Page 1 Headquarters: 1818, H Street, N.W., Washington, D.C. 20433, U.S.A. The World Bank Nepal Country Office Facsimile: 225112 INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Lal Durbar Telex: 2228 INDEVA NP INTERNATIONAL DEVELOPMENT ASSOCIATION Yak & Yeti Hotel Complex Telephone: 226792, 439571 Kathmandu, Nepal Cable Address: INTBAFRAD KATHMANDU Postal Address: P.O.Box 798 CONFORMED COPY April 5,2004 Mr. Bhanu Prasad Acharya Secretary Ministry of Finance His Majesty’s Government of Nepal Kathmandu Re: NEPAL: Credit No. 3293-NEP (Road Maintenance and Development Project) Amendment to the Development Credit Agreement Dear Mr. Acharya: We refer to the Development Credit Agreement relating to the Road Maintenance and Development Project (the “Project”) between the Kingdom of Nepal (the “Borrower”) and the International Development Association (the “Association”) dated December 22, 1999 (the “Credit Agreement”), including any amendments made from time to time. We also refer to the Ministry of Finance letter dated February 25, 2004 and the understanding reached between the Borrower and the Association to: (i) extend the Closing Date; (ii) amend the Project objectives; and (iii) restructure the Project components, of the Credit Agreement to address the implementation obstacles affecting the Project areas. Accordingly, we are pleased to inform you that, after due consideration, the Association hereby agrees to amend the Credit Agreement, as follows: 1. The Closing Date in Section 2.03 of Article II of the Credit Agreement is amended to read as follows: “Section 2.03. The Closing Date shall be December 31, 2006 or such later date as the Association shall establish. The Association shall promptly notify the Borrower of such later date.” 2. In Schedule 2 (Description of the Project) to the Credit Agreement: (a) The Project objectives in the first paragraph of Schedule 2 shall be changed to read as follows: “The objective of the Project is to assist the Borrower in the provision of a sustainable and efficient road service on the strategic road network.” (b) Part A shall have the following additional paragraph: “provision of technical advisory services to the Road Board for carrying out of beneficiaries surveys” Page 2 Mr. Bhanu Prasad Acharya -2- Credit No. 3293-NEP (c) Part B.1 shall read as follows: “Part B : Road Construction and Upgrading 1. Carrying out of: (i) construction work of about 50 km of new dry- weather feeder roads and strategic road network; (ii) upgrading work of about 154 km of existing dry-weather feeder roads to gravel road standard.” (d) Part C.1, shall read as follows: “Part C : Road Rehabilitation 1. Carrying out of: (i) rehabilitation work to about 258 km of the strategic highway and feeder road network; (ii) upgrading work to about 125 km of feeder roads to bituminous standard; (iii) provide bituminous seal to about 141 km of rehabilitated gravel roads;” (e) Part D shall read as follows: “Part D : Road Maintenance 1. Implementing periodic maintenance of about 676 km of the strategic highway and feeder road network and performance based maintenance of about 134 km of strategic highway. 2. Implementing routine and regular maintenance of strategic highway and feeder road network, as well as necessary emergency maintenance.” (f) The following components shall be added as Parts E and F and the previous Part E shall be re-lettered to read as Part G: “Part E : Emergency Road Repair Rehabilitating about 36 km of emergency strategic road network damaged due to flooding. Part F : Community Road Works Constructing 45 km of feeder road using community based organizations.” 3. All the terms and conditions of the Credit Agreement that have not been amended hereby shall remain unchanged and in full force and effect. Page 3 Mr. Bhanu Prasad Acharya -3- Credit No. 3293-NEP Please confirm your agreement to the amendment set out above by having an authorized representative of the Borrower sign the form of confirmation set forth herein below, and returning one fully executed original of this amendment letter to us at your earliest convenience and retaining one original for your records Sincerely, /s/ Deborah Bateman Deborah Bateman Acting Country Director for Nepal South Asia Region Confirmed and Agreed KINGDOM OF NEPAL By /s/ Bhanu Prasad Acharya Name: Bhanu Prasad Acharya Title: Secretary Date: April 15, 2004 Page 4 Mr. Bhanu Prasad Acharya -4- Credit No. 3293-NEP