OFFICIAL DOCUMENTS The World Bank 1, Dniprovikiy Uzviz (380-44) 490-6671 INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELO eIT Ivo640 (380-44) 490-6672 INTERNATIONAL DEVELOPMENT ASSOCIATION Ukraine (380-44) 490-6673 REGIONAL OFFICE UKRAINE, BELARUS AND MOLDOVA May 10, 2012 His Excellency Yuriy Kolobov Minister Ministry of Finance Kyiv 01001 Ukraine Dear Mr. Kolobov: Re: Ukraine- Power Transmission Project (Loan No. 4868-UA) Amendment to Loan Agreement We refer to the Loan Agreement dated November 9, 2007 as amended to date, between International Bank for Reconstruction and Development (the "Bank") and Ukraine (the "Borrower") for the above referenced Project, and to the Project Agreement between the Bank and State Enterprise National Power Company - Ukrenergo (the "Project Implementing Entity") of the same date. We also refer to the letter from the Deputy Minister of Finance dated April 2, 2012, requesting the Bank to extend the Closing Date of the Loan, amend the date of the mid-term review of the Project and amend the date by which the Project Implementing Entity will carry out a revaluation of its assets. After due consideration, I am pleased to inform you that the Bank concurs with your request and hereby amends the Loan Agreement as follows: 1. The Closing Date of the Project as set out in Schedule 2 Section IV.B.2 is hereby extended to December 31, 2014. 2. The date by which the mid-term review shall be carried out as set out in Schedule 2 Section II.A.1 is hereby amended to December 31, 2012. 3. The date by which the Project Implementing Entity shall carry out a reevaluation of its assets as set out in Schedule II Section V.1 is hereby amended to December 31, 2012. Additionally, we are pleased to agree to your request to revise the target values of the performance monitoring indicators. Accordingly, the performance monitoring indicators set out in the attachment to Supplemental Letter No. 2 dated November 9, 2007 are replaced by the indicators set out in the Attachment to this amendment letter. 1 Except as amended hereby, all other provisions of the Loan Agreement shall remain in full force and effect. The Project Agreement between the Bank and the Project Implementing Entity is being amended separately. Please confirm the agreement of the Borrower to the amendments set forth above by countersigning and dating both copies of this amendment letter and returning one of the countersigned copies to us. This amendment letter shall be effective as of the date of said countersignature. Sinc rely, Marius Vist as Acting Country Direc Ukraine, Belarus and Moldova Europe and Central Asia AGREED: UKRAINE By: eO' Title: Minist& nce Date: /.C,'i. / Attachment Performance Monitoring Indicators for Supplemental Letter No. 2 to the Loan Agreement 2 Copied to: H.E. Yuriy Boyko Minister, Ministry of Energy and Coal Industry Mr. Sergiy Rybak, Deputy Minister, Ministry of Finance of Ukraine Mr. Volodymyr Makukha, Deputy Minister, Ministry of Energy and Coal Industry of Ukraine Mr. Mykyta Konstantinov, Head, Department for Strategic Policy, Investments and Nuclear Energy, Ministry of Energy and Coal Industry of Ukraine Mr. Anatoliy Khodakivskiy, Director, Ukrenergo Mr. Sergiy Titenko, Chairman, NERC Mr. Victor Lyssykh, Head of Investment and Credit Policy Division, Ukrenergo Mrs. Olena Kucherenko, Director, Department for International Technical Assistance and Cooperation with International Financial Organizations, Ministry of Economic Development and Trade of Ukraine Ms. Halyna Pakhachuk, Department Head, Department for External Debt Management and International Cooperation, Ministry of Finance of Ukraine Ms. Viktoria Kolosova, Head, Division for Cooperation with International Finance Organizations, Department for External Debt Management and International Cooperation, Ministry of Finance of Ukraine Mr. Gennadiy Latiy, Head of Department for Foreign Economic Policy and International Cooperation, Mr. Dmitriy Tolmachev, Head of EPCU, Ministry of Energy and Coal Industry of Ukraine Mr. Rudolf Jan Treffers, Executive Director, World Bank Ms. Tamara Solyanyk, Senior Advisor to Executive Director, World Bank 3 ATTACHMENT 1 Results Framework and Monitoring - Attachment to Supplemental Letter No. 2 dated November 9, 2007 UKRAINE: POWER TRANSMISSION PROJECT PROJECT PERFORMANCE INDICATORS Target values Data collection and reporting Performance Baseline 21 2 2 F I to collection Rea usibill for indicators 2011 2012 2013 2014 p 0,repors nsrmts Idata collection omponentnt Z Beginning offBeginning of reconstructron ofmofa2rs/se220tV transition to a M odel of bilateral agreem ents RVpuarerlbynM ECrep nt Power~~~PC andke UEotsb EC n oeigR0% Existing model Existing model model of bilateral with a balancing market Annual NECEPCU and UE opnngRagreements with a operational NR ________ _ __ ______ bala ncing market __ _ _ _ _ i Submission of Draf la Onthe draft law to Development of Drf a nthe VR for its Power Market Reports by MEC, Implementation of Operational Principles Elaboration of adoption RlsTilOeainAna EC E Rad !PUadU the WEM concept [] R of Ukraine's Power Draft Law Marn3t and enactments of VR Effectiveness of the Law the Law Results indicators R -________ by each component Componnt A RReplacement o Compliton Aof Obsoletes/RePacret' 3por Replacement of f Replacement of 4 poe Project progress reports Reai[ato f5 pow er breakers at 39 0 power breakers at reacemenat of0 42 s/we Quarterly adU eot EPCUadU transmission equipment a t 75 V braesa15,oe Vbekr t 5 VssadU eot UadU substations a70kkV s/s 70k / _____~~~~~~~~~~ ____________-reosrcinfBeginnig of Beginnig of Poetpors eot Beinng of reconstruction reconstruction of 5 Completion of reconstructiontPo rpot of 2s/s 220 kV s/s 220 kV and 330 of 5s/s 220 kVand 330 kV Quarterl and UErepogPC nd s/s330kV and 330 kV kV 4 Beginning of Continuation of installation of installation of of installation of Completion o ntlaino Bidding relay protection relay protection relay protection systems and Project progress reports EPCU and UE procedures ssesad stmsnd automation systems at 750 kV Quarterly and UE reportsEPUadE automation automation S/s systems at 750 systems at 750 kV kV s/s s/s Beginning of Commissioning Component B construction of of 330 kV TL to Improved voltage Strengthening of O R Inadequate TL 330 kV TL to Dniester and quality/Reduced Improved voltage Quarterly EPCU, UE and UHE transmission [1 capacity Dniester and 330 33 VBrss ESquality/Reduced ENSQurel network kV Bar s/s upgre upgrade upgr Component C F Stabilization of the Low reliability and Beginning of Continuation of Completion of modernization Project progress Crimea electric quality of power modernization modation tion of of 330 kV s Quarterly reports, UE and UHE EPCU and UE R supply of 330 kV s/s 330 kV s/s reports power grid nni Completion of modernization of Project progress of control pors systems at 220 control systems at Quarterly reports, UE and UHE EPCU and UE 220 and 330 kV reports and330kV substations substations Component D Bidding Completed anagement Not established Bidding procedures and implementation Quarterly Project reports and UE UE Information Redes beginning of and reports System E implementation commissioning Submission for:s Component E aGiCoeapproval by the Project progres Implementation of Developing Dra Grid Code Adopted Applied Annual reports, reports by EPCU, UE and NERC Grid Code R dMECI and NERC authority 5 Cleared with and bcc: Ms. Musiime (LEGOP/LEGEM), Ms. Malenko (CTRLA) Distribution: Ukraine DL, ECSSD Sector Staff, ECAVP Managers, ECSOQ Sector Staff, loa-eca Mmes./Messrs.: Lamech, Salminen, Gonzalez, Glazkov, Masterson (ECSS2), Serrano, (ECSSD), Leipold, Shmeliova (ECSO2), Babich (ECSO3), Sulukhia (ECSSD) Siryachenko, Gunko, Tranina (ECCUA), Luff, Golokoz, Snizhko (ECCU2) WBDocs 6