OFFICIAL Supplemental Letter No. 3.9 UTILITY PRODUCTION COMPANY "KRAMATORSKYI VODOKANAL" Date " 4&da,_ 2014 International Bank for Reconstruction and Development 1818 H Street, N.W. Washington, D.C. 20433 United States of America Re: Loan No. 8391-UA Second Urban Infrastructure Project (Urban Infrastructure Project - 2) Performance Monitoring Indicators Dear Sirs and Mesdames: This refers to Section II.A of the Schedule to the Project Agreement of even date herewith between the International Bank for Reconstruction and Development (the Bank) and the Utility Production Company "Kramatorskyi Vodokanal" (the Project Implementing Entity). The Project Implementing Entity hereby confirms to the Bank that the indicators set out in the attachment to this letter shall serve as a basis for the Project Implementing Entity to monitor and evaluate the progress of the Project and the achievement of the objectives Very truly yours, UTILITY PRODUCTION COMPANY "KRAMATORSKYI VODOKANAL" By L Authorized Representative Attachment Attachment to the Supplemental Letter No. 3.9 Loan No. 8391 -UA Second Urban Infrastructure Project (Urban Infrastructure Project - 2) Performance Monitoring Indicators Project Development Objective PDO Statement The project development objective (PDO) is to improve the quality and efficiency of water, wastewater, and solid waste services in selected cities in Ukraine. These results are at the: Project Level Project Development Objective Indicators Cumulative Target Values Data Source/ Responsibil Frequency ity for Data Comments Indicator Name Core unit of Baseline YRI YR2 YR3 YR4 YR5 YR6 Methodology Collection Measure Cleto Volume (mass) of BOD / Quality of pollution loads removed by Tons/Ye 18 18,485 Annual Semi-annual RPMUs & Qualt the treatment plant supported 15,285 18,000 18,285 reports CPMU water under the project Quality of Industrial or municipal solid Tons year 0 20,000 28,000 30,000 40,000 Annual Semi-annual RPMU & waste recycled in Kharkiv reports CPMU sev e waste Operating Cost Coverage Ratio 1. Kharkiv VK 0.76 0.76 0.78 0.80 0.82 0.84 0.86 Efficiency of 2. Kharkiv MC 1.18 1.18 1.18 1.20 1.20 1.20 1.20 Annual RPMUs & services - water, 3. Kirovograd Percentage 0.67 0.67 0.68 0.69 0.72 0.75 0.77 Annual reports CPMU wastewater and 4. Kramatorsk 0.74 0.74 0.74 0.76 0.78 0.80 0.85 solid waste 5. Ternopil 0.92 0.92 0.92 0.92 0.95 0.95 0.97 6. Zhytomyr 0.78 0.78 0.80 0.82 0.85 0.90 0.95 Energy efficiency as kWh per m 3 TBC Efficiency of measured by amount of of water nnual A r t CPMU services - water energy used per m3 of water produced reports supply produced or wastewater kWh per m3 TBC Efficiency treated in utilities of waste water 0.9 Annual RPMUs & . participating in the project treated reports CPMU sev e Tons of GHG emissions Tons/year 0 0 0 0 200,000 350,000 475,392 Annual Annual RPMUs & CTF Indicator reduced or avoided reports CPMU Intermediate Results Indicators Cumulative Target Values Responsibi Unit of Frequency Data Source! lity for Comment Indicator Name Core Baseline YRI YR2 YR3 VR4 YR5 YR6 Methodology Data Measure Collection Direct project beneficiaries V Number 0 0 0 3.14 4.0 4.3 4.3 Annual Annual RPMUs & (number) (million) Reports CPMU Direct project beneficiaries " Percentage 0 0 0 50% 50% 50% 50% Annual Annual RPMUs & who are female Reports CPMU Twice Customers in Proje, Customers in Project areas (before Quality of areas reporting reporting improved water Average TBD in Increase and after Customer RPMUs & water improved water supply services, as Rating first year of 20% project Score Cards CPMU supply supply services, as measured through score interventi services measured through cards (rating 1-5) ons) score cards (rating I 5) Piped household water connections affected by rehabilitation works Number 0 0 0 450,650 453650 500,000 555,000 Semi-annual Semi-annual RPMUs & undertaken under the reports CPMU project Industrial and municipal waste disposal capacity Tons/year 0 0 0 200,000 300,000 350,000 400,000 Semi-annual Semirna CPMU created in Kharkiv reports CPMU Utility companies that the V Number 0 10 10 10 10 10 10 Semi-annual Semi-annual RPMUs & Cmiponent 2 project is supporting reports CPMU Number of utility Component 2 companies implementing Number 0 4 4 4 6 7 7 Semi-annual Semi-annual RPMUs & indicator recommendations of Utility reports CPMU Performance Improvement Plan Utility companies using Number 0 4 4 4 6 7 7 Semi-annual Semi-annual RPMUs & Component 2 benchmarking systems reports CPMU indicator Prepare new design Semi-annual RPMUs & Component 2 standards for water supply Yes/ No No No No No No Yes Yes Semi-annual reports CPMU indicator and wastewater Energy savings GWh/yr 0 0 0 235 353 470 Annual Semi-annual RPMUs& CTF Indicator reports CPMU I Electricity Generation GWh/yr TBC Annual Semi-annual RPMUs & CTF Indicator I_ reports CPMU