The World Bank 1818 H Street N.W. (202) 477-1234 INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Washington, D.C. 20433 Cable Address: INTBAFRAD INTERNATIONAL DEVELOPMENT ASSOCIATION U.S.A. Cable Address: INDEVAS April 3, 2012 OFFIC[R i His Excellency DOCUME1 , 76t -// Slavko Lini6 Minister of Finance Ministry of Finance Katanciceva 5 70 10000 Zagreb Republic of Croatia Re: Republic of Croatia. Coastal Cities Pollution Control Project 2 (Loan No. 7640-HR; GEF TF Grant No. TF092 704) Amendment to the Loan Agreement, the Project Agreement and the GEF Trust Fund Grant Agreement Dear Minister Lini6: We refer to the: (i) Loan Agreement between the Republic of Croatia (the Borrower) and the International Bank for Reconstruction and Development (the Bank) ("Loan Agreement"), as amended; (ii) the Project Agreement between the Bank and the Hrvatske Vode (the Project Agreement) and (iii) the GEF Trust Fund Grant Agreement between the Republic of Croatia and The Bank, acting as an Implementing Agency of the Global Environment Facility (the Grant Agreement), all for the above-referenced Project and dated February 6, 2009 (collectively referred to as "Legal Agreements"). We also refer to your request on behalf of the Borrower contained in the Borrower's letter dated May 13, 2011, to amend the Legal Agreements. I am pleased to inform you that, after careful consideration, we have acceded to the aforementioned request and propose to amend the Legal Agreements as follows: I. The Loan Agreement shall be amended as follows: 1. In Schedule 1, Part 2.1, paragraph (iv) is amended as follows: "(iv) the carrying out of studies for preparation of projects for financing under European Union Funds, including preparation of feasibility studies and bidding documents for projects eligible for EU financing." 2. In Schedule 2, Section I.D, the term "Environmental Safeguard Framework" is replaced with "Environmental Framework". Minister Slavko Linid - 2 - April 3, 2012 3. The Table set forth in Section IV.A.2 of Schedule 2 (Withdrawal of Loan Proceeds) is amended as set forth in the attachment hereto (Attachment 1). II. The Project Agreement shall be amended as follows: 1. In Section I.D of the Schedule, the term "Environmental Safeguard Framework" is replaced with "Environmental Framework". 2. Section II.B of the Schedule is amended to read as follows (modifications are shown in italics): "B. The Project Implementing Entity shall establish, not later than June 30, 2012, or such later date as the Bank shall establish a model to monitor and benchmark the operational, financial and environmental performance of water and wastewater operations of the MWSCs participating in the Project and, thereafter, shall use and update such model in a manner satisfactory to the Bank." III. The Grant Agreement shall be amended as follows: 1. In Schedule 1, Part 2.1, paragraph (iv) is amended as follows: "(iv) the carrying out of studies for preparation of projects for financing under European Union Structural Funds, including preparation of feasibility studies and bidding documents for projects eligible for EU financing." 2. In Schedule 2, Section I.B, the term "Environmental Safeguard Framework" is replaced with "Environmental Framework". 3. In Schedule 2, Section II.B. (b) is amended to read as follows (modifications are shown in italics): - "(b) prepare, under terms of reference satisfactory to the Bank, and furnish to the Bank, on or about March 30, 2011 or such later date as the Bank shall establish, a report integrating results of the monitoring and evaluation activities and setting out measures recommended to ensure the efficient carrying out of Parts 1, 2 and 3.1 of the Project and the achievement of the objectives thereof during the period following such date;" 4. The Table set forth in Section IV.A of Schedule 2 (Withdrawal of Grant Proceeds is amended as set forth in the attachment hereto (Attachment 2). All the other terms and conditions of the Legal Agreements, as amended hereby, shall remain in full force and effect. Minister Slavko Linid - 4 - April 3, 2012 Attachment I SCHEDULE 1 Withdrawal of Loan Proceeds Category Amount of the Loan Percentage Allocated of Expenditures (Expressed in Euro) to be Financed (1) Goods: (a) under Parts 1, 2 and 1,800,000 3.1 of the Project 50% (b) under Part 3.2 250,000 50% of the Project (2) Works: (a) under Part 1.1 (a) 44,650,000 of the Project 50% (b) under Part 1.1 (b) 6,500,000 40% of the Project (3) Consultants' Services and Training: 4, 700,000 (a) under Parts 1, 2 and 50% 3.1 of the Project 2,100,000 50% (b) under Part 3.2 of the Project (4) Unallocated 0 TOTAL AMOUNT 60,000,000 Minister Slavko Lini6 - 5 - April 3, 2012 Attachment 2 Withdrawal of Grant Proceeds Amount of the Grant Percentage Allocated of Expenditures Category (Expressed in USD) to be Financed (1) Works: (a) under Part 1.1 (b) 2,800,000 20% of the Project, excluding those financed under Category (1) (b) hereof (b) for the constructed treatment 2,800,000 100% wetlands facility under Part 1.1 (b) of the Project (2) Consultants' Services and 650,000 100% Training under Parts 1, 2 and 3.1 of the Project (3) Unallocated 150,000 TOTAL AMOUNT Minister Slavko Linid - 3 - April 3, 2012 Please confirm your agreement to the foregoing amendment, on behalf of the Republic of Croatia, by signing and dating the confirmation on the enclosed copy of this Amendment Letter and returning it to us. This amendment will come into force and effect as of the date of countersignature by both the Borrower and Hrvatske Vode, and upon receipt by the Bank of the said duly countersigned original Amendment Letter. Sincerely, Peter Harrold Country Director Central Europe and Baltic Countries Europe and Central Asia Region CONFIRMED AND AGREED: REPUBLIC OF CROATTI " By: GLAUKI-0 L(IJIc'2 Title: /A//STER OF F11JA1ICE Date: A PP/L- , LO/L q>AG