,600 meters) Rate of completion of rolling % 0% 0% 0% 75% 100% 100% 100% Annual Contract equipment purchase supervision