Conformed Copy - L4484 - Water Sector Reform Project - Amendment

Page 1 July 7, 2000 Mr. José Luis Machinea Ministro de Economía Hipólito Yrigoyen 250 1086 Buenos Aires, Argentina Re: Loan No. 4484-AR (Water Sector Reform Project) Amendment to the Loan Agreement Dear Sir: Please refer to the Loan Agreement between International Bank for Reconstruction and Development (the Bank) and the Argentine Republic (the Borrower) of even date herewith (the Loan Agreement) with regard to the above-captioned Loan. We are pleased to inform you that, pursuant to your request and our recent discussions on the subject, the Bank agrees to amend the Loan Agreement as set forth below. 1. Section 1.02 (f) is hereby amended to read as follows in its entirety: ""SOP" means the Borrower’s Secretaría de Obras Públicas (Public Works Secretariat). 2. Section 3.06 (a) (i) and (ii) is hereby amended to read as follows in its entirety: "(i) onlend such amount of Loan proceeds to ENOHSA on terms identical to those of the Loan; (ii) with respect to amounts so onlent in connection with Part A of the Project (other than in connection with the Posadas sewerage expansion referred to in paragraph (b) (i) of this Section), cause ENOHSA promptly to disburse such amounts in Dollars as part of Subloans to those Subborrowers which incurred said eligible expenditures; (iii) with respect to amounts so onlent in connection with Part A of the Project for said Posadas sewerage expansion, cause ENOHSA promptly to disburse such amounts in Dollars on a grant basis to the province of Misiones and further cause ENOHSA to ensure that the province of Misiones promptly disburses such amounts in Dollars on a grant basis to the utility referred to in paragraph (b) (i) of this Section.". 3. Section 3.06 (b) (ii) is hereby deliberately left blank. 4. Section 3.06 (b) (iii) is hereby amended by replacing the words "The Borrower shall ensure that" with the words "The Borrower shall cause ENOHSA to ensure that". 5. Section 3.08 (b) is hereby amended by replacing the word "SRNDS" with the word "SOP". 6. A new Section 3.10 is hereby added immediately after Section 3.09, to read as follows in its entirety: "For purposes of the onlending of Loan proceeds to ENOHSA referred to in Section 3.06 (a) (i) of this Agreement, the Borrower shall enter into a subsidiary loan contract with ENOHSA, satisfactory to the Bank, whereby the Borrower commits to carry out such onlending on terms identical to those of the Loan, and ENOHSA commits to repay and service on said terms its debt to the Borrower incurred thereby and to use the Loan proceeds so onlent in accordance with the terms of this Agreement. Except as the Bank may otherwise agree, the Borrower shall not amend or fail to enforce any provision of such subsidiary loan contract. The Borrower shall exercise its rights under such subsidiary loan contract in such a manner as to protect the interests of the Borrower and the Bank and to accomplish the purposes of the Loan.". 7. Section 5.01 is hereby amended by adding a new paragraph (c) at the end thereof, to read as follows in its entirety: "ENOHSA or the Borrower shall have failed to comply with any of their obligations under the subsidiary loan contract referred to in Section 3.10 of this Agreement.". 8. Section 5.02 is hereby amended by replacing the words "(a) or (b)" with the words "(a) or (b) or (c)". 9. Section 6.01 is hereby amended by deleting the word "and" at the end of paragraph (c) thereof, replacing the period at the end of paragraph (d) thereof with the word "; and", and adding a new paragraph (e) immediately after paragraph (d) thereof, to read as follows in its entirety: "that the subsidiary loan contract, referred to in Section 3.10 of this Agreement, has been entered into.". Page 2 10. Section 6.02 is hereby amended to read as follows in its entirety: "The following is specified as an additional matter, within the meaning of Section 12.02 (c) of the General Conditions, to be included in the opinions to be furnished to the Bank (one from the Borrower and one from ENOHSA), namely that the subsidiary loan contract referred to in Section 3.10 of this Agreement has been duly authorized or ratified by the Borrower and ENOHSA, has been duly executed by them, and is legally binding upon the Borrower and ENOHSA in accordance with its terms.". 11. A new Section 6.03 is hereby added immediately after Section 6.02, to read as follows in its entirety: "The date October 9, 2000 is hereby specified for the purposes of Section 12.04 of the General Conditions.". 12. Section 7.01 is hereby amended by deleting the words "and Public Works and Services". 13. Section 7.02 is hereby amended by deleting the words "y Obras y Servicios Públicos". 14. Schedule 2, Part B.3 (c) is hereby amended by replacing the word "SRNDS" with the word "SOP". 15. Schedule 2, Part C.1 is hereby amended by replacing the word "SRNDS" with the word "SOP". 16. Schedule 6, Part A.1 (g) (ii) is hereby amended to read as follows in its entirety: "there must be in existence other legally binding arrangements in favor of the Borrower or ENOHSA (approved by the Borrower’s Secretaría de Programación Económica y Regional or its successor and the Borrower’s Secretaría de Hacienda or its successor and the Borrower’s Secretaría de Finanzas or its successor), which arrangements guarantee payment of the Subloan interest, principal and other charges either by the Subborrower (through, for example, direct application of Subborrower accounts receivable) or by the relevant province or municipality;". Please confirm your agreement to the foregoing amendments by signing and dating this letter in the spaces provided below. This amendment letter may be executed in two counterparts, each of which shall be an original. Upon your confirmation, please return one fully executed original to us. The provisions of this amendment letter will become effective as of the date first above written upon receipt by the Bank of one fully executed original of this amendment letter. Very truly yours, INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By /s/ Myrna L. Alexander Director Country Management Unit  for Argentina, Chile and Uruguay ARGENTINE REPUBLIC By /s/ José Luis Machinea Date: July 7, 2000