OFFICIAL DOCUMENTS THE WORLD BANK IBRD * IDA I WORLDBANKGROUP April 11, 2018 Hon. Manasseh D Sogavare, MP Deputy Prime Minister and Minister of Finance and Treasury Ministry of Finance and Treasury P.O. Box 26 Honiara Solomon Islands Dear Minister, Solomon Islands: Additional Financing for Sustainable Energy Project Credit No. 5379-SB and Grant No. H913-SB Amendment to the Financing Agreement We refer to the Financing Agreement ("Financing Agreement") between the Solomon Islands ("Recipient") and the International Development Association ("Association") for the above-mentioned Project ("Project") and Amendment to the Original Financing Agreement, dated April 1, 2014, as amended. We also refer to the letter, dated April 4, 2018, from the Ministry of Finance and Treasury to the Association requesting a cancellation of an amount of the above-captioned Credit and revisions to the results framework of the Project. All capitalized terms used in this letter ("Amendment Letter") shall have the same meanings ascribed to them in the Financing Agreement unless the context requires otherwise. We are pleased to inform you that the Association agrees to your request and: (a) cancels, as of April 4, 2018, an amount of the Credit equal to two million two hundred seventy- five thousand Special Drawing Rights (SDR 2,275,000) in accordance with the provisions of Section 6.01 of the General Conditions; and (b) proposes to amend the withdrawal table set forth in Section IV.A.2 of Schedule 2 to the Financing Agreement to read as follows: Percentage of Amot Aloted Amount of the Expenditures to be Category Cre led Grant Allocated Financed SDR) (expressed in SDR) (exclusive of Taxes) (1) Goods, works, non-consulting services, consultants' services, Traningtand' 4,925,000 1,400,000 100% services, Training and Incremental Operating Costs for the Project Amount cancelled as 2,275,000 of April 4, 2018 TOTAL AMOUNT 7,200,000 1,400,000 G WORLD BANK GROUP Solomon Islands -2- April 11, 2018 In addition, the results framework of the Project is revised as set forth in the Attachment I to this Amendment Letter. Except as specifically amended herein, all other provisions of the Financing Agreement shall remain unchanged and in full force and effect. Please confirm the Recipient's agreement to the foregoing by having an authorized official of the Recipient sign and date both enclosed copies of this Amendment Letter, and returning one copy to the Association. Upon receipt by the Association of the countersigned copy of this Amendment Letter, the amendments herein shall become effective as of the date of the Recipient's countersignature. Sincerely, INTERNATIONAL DEVELOPMENT ASSOCIATION By_ Michel Kerf Country Director Papua New Guinea & Pacific Islands East Asia and Pacific Region AGREED: SOLOM ISLANDS By: A orized Representative Name: " Title: 1Mex.-- ~ Date: _ _ _ ___ _ Cc: Pradip Verma, Chief Executive Officer, Solomon Islands Electricity Authority Solomon Islands -3- April 11, 2018 Attachment 1 Revised Results Framework for the Project Project Development Objective Indicators Quarterly financial management reports, and rolling projections for SIEA performance within 14 days after end of each quarter Unit of Measure: Text Indicator Type: Custom Baseline Actual (Current) End Target Action Value N Y Y Revised Date 31-Dec-2007 15-Jan-2018 31-Mar-2019 Number of days between due date of customer bill, and if not paid, notice of arrears Unit of Measure: Days Indicator Type: Custom Baseline Actual (Current) End Target Action Value 365.00 15.00 15.00 Revised Date 31-Dec-2007 15-Jan-2018 31-Mar-2019 Generator efficiency improved Unit of Measure: Text Indicator Type: Custom Baseline Actual (Current) End Target Action Lungga 06 (L06) Lungga 06 (L06) Lungga 06 (L06) 00% Lungga 08 80%, L08 75%, 85% Lungga 08 Marked for (L08) 55% Lungga operational, L10 (L08) 85% Lungga Deletion 10 (L10) 40% 90% 10 (L10) 85% Date 31-Dec-2007 14-Jul-2017 31-Mar-2019 System Average Interruption Duration Index (SAIDI) Unit of Measure: Minutes Indicator Type: Custom Baseline Actual (Current) End Target Action Value 51840.00 1870.90 2000.00 Revised Date 31-Dec-2007 15-Jan-2018 31-Mar-2019 System Average Interruption Frequency Index (SAIFI) Unit of Measure: Minutes Indicator Type: Custom Baseline Actual (Current) End Target Action Value 816.00 21.20 85.00 Revised Date 31-Dec-2007 15-Jan-2018 31-Mar-2019 Solomon Islands -4- April 11, 2018 System losses Unit of Measure: Percentage Indicator Type: Custom Baseline Actual (Current) End Target Action Value 27.00 18.00 18.00 Revised Date 31-Dec-2007 15-Jan-2018 31-Mar-2019 Average number of debtor days to collect billed revenue Unit of Measure: Days Indicator Type: Custom Baseline Actual (Current) End Target Action Value 360.00 40.52 35.00 Revised Date 31-Dec-2007 15-Jan-2018 31-Mar-2019 Collection ratio Unit of Measure: Percentage Indicator Type: Custom Baseline Actual (Current) End Target Action Value 72.00 65.00 70.00 Revised Date 31-Dec-2007 14-Mar-2018 31-Mar-2019 Revenue per Kwh generated Unit of Measure: Text Indicator Type: Custom Baseline Actual (Current) End Target Action Value SB$ 1.39/KWh SB$ 4.5/KWh SB$ 4.5/KWh New Date 30-Jun-2008 21-Mar-2018 01-Apr-2019 Intermediate Indicators Commissioning of one 12MVA transformer at Lungga Power Station Unit of Measure: Text Indicator Type: Custom Baseline Actual (Current) End Target Action Value N N Y Revised Date 13-Feb-2014 15-Jan-2018 31-Mar-2019 Commissioning of 5MVA 33kV/11kV transformer and a second 33 kV switchboard at Ranadi Unit of Measure: Text Indicator Type: Custom Baseline Actual (Current) End Target Action Value N N Y Revised Date 13-Feb-2014 15-Jan-2018 31-Mar-2019 Solomon Islands -5- April 11, 2018 Kola'a Ridge 33/11kV substation commissioned with one 7.5MVA transformer Unit of Measure: Text Indicator Type: Custom Baseline Actual (Current) End Target Action Value N N Y Revised Date 13-Feb-2014 15-Jan-2018 31-Mar-2019 Feeder 12 load relocated from Lungga 11kV generation bus to East Honiara Substation Unit of Measure: Text Indicator Type: Custom Baseline Actual (Current) End Target Action Value N N Y Revised Date 13-Feb-2014 15-Jan-2018 31-Mar-2019 Net Profit before tax Unit of Measure: Text Indicator Type: Custom Baseline Actual (Current) End Target Action Value Loss SB$ 44M Profit SB$98M Profit SB$98M New Date 30-Jun-2008 21-Mar-2018 01-Apr-2019