On ratification of the Financing Protocol between the Government of the French Republic and the Government of the Republic of Kazakhstan (project for rehabilitation and modernization of water supply and sewerage infrastructure in Almaty)

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On ratification of the Financing Protocol between the Government of the French Republic and the Government of the Republic of Kazakhstan (project for rehabilitation and modernization of water supply and sewerage infrastructure in Almaty)

Law of the Republic of Kazakhstan dated July 11, 2001 No. 232

To ratify the Financing Protocol between the Government of the French Republic and the Government of the Republic of Kazakhstan (project for rehabilitation and modernization of water supply and sewerage infrastructure in Almaty), completed in Astana on October 5, 2000.

President of the Republic of Kazakhstan

Financing Protocol between

By the Government of the French Republic and

By the Government of the Republic of Kazakhstan

In order to strengthen the friendly ties and cooperation that unite them, the Government of the French Republic and the Government of The Republic of Kazakhstan has agreed to conclude this Protocol in order to promote the economic development of Kazakhstan.

Article 1 - Amount and object of financial assistance The Government of the French Republic allocates financial assistance to the Government of the Republic of Kazakhstan for the implementation of a priority project for the economic development of the Republic of Kazakhstan. This concessional loan, with a maximum amount of 27.440 million Euros (twenty-seven million four hundred and forty thousand Euros), will finance the purchase of French equipment and services necessary for the implementation of the project referred to in Annex 1 to this Protocol.

Article 2 - Project Financing rules The financing of the project mentioned in the annex is provided by a French government loan. The first down payment of each contract related to this project is from 10% to 20% of the amount of the funded contract, excluding transportation costs and insurance.

Article 3 - Conditions and rules for the use of financial assistance The term of the French government loan is 16 years, 6 of which are preferential. The annual interest rate is 2.1%. The principal amount is repaid in 20 equal and consecutive semi-annual installments, with the first installment due 78 months after the end of the calendar quarter during which the borrowings will be made. Interest is accrued on the remaining amount of the principal debt; it is accrued starting from the date of each draw on the French government loan and is paid twice a year. If the repayment date for the principal amount or interest falls on a non-working day in France, it is postponed to the first working day following it. Any delay in repayment of the principal amount or interest entails the imposition of a moratorium interest, starting from the day of the debt and up to the day of its actual payment. The interest rate of the moratorium is the interest rate established by French law, which, in accordance with the ministerial decree for 2000, is 2.74% increased by 3% per annum, that is, 5.74% per year. Interest is accrued on the moratorium interest itself at the rate shown above, if this moratorium interest has not been paid for a whole year. The application Agreement will be signed between Natexis Bank Populaire, acting on behalf of and on behalf of the Government of the French Republic, and the Ministry of Finance of the Republic of Kazakhstan, or any other authority authorized by the Ministry of Finance, acting on behalf of and on behalf of the Government of the Republic of Kazakhstan. It will clarify the rules for the use and repayment of the French government loan. All disagreements related to the implementation of this intergovernmental Protocol will be resolved within the framework of bilateral diplomatic relations.

Article 4 - Settlement and payment currency Based on this protocol, the settlement and payment currency is Euro.

Article 5 - Use of the Loan The Government of the Republic of Kazakhstan will provide the final borrower with a loan for the same amount in Euros and on the same terms for the term, grace period and interest rate as the Government loan. The French Republic.

Article 6 - Acceptance of contracts for financing through the protocol The Government of the Republic of Kazakhstan undertakes that contracts accepted for financing under this Protocol will not be the subject of any practice censured by international anti-corruption standards such as those contained in the OECD Convention of December 17, 1997 "On Combating Corruption of Foreign Civil Servants in International Commercial Transactions." The acceptance of each contract related to the project mentioned in the annex for financing through the Protocol is conditional on the following: - compliance of the contract with the recommendations formulated based on the results of a preliminary assessment of the project corresponding to the above-mentioned contract; - verification of the project's compliance with the provisions stipulated by The OECD Agreement on Export credits supported by the State; - absence of debts and late payments from the Government of the Republic of Kazakhstan under agreements on debt consolidation and government loans of France; - analysis of the state of debts and late payments on bank loans guaranteed by KOFAS issued to the Government of the Republic of Kazakhstan, its public sector or under a government guarantee of the Republic of Kazakhstan. Each contract related to the project mentioned in the annex, after the competent French authorities have determined that these conditions have been properly met, will undergo the procedure for its acceptance for financing through the Protocol through an exchange of letters between the Economic Adviser of the French Embassy in Almaty, acting with the permission of the competent French authorities, and the competent Kazakh authorities.

Article 7 - Deadlines for French Government assistance In order to receive the financial assistance specified in the above article, contracts signed by the French supplier and the Kazakh buyer must be accepted for financing through the Protocol no later than April 30, 2002. The French government-funded copies provided by this Protocol must be produced no later than April 30, 2005.

Article 8 - Taxes and duties Financial assistance funds related to the implementation of this agreement According to the Protocol, they cannot be used to pay taxes and duties in Kazakhstan. Principal repayments and interest payments related to the implementation of this Protocol will be exempt from taxes and duties in Kazakhstan.

Article 9 - Retrospective evaluation of the project The Government of the French Republic may, at its own expense, make a retrospective assessment of the economic, financial and accounting aspects of the project accepted for financing under this Protocol, in particular in order to assess its impact on economic development. Of Kazakhstan. If desired, the Government of the Republic of Kazakhstan may join in conducting this assessment, in accordance with the rules that need to be determined in order to receive the results of the study immediately. The Government of the Republic of Kazakhstan undertakes to accept the assessment mission sent by the Government of the French Republic and to facilitate its access to information related to the project.

Article 10 - Entry into force This Protocol shall enter into force after: - its signing by both parties; - its ratification by the competent Kazakh authorities; - signing of a Loan Agreement between the Almaty Su Joint Venture and the European Bank for Reconstruction and Development or the International Finance Corporation (World Bank Group) for the equivalent of at least 5 (five) million US dollars to co-finance the project,

specified in Annex 1 of this Protocol.

In witness whereof, the representatives of the two Governments, duly authorized for this purpose, have signed this Protocol and affixed their seals to it.

Compiled in

In four original copies: two in French and two in Russian, the French text being considered authentic.

For the Government

For the Government of the French Republic of the Republic of Kazakhstan

Appendix 1

The French assistance in the amount of 27.44 million Euros allocated under this Protocol is intended to finance, on preferential terms, the implementation by a French company of an initial rehabilitation and modernization program for the water supply and sewerage infrastructure of Almaty in order to ensure delegated water supply management in viable economic conditions and, thereby, improve the quality of public services.

This project, which continues various cooperation activities between the French and Kazakh governments in the water sector, makes it possible to establish a long-term partnership between the city of Almaty and the Generale des Eaeu association, materialized by the signing of a thirty-year contract between the city of Almaty and the Almaty Su joint venture on November 27, 1999, called the Contract for tire Lease, Investment and Operation of the Potable Water and Waste Water Facilities".

This project is being financed in parallel by a loan from the European Bank for Reconstruction and Development or the International Finance Corporation in the amount equivalent to at least 5 million US dollars. The attraction of this loan by the Almaty Su joint venture does not require the provision of a state guarantee from the Republic of Kazakhstan.

Appendix 1 is an integral part of this Agreement. The protocol.

(Experts: Umbetova A.M., Puchkova O.Ya.)

President

Republic of Kazakhstan

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