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                                                     JULY 23. 1991
The Honorable
Mr. Jesus Estanislao
Secretary of Finance
Department of Finance
Manila, Philippines
Dear Mr. Secretary:
                  Re: Loan No.3165-PH
                      (Energy Sector Project)
                      Amendment of Schedule 1 to the Loan Agreement
         I refer to the Loan Agreement (Energy Sector Project),
dated March 16, 1990, between the International Bank for
Reconstruction and Development  (the  Bank)  and  the  Republic  of
the  Philippines  (the Borrower).  I also refer to the letter dated
March 21, 1991 from Mr. W. R. de La Paz, the Executive Director of
the Office of Energy Affairs (OEA), in which he requests on behalf
of the OEA, the Energy Regulatory Board (ERB) and the Environmental
Management Bureau (Ems) for increasing the percentage of financing
of locally procured goods and inclusion of civil works as an
independent category.
         I am pleased to inform you that, pursuant to the above
request the Bank has agreed to amend the Loan Agreement as set out
in the Attachment hereto.
         Would you please confirm agreement, on behalf of the the
Borrower, to the  foregoing amendment by signing and dating the
confirmation form on the attached copy of this letter and
returning the signed copy to me for our records.
                                       Sincerely yours,
                                       Jeffrey Gutman
                                       Acting Director
                                       Department II, Asia Region,
World Bank
Confirmed:
Republic of the Philippines
By: /s/ Jesus Estanislao, Secretary of Finance
Date:  10/7/91
                               SCHEDULE 1
              Withdrawal of the Proceeds of the Loan
1.   The table below sets forth the Categories of items to be
financed out of the proceeds of the Loan, the allocation of the
amounts of the Loan to each Category and the percentage of
expenditures for items so to be financed in each Category:
                              Amount of the
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                            Credit Allocated              % of
                              (Expressed in           Expenditures
      Category               SDR Equivalent           to be Financed
(1)   Goods and related       31,600,000             100% of foreign
      equipment                                      expenditures, 100%
      installation                                   of local expendi-
                                                     tures, and 85% of
                                                     other locally
                                                     procured items
(2)   Technical                6,000,000             100%
      assistance and
      training
(3)   Works                    1,400,000             95%
(5)   Unallocated              1,000,000
                              __________
      TOTAL                   40,000,000
                              ==========
2.    For the purposes of this Schedule:
     (a)  the term "foreign expenditures" means expenditures in
the currency of any country other than that of the Borrower for
goods or services supplied from the territory of any country other
than that of the Borrower; and
     (b)  the term "local expenditures" means expenditures in the
currency of the Borrower or for goods or services supplied from
the territory of the Borrower.