OFFICIAL The World Bank 00CUMENTS1 H Street N.W. (202) 473-1000 INTERNATIONAL BANK FOR RECONSTRUCTION ND DEVELOPMENT Wa4ington, D.C. 20433 Cable Address: INTBAFRAD INTERNATIONAL DEVELOPMENT ASSOCIATION U.S Cable Address: INDEVAS March 4, 2014 Mr. Samir Sharifov Minister of Finance Ministry of Finance Baku Republic of Azerbaijan Dear Mr. Minister: Re: Absheron Rehabilitation Program II: Integrated Solid Waste Management Project (Loan No. 7549-AZ) Amendments to the Loan Agreement and Supplemental Letter No. 2 We refer to the Loan Agreement between the Republic of Azerbaijan (the "Borrower") and the International Bank for Reconstruction and Development (the "Bank") (the "Loan Agreement") dated May 20, 2009, as amended to date. We also refer to the Loan Agreement for the Additional Financing for the Integrated Solid Waste Management Project dated January 10, 2014 (Loan No. 8274-AZ) which would require introducing certain amendments to the Loan Agreement and related Supplemental Letter No. 2. Consequently, the Loan Agreement and the related Supplemental Letter No. 2 are hereby amended as follows: A. Loan Agreement: 1. The name of the Project shall be amended to read as follows: "Integrated Solid Waste Management Project" 2. Article IV of the Loan Agreement shall be amended to read as follows: "4.01. The Additional Events of Suspension consist of the following: (a) The Project Operational Manual has been amended, suspended, abrogated, repealed or waived so as to materially and adversely affect the implementation of the Project. (b) Presidential Decree No. 504, dated December 28, 2006, approving the Charter of the Ministry of Economic Development of the Borrower, has been amended, suspended, abrogated, repealed or waived so as to materially and adversely affect the implementation of the Project 4.02. The Additional Event of Acceleration consists of the following, namely that any event specified in paragraphs (a) and (b) of Section 4.01 of this Agreement occurs and is continuing for a period of sixty (60) days after notice of the event has been given by the Bank to the Borrower." -2- 3. The objective of the Project set forth in Schedule I to the Loan Agreement shall be amended to read as follows: "The objective of the Project is to support: (i) improving solid waste disposal management; (ii) increasing waste collection coverage; and (iii) enhancing waste data information and financial management capacity in the Greater Baku area." 4. The Component A. 1 of the Project set forth in Schedule I to the Loan Agreement shall be amended to read as follows: "1. Finalization of a strategic plan for the sector, which includes: (a) analytical work to assess the existing systems, institutional reform, sector financing, funding and cash flow management; (b) development of legal framework and institutional structure; (c) development of roll-out plans for waste collection services and involvement of private sector; (d) tariff and tariff collection reforms; (e) development of accounting and data systems; and (f) strategy for dealing with municipal and nonhazardous waste, planning for rehabilitation of disposal sites and closure of informal dumps." 5. The Component C of the Project set forth in Schedule 1 to the Loan Agreement shall be amended to read as follows: "Component C: Closure and Management of Informal Dumps Closure and cleanup of informal dumps through removal and the transportation of waste from wild dumps, as well as the improvement of management of formal sites, in order to minimize the negative environmental effects associated with informal or non-sanitary waste disposal." 6. Section IV.B.2 under Schedule 2 to the Loan Agreement shall be amended to read as follows: "2. The Closing Date is September 30, 2016." 7. The definition of "PMT" shall be amended to read as follows: "8. PMT" means the Project Management Team within the Ministry of Economic Development of the Borrower, established through the Ministerial Decree No. 121, dated April 16, 2008, or any successor thereto, responsible for the day-to- day management and monitoring of the Project." All the terms and conditions of the Loan Agreement that have not been amended hereby shall remain unchanged and in full force and effect. B. Supplemental Letter No. 2: Performance Monitoring Indicators: With reference to the provisions of Section II.A. 1 of Schedule 2 to the Loan Agreement, the Borrower hereby confirms to the Bank that the indicators set out in the attachment to this amendment 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. -3- Please confirm your agreement to the foregoing by countersigning both copies of this amendment letter and returning one of the countersigned copies to us. Upon receipt by the Bank of the copy of this amendment letter countersigned by you, this amendment letter will become effective as of the date of your countersignature. Sincerely yours, Henry G. Kerali Country Director South Caucasus Country Department Europe and Central Asia Region CONFIRMED: REPUBLIC OF AZERBAlJAN By: * Date: / Authorized Repre ntati e Name: Mr. Samir Sharifov Title: Minister of Finance Attachment Amendment to the Annex to Supplemental Letter No. 2 REPUBLIC OF AZERBAIJAN Integrated Solid Waste Management Project Performance Monitorine Indicators Project Development Objective (PDO): The overall project objective is to support (i) improving solid waste disposal management; (ii) increasing waste collection coverage; and (iii) enhancing waste data information and financial management capacity in the Greater Baku area. (revised for clarity) Baseline Cumulative Target Values" PDO Level Results UOM2 Original Progress 2013 2014 2015 2016 Data Source/ Responsibility Indicators' UO2 Project To Date 203Frequency Methodology for Data Comments a Start (2012)' Collection (2008) Number of people in urban Project areas provided with access 1973000 2435000 2500000 2565000 2630000 2700000 Annual Progress PMT to regular solid waste Number Report collection under the project Substantial part Increased number of waste Project generators that pay for E Number of population 13150005 1400000 1500000 1600000 1800000 Annual Progress PMT waste collection not billed for Report SWM services Contaminated land Project managed or dump sites Number 66 33 40 43 45 50 Annual Progress PMT closed under the project Report (ha) Please indicate whether the indicator is a Core Sector Indicator (for additional guidance - please see http://coreindicators). 2 UOM = Unit of Measurement. For new indicators introduced as part of the additional financing, the progress to date column is used to reflect the baseline value. 4 Target values should be entered for the years data will be available, not necessarily annually. Target values should normally be cumulative. If targets refer to annual values, please indicate this in the indicator name and in the "Comments" column. ' 2012 estimate: 40% of population paying for waste collection (AIM Texas) -2- Number of waste facilities Limited data on Project providing regular O] Number waste collection 3 3 4 4 6 Annual Progress PMT information to the waste and disposal Report data information system Industrial and municipal No sanitary Project waste disposal capacity z Tons disposal 550,000 9,700,000 Annual Progress PMT created under the project capacity Report (tons) Beneficiaries" Number According to Number of female statistics the beneficiaries in urban areas Project females are 50.5% provided with access to z 996365 1229675 1265000 1280000 1314000 1330000 Annual Progress PMT of total population regular solid waste Report in Greater Baku collection under the project area Intermediate Results and Indicators Baseline Target Values Intermediate Unit of Original Progress Data Source/ Responsibility Results U Mearement Project To Date 2013 2014 2015 2016 Frequency Dathouolog for Data Comments Indicators a Start (2012) Collection (2008) Intermediate Result 1: Improvement in the governance, financial management and M&E capacity of the formal solid waste management agency for Greater Baku to be established Number of qualified staff employed according to annually updated 368 staff Staff level Staff level in Staff level in Staff level in Project staffing plan Text 0 qualified at in line with line with line with line with Biannual Progress PMT covering (a) solid Tamiz staffing staffing plan staffing plan staffing plan Report waste Shahar plan management operations; (b) financial management; (c) 6 All projects are encouraged to identify and measure the number of project beneficiaries. The adoption and reporting on this indicator is required for investment projects which have an approval date of July 1, 2009 or later (for additional guidance - please see http://coreindicators). -3- Intermediate Results and Indicators Baseline Target Values Intermediate Unit of Original Progress 2013 2014 2015 2016 Data Source/ Responsibility Results 2 Measurement Project To Date Frequency Methodology for Data Comments Indicators a Start (2012) Collection (2008) budgeting, O&M and M&E. Approval of Operational plan Strategic proposed for service studies strategy for delivery and Preliminary completed; Operational Annual Annual Annual Project waste financial O Text Strategic plan for plan update update update Binnual Progress PMT collection management Plan waste adopted Report services by improvements disposal in Government updated regularly place expected in 2013 Increased Substantial Project number of waste Number part of 1315000 1550000 1700000 1850000 2000000 Biannual Progress PMT generators population invoiced not billed Report Intermediate Result 2: Improved disposal management and upgrading of the Balakhani Landfill Full registration Limited All waste Full Full Full Full Project of waste received l Text registration loads registration registration registration registration Biannual Progress PMT at theiBalakhani of waste registered of waste of waste of waste of waste Report Permanent Limited access to site security the Balakhani and sites No No No landfill to reduce No fencing, fully Limited unauthorized unauthorized unauthorized Project presence of O Text limited site fenced; access to individuals at individuals at individuals at Biannual Progress PMT unauthorized security access site the site the site the site Report individuals and restricted to animals authorized staff Dumping surface No surface Dump Dump Monthly Monthly Monthly Project area covered O] Text coverage surface area surface area coverage of coverage of coverage of Biannual Progress PMT monthly to and covered; no covered dump surface dump surface dump surface Report -4- Intrmediate Results andi Indleatri Baseline Target Values Intermediate Unit of Original Progress 2013 2014 2015 2016 Data Source/ Responsibility Results E Measurement Project To Date Frequency Methodology for Data Comments Indicators 0 Start (2012) Collection (2008) reduce fires and frequent fires at the area area area exposure of fires site waste Leachate-/ runoff water Leachate Leachate Leachate management No leachate No leachate Design collection collection collection Project system O Text Biannual Progress PMT operatonal t thecollection collection ready system system system fully Rpr operational at the installed operational operational Report Balakhani landfill Landfill gas Landfill gas Landfill gas Landfill gas . collection system No landfill No landfill Design collection collection collection Project operational at the O Text gas gas ready system system system fully Biannual Progress PT Balakhani collection collection installed operational operational Report landfill Intermediate Result 3: Improved management of other dumps and closure of informal solid waste dumps Limited access to the facility No fencing, No No No Project to reduce presence of O Text limited site Restricted Access unauthorized unauthorized unauthorized Biannual Progress PMT unauthorized individuals and security access limited individuals individuals individuals Report animals 66 larger Project Number of wild dumps closed Number unauthorized 33 40 43 45 50 Biannual Progress PMT dump sites Report identified Intermediate Result 4: Improved solid waste collection coverage in 5 outer Baku districts 1 LimitedPrjc Increased number of bins and LmtdProject collection points distributed in O Number collection points 2430 5669 5750 5896 6000 Biannual Progress PMT five outer Baku districts districts u Report -5- Regular solid waste collection Limited Project in outer Baku districts Ol Text collection 6x week 6x week 5x week 4x week 3x week Biannual Progress PMT provided according to services Report collection roll-out plan First client Share of population in project . 51% Project satisfaction target areas satisfied with O Percent Low level 55% 60% 65% 70% Biannual Progress PMT survey improved solid wasteleeRpotcmeedi collection service Report completed in Intermediate Result 5: Post-project investments identified to develop landfill capacity and introduce transfer stations Number of feasibility studies and environmental impact Project assessments for new solid O Number No F/S 3 3 5 7 8 Biannual Progress PMT waste management Report investments carried out eNo No Project National Waste Management Text NWMP NWMP Draft NWMP Final NWMP Final NWMP Biannual Progress PMT Plan (NWMP) developed NWMP NWMP_ Report