L IL I OcuitMfmt The World Bank * U*Um'5UnIsf- Telephone: +94-11-2448070 / 2345281 INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT 1st Floor, DFCC Building, Facsimile: +94-11-2440357 / 5561352 INTERNATIONAL DEVELOPMENT ASSOCIATION 73/5, Galle Road, Cable Address: INTBAFRAD COLOMBO Colombo 3, Sri Lanka. Mailing Address: P.O. Box 1761, Colombo. February 5, 2013 Dr. P.B. Jayasundera Secretary to the Treasury Ministry of Finance and Planning Coloribo 1. Democratic Socialist Rtepublic of Sri Lanka: IDA Credit No 4702-LK (Sustainable Tourism Dev elopment Project) Amendment to Financing Agieement Dear Si: We refer to the Financing Agre,.ment dated November 8, 2010 entered into between the Demociatic Republic of Sti Lanka (tle R!cipient) and the International Development Association (the Association) for the above-referened Proj:ct. We refer also to your request dated August 15, 2012 for amendments to the Financing Agrecment. I am pleased to inlorm yo.j tf at, a fter due consideration, the Association has agreed with your request and consequently proposes :o hereb / amend the Financing Agreement as follows: 1. Schedule 1, Part 1 is amenc ed :o re id in its entirety as follows: "Part 1: Institutional Fran ework (a) Esiablishmnmt of sustainable training centers of excellence, including provision of technic al assis ance and equipment to SLITHM. (b) Strengthen ng the capacity of SLITHM and MEDDT to enhance the quality of services n tie tc urism sector through the provision of technical assistance and training. (c) Carrying o it skills development and capacity building programs aimed at service providers in the tou -ism sector in order to enhance quality of their services. (d) Establishm-nt of product and service standards for the tourism sector. (e) promotion af such standards, including increasing compliance with such standards, through canying out of public awareness campaigns, including, but not limited to, workshops." Dr. P.3. Jayasundera -2- February 5, 2013 2. Schedule 1, Part 2 s deleted ir its (ntirety. 3. Schedule 1, Part 3 is amended to r,ad as follows: "Part 3: Support to sustainable tour sm business models (a) Establishment of a ma :chir g grant facility. (b) Provision Df grants to eli!;ible tourism businesses for: (i) product innovation; and (ii) green, energy and water ef icicnt ai id environmentally friendly establishment." 4. Schedule 2 Section I, Part B (Imp] -mentation Arrangements) is amended by the addition thereto of a new Paragrapl 5 as fo lows: "5. The Recip.ent sha I use a >ank selected through a competitive process acceptable to the Association to administer he 1rants to be provided under Part 3 (b) of the Project (the Administrator Bank). 5. The first paragraph of Schiedule :!, Section I, Part C (Criteria and Terms and Conditions for Grants) is amended to read as Follo vs: "1. Under Pail 3(b) of the Pro ect, the Recipient shall provide Grants to Beneficiaries for: (a) product innovation; or (b) gre n, energy and water efficient and environmentally friendly establishment in accordanc- with the procedures laid down in the Project Implementation Manual including but noi limited to the following: (a) Graiits for P oduct Innovation shall be provided to finance the carrying out of Eligible Proc uct Innovation Subprojects and Grants for green, energy and water efficient and en,ircnme ltally friendly establishment shall be provided to finance the carrying out of Llig.ble Yreen, energy and water efficient and environmentally friendly establishment Subpiojec s. (b) To be cligil le to receive a Grant for Product Innovation or a Grant for green, tnergy and wai er efficient and environmentally friendly establishment, a Beneficiary shall be: (i) a .ourism -stablishment with legal personality, duly registered under the laws of tht Recipient; or (ii) a ::ommur ity run enterprise, with legal personality, duly registered with th;, SLTD k; or (iii) an as ocia :ion duly registered under the laws of the Recipient. (c) To :e oligilble to receive a Grant for Product Innovation or a Grant for green, onergy ind wa er efficient and environmentally friendly establishment, a Subproject shall: ItCA ?4842 LI WUI 64145 1L1 FAX (202) 477-6391 Dr. P.B. Jayasundera -3- February 5, 2013 () ad-Ire, s a new market segment, including ecotourism, geotourism, or cu tural to irism, or be for the upgrading of skills in the said market segments >r for upgrading product and service standards in existing en.erprises; and (i) ha-e been received, appraised and approved by the Administrator Bank in accorda ice with the Project Implementation Manual. (d) Grants :'or I roduct Innovation and Grants for green, energy and water efficient and enviroimei tally friendly establishment shall reimburse Beneficiaries up to 50% of the cc st cf go ds, works and services incurred by said Beneficiaries under the Subp-oject, aid ,hall not exceed $76,000 in each case. 6. The table in Schedule 2, ;ec:ion II, Part C, Paragraph 2 (Other Methods of Procurement of Consultants' Services) is amended o read as follows: Procurement Method (a) Quality-Based Selecti n (b) Least Cost Seliction (c) Fixed Budget Selectioii (d) Selection Based oi Co isultant's Qualifications (e) Single-Source Sel-cticn (f) Establ: shed coinrerci .l practices acceptable to the Association (g) Procecures set forth in paragraphs 5.2 and 5.3 of the Consultant Guidelines for the Selk ction of Individual Consultants; (h) Single-source prccedt res for the Selection of Individual Consultants. 7. Attachment I to Schedule 2 is amended to read in its entirety as set out in Attachment I to this letter. 8. The table in Section IV of Scheduk 2 is amended to read in its entirety as set out in Attachment 2 to this letter. 9. Paragraphs 8 and 9 of the Appcndi> are amended to read as follows: "8. "Grants" means Grants Jar green, energy and water efficient and environmentally friendly establishment and Gra its f r Product Innovation both as hereinafter defined. "9. "Grants for green, ene gy and water efficient and environmentally friendly establishment" means grants provided or to be provided under Part 3(b)(ii) of the Project, provided that, for the purpc se of th s definition: (i) "Green" shall mean the tourist establishment or entities that are preservitig biodi' ersity or including ecological value addition and reducing the contribution of carbon to the ai- quality; (ii) "Energy efficiency" shall mean the tourist establishment or entities that are nvesting more than 20 percent of their total investment on R:A 2-18423. U WUI 64145 Q FAX (202) 477-6391 Dr. P.B. Jayasundera -4- February 5, 2013 generating renewable encrgy or energy efficient design and equipment to reduce energy consumption level; (iii) "Water ef iciency" shall mean that the tourist establishment or entities -hat are preserving water sources and installing water recycling plants to reduce waste water which includes rain watei harves ing; and (iv) "Environmental friendly" shall mean that the tourist establishmcnt or cntilies hat are contributing to conserve biodiversity and cultural diversity with more than :5%Y/ of heir investments, contributing to cleaner air by minimum of 10% of their investment ind use of natural resources to be recovered through mitigation by investing minimum of 15% of their investment." 10. Unless the contex: otherwise req iires, all references to "Carbon Reduction" throughout the Financing Agreement shall be deer ned to be references to "green, energy and water efficient and environmentally friendly e.tab ishn tent". Please indicate your agreement to these amendments by signing the form of countersignature below and returning one or ginal to us. Up )n receipt of the countersigned original by us, this amendment shall come into force as of the date of tiis ltter. Sincerely, INTERNATIONAL B kNK DEVELOPMENT ASSOCIATION Doina Petrescu Acting Co.inty Di -ector for Sri Lanka and the Maldives CONFIRMED DEMOCRATIC SOC T REPUBLIC OF SRI LANKA By__ Authori& esentaive Mae P L, K MAPA PATHIRANA Name: __._::___Ger ra! Date: C C k 3 R :A 218423. ( WUI 64145 L FAX (202) 477-6391 Dr. P.B. Jayasundera -5- February 5, 2013 cc: Mr. Priyantha Mayadunne, Add itior al Secretary, Ministry of Economic Development Mr. M.P.D.U.K. Mapa Path rana, D rector General, Department of External Resources, Ministry of Finance and Plannini! Mr. Sunil Hettiarachchi, DirectOr G neral, Investment and Tourism, Ministry of Economic Development Ms. Saroja Sirisena, Director C ener al, External Affairs, Ministry of Economic Development Mr. A.B.M. Ashraf , Project D rector/Facilitator, Ministry of Economic Development Mr. Mukesh Nandan Pra .;ad, Ex,.cutive Director, The World Bank R:,A 218423 L WUI 64145 U FAX (202) 477-6391 ATTACHMENT I ATTACHMENT I TO SCHEDULE 2 - Project Performance Indicators Component Intermediate Result Results Indicator Outcome Indicator Component 1 Strengthening implementation and supervision at Business model for regional Completed the regional level SLTDA in the East Training of human resources in the tourism Number of people trained 500 industry in the East I Niche markets in Eco Tourism. Avurvedic I Number of eco and community 1 25 activities, etc., strengthened guides trained Marketing and promotional strategy incorporating Regional & Eastern strategy Completed both national and regional products (i.e. East) Streamlining licensing and registration process Number of steps taken for 50% reduction licensing & registration Streamlining hotel grading process Number of steps for grading 50% reduction hotels Component 3 Grant Facility Grant Manual Approved Sustainable Product offerings increased Entrepreneurs engaged in the 275 program Improved turnover of the MG recipient Average Percentage increase in 25 turnover for the Matching Grant Increase in employment due to MG recipients 800 Number of new employment generated RCA 248423. L WUI 64145 U FAX (202) 477-6391 ATTACHMENT 2 Percentage of Expenditures to be Amot nt of the Financing Financed All cat( d (expressed in SDR) (inclusive of taxes) Category (1 Goods, works and 902,200 100% coisultants' services under Part I of the Project (2) Consultants' services 64,500 100% under Part 3 (a) of the Proj ect (3) Grants under Part 3 (b) of 10,311,100 100% the Project (4) Incremental Operating 322,200 100% Costs TOTAL AMOUNT 11,600,000 F:CA 24 3423. Q WUI 64145 G FAX (202) 477-6391