On the ratification of the Loan Agreement (Atyrau Water Supply and Sanitation Pilot Project) between the Republic of Kazakhstan and the International Bank for Reconstruction and Development

Home / RLA / On the ratification of the Loan Agreement (Atyrau Water Supply and Sanitation Pilot Project) between the Republic of Kazakhstan and the International Bank for Reconstruction and Development

Law of the Republic of Kazakhstan dated October 5, 1999 No. 470-I

To ratify the Loan Agreement (Atyrau Water Supply and Sanitation Pilot Project) between the Republic of Kazakhstan and the International Bank for Reconstruction and Development, signed in Washington on August 3, 1999.

President of the Republic of Kazakhstan Loan Agreement (Atyrau Water Supply and Sanitation Pilot Project) between the Republic of Kazakhstan and the International Bank for Reconstruction and Development (August 3, 1999) Loan N 4486 - KZ Loan agreement

Agreement dated August 3, 1999 between the Republic of Kazakhstan (the Borrower) and the International Bank for Reconstruction and Development (the Bank), Whereas (A) The Borrower, having become convinced of the feasibility and priority of the project described in Annex 2 to this Agreement (the Project), has requested the Bank's assistance in financing the Project; and Whereas, the Bank has agreed, in particular, on the basis of the above, to provide a Loan to the Borrower on the terms and conditions set out in this Agreement; The Parties to this Agreement, based on the above, agree on the following:

Article I

General Terms and Conditions; Definitions Section 1.01 "General Terms and Conditions Applicable to Loan Agreements and Guarantees for Loans in the Single Currency" of the Bank dated May 30, 1995, as amended on December 2, 1997 inclusive (General Terms and Conditions), are an integral part of this Agreement. Section 1.02 Unless the context requires otherwise, a number of terms defined in the General Terms and Conditions have the meanings indicated in them, respectively, and the following additional terms have the following meanings: (a) "Annual Agreements on the Performance of Financial and Business Activities" means agreements for a specific year on the performance of financial and business activities concluded annually during the performance of The Atyrau Regional Akimat and the Vodokanal organization in accordance with the Article 3.01 (d) of this Agreement and in accordance with the terms, as set forth or referred to in paragraph 3 of Annex 7 to this The Agreement, which may be amended from time to time; (b) "Atyrau Regional Akimat" means Atyrau Regional Akimat Of the Borrower or any of its legal successors; (c) "Atyrau City" means the City of Atyrau of the Borrower or any of its legal successors; (d) "KVR" means the Committee on Water Resources under the Ministry Agriculture of the Borrower or any of its successors; (f) "MF" means the Ministry of Finance of the Borrower or any of its successors; (f) "Project Implementation Agreement" means an agreement on the division of functions in the implementation of the Project between the MF, the KVR, the Atyrau Regional Akimat and the City of Atyrau, from ______________ 1999 a year that may be amended from time to time.; (g) "Project and Ancillary Loan Agreement" means the agreement concluded between Atyrau Regional Akimat and Vodokanal organization in accordance with Section 3.01 (d) of this Agreement, which may be amended from time to time and this term includes all annexes to the Project and Ancillary Loan Agreement and Annual Financial Performance Agreements. (h) "PMO" means the project management report prepared in accordance with section 4.02 (a) of this Agreement; (i) "Project Preparation Loan" means: a project preparation loan provided by the Bank to the Borrower pursuant to a letter of agreement signed on behalf of the Bank on November 25, 1998 and on behalf of the Borrower on December 3, 1998; (j) "Special Account" means the account referred to in Section 2.02 (b) of this Agreement; (k) "Auxiliary Loan Agreement" means the agreement concluded between the Ministry of Finance and Atyrau Regional Akimat IN ACCORDANCE WITH Section 3.01 (d) of this Agreement, which may be amended from time to time, and this term includes all annexes to the Auxiliary Loan Agreement; and (l) Vodokanal organization means: Atyrau Regional Akimat Organization Gorvodokanal, a state-owned urban enterprise established by the City of Atyrau and registered in the Atyrau Regional Department The Ministry of Justice on December 12, 1991, or any of its legal successors. Section 1.03 Each reference to the General Terms and Conditions of the Project implementing organization is considered a reference to the Vodokanal organization.

Article II

Loan

Section 2.01 The Bank agrees to provide to the Borrower, on the terms and conditions set forth or referred to in the Loan Agreement, an amount equal to sixteen million five hundred thousand US dollars (16,500,000 US dollars). Section 2.02 (a) The Loan amount may be withdrawn from the Loan Account in accordance with the provisions of Annex 1 to this Agreement for expenses that occur (or, if the Bank agrees, are expected) in relation to the corresponding cost of goods, works and services required for the Project and financed from the Loan funds. (b) For the purposes of the Project, the Borrower may open and maintain a special deposit account in US dollars with a commercial bank acceptable to the Bank, on terms and conditions acceptable to the Bank. Deposits to and payments from a Special Account are made in accordance with the provisions of Annex 6 to this Agreement. (c) Immediately after the Entry into Force, the Bank, on behalf of the Borrower, withdraws from a Special Account and pays himself the amount required to repay the principal amount of the Loan for the Preparation of the Project, which has been withdrawn and for which there are amounts not presented for payment on such date and the payment of all unpaid fees on it. The outstanding balance of the authorized Loan amount for Project Preparation is then cancelled. Section 2.03 The final Date is September 30, 2004 or such later date as the Bank determines. The Bank immediately notifies To inform the Borrower about such a later date. Section 2.04 The Borrower pays a commission to the Bank in the amount of one percent (1%) of the Loan amount. On or immediately after the Effective Date, the Bank, on behalf of the Borrower, withdraws from the Loan Account and pays itself the amount of the aforementioned commission. Section 2.05 The Borrower pays the Bank a commission for the obligation to provide a loan at a rate of three quarters of one percent (3/4 of 1%) per year on the principal amount of the Loan, which is not withdrawn periodically. Section 2.06 (a) The Borrower pays interest on the principal amount of the Loan withdrawn and for which there are outstanding amounts from time to time at a rate for each Period for which Interest is Accrued equal to the Base LIBOR Rate plus the Total LIBOR Spread. (b) For the purposes of this Section: (i) "Interest-Bearing Period" means the initial period from the date of this Agreement up to and including the Date of the First Payment of Interest, and thereafter, excluding the initial period, each period from the Date of Payment of Interest up to and including the next Date of Payment of Interest (ii) "Interest Payment Date" means: any period specified in Section 2.07 of this Agreement. (iii) The "LIBOR Base Rate" for each Interest-Bearing Period means: The London Interbank Deposit Offer Rate for deposits in US dollars for six months, as estimated on the first day of the Interest-Bearing Period (or, in the case of the initial Period, for Which Accrues Interest, estimated per Day - The date of Interest Payment, which occurs on the first day of the Period for which Interest is Accrued or the day immediately preceding such date), reasonably determined by the Bank and expressed as a percentage for the year. (iv) The "Total LIBOR Spread" for each Interest-Bearing Period means: (A) Three-quarters of one percent (3/4 of 1%); (B) minus (or plus) the weighted average margin for the Interest-Bearing Period is lower (or higher) London interbank deposit offer rates or other benchmark rates for deposits for six months in respect of the Bank's borrowings or parts thereof for which there are outstanding amounts deducted by the Bank to finance loans in the single currency or parts provided to them that include a Loan; as reasonably determined by the Bank and expressed as a percentage per year. (c) The Bank shall notify the Borrower of the LIBOR Base Rate and the Total LIBOR Spread for each Interest-Bearing Period immediately upon their determination. (d) whenever, in the light of changes in market practices affecting the determination of interest rates referred to in this Section 2.06, the Bank determines that it is in the interests of its borrowers as a whole and the Bank to apply a different basis for determining the interest rates applicable to the Loan than that provided for in the above In this Section, the Bank may change the basis for determining the interest rates applicable to the Loan by notifying the Borrower of the new basis at least six (6) months in advance. The basis becomes valid upon the expiration of the notice period, unless the Borrower has notified the Bank within the aforementioned period of time of his objection to such a basis, in which case the aforementioned amendment does not apply to the Loan. Section 2.07 Interest and other fees are payable semi-annually on unpaid amounts due on February 15 and August 15 of each year. Section 2.08 The Borrower repays the principal amount of the Loan in accordance with the installment repayment schedule set out in Appendix 3 to this Agreement. The agreement.

Article III Project Execution Section 3.01 (a) The Borrower declares its obligations with respect to the objectives of the Project and carries out the Project for these purposes in accordance with existing requirements and with the achievement of the intended results and in accordance with relevant administrative, financial, engineering, environmental protection and technical practices, and immediately provides funds, facilities,, services and other resources, required in connection with the Project. (b) Without any limitation or diminution of any of its other obligations under the Loan Agreement, the Borrower, through the Atyrau Regional Akimat, ensures that Vodokanal implements Parts A, B and C.1 of the Project in accordance with existing requirements and with the achievement of the intended results and in accordance with the relevant administrative, financial, engineering environmental protection and technical practices, and adopts and ensures that all measures are necessary or necessary to, In order to enable Vodokanal to fulfill such obligations, it does not accept or allow any measures to be taken that would hinder or hinder such fulfillment. (c) Without prejudice to the provisions of paragraphs (a) and (b) of this Section, and unless otherwise agreed by the Borrower and the Bank, the Borrower shall The project is implemented through MF, KVR, Atyrau Regional Akimat and Atyrau City and ensures that Vodokanal implements Parts A, B and C.1 of the Project, all in accordance with the Project Implementation Agreement and the Program. Implementation set out in Annex 5 to this Agreement. (d) For the purposes of the Project, the Borrower resends the Loan funds Atyrau Regional Akimat, in accordance with the Auxiliary Loan Agreement (Auxiliary Loan Agreement) concluded between the Ministry of Finance and Atyrau Regional Akimat on terms and conditions approved by the Bank and Atyrau Regional Akimat, provides works and supplies financed from Loan funds allocated periodically according to Categories (1) and (3) in the table in paragraph 1 of Annex 1 to this Agreement, the Vodokanal organization in accordance with the agreement on the implementation of the project and the auxiliary loan concluded between the Borrower and the Vodokanal organization (Agreement on the Implementation of the Project and Auxiliary Loan) and the annual agreements on the implementation of financial and economic activities (Annual Agreements on the Implementation of Financial and Economic Activities) on the terms and conditions approved by the Bank. Unless otherwise decided by the Bank, such terms and conditions include the terms and conditions set forth or referred to in Appendix 7 to this Agreement. (e) The Borrower exercises its rights in accordance with the Agreement on the Auxiliary Loan, the Agreement on the Implementation of the Project and ensures the exercise by the Atyrau Regional Akimat of its rights in accordance with the Agreement on the Implementation of the Project and the Auxiliary Loan and the Annual Agreements on the Performance of Financial and Business Activities in such a way as to protect the interests of the Borrower and the Bank and to fulfill the objectives of the Loan and - unless the Bank has decided otherwise - The Borrower does not assign, amend, cancel or cancel the Ancillary Loan Agreement and the Project Implementation Agreement and ensures that the Atyrau Regional Akimat does not assign, amend, cancel or cancel the Project Implementation Agreement and the Ancillary Loan Agreement and the Annual Implementation Agreements. Financial and Business Activities or any of their positions. Section 3.02 Except in cases where the Bank has decided otherwise, the purchase of goods, the provision of work and the provision by consultants of their services required for the Project and financed from the Loan funds are governed by the provisions Appendices 4 to this Agreement.

Article IV

Financial Obligations Section 4.01 (a) The Borrower, no later than June 30, 1999, establishes and continuously maintains a financial management system, including accounting documents and accounts, in accordance with relevant accounting principles that are regularly applied and prepares financial statements in a form acceptable to the Bank, in accordance with the requirements for reflecting transactions, funds and expenses, related to the Project. (b) The Borrower: (i) maintains the accounting documents, accounts and prepares the financial statements referred to in paragraph (a) of this Section and the accounting documents and accounts for a Special Account for each financial year, which has been audited in accordance with relevant auditing standards acceptable to the Bank and regularly applied by independent auditors; acceptable to the Bank; (ii) submit to the Bank as soon as possible, but in any case not later than six months after the end of each such year: (A) certified copies of the financial statements referred to in paragraph (a) of this Section for the year so audited, and (B) an opinion on such reports, accounting documents and accounts, and a report on such audit conducted by the aforementioned auditors, to the extent and in such detail as the Bank has reasonably requested.; and (iii) provides the Bank with such other information related to such accounting documents and accounts and their audit and related to the aforementioned auditors as the Bank may reasonably request from time to time. (c) For all expenses for which withdrawals from the Loan Account have been made on the basis of the PMO or expense reports, the Borrower: (i) maintains or ensures the maintenance, in accordance with paragraph (a) of this Section, of accounting documents and special accounts reflecting such expenses; (ii) keep, for at least one year after the Bank has received the audit report for the financial year in which the last withdrawal of funds from the Loan Account was made, all accounting documents (contracts, orders, invoices, invoices, receipts and other documents) confirming such expenses; (iii) authorizes representatives of the Bank to review such accounting documents; and (iv) ensures that such accounting documents and accounts are included in the annual audit referred to in paragraph (b) of this Section and that the report of such audit contains a specific opinion issued by the aforementioned auditors as to whether the PMO or expense reports submitted during such financial period can be relied upon. year, together with the procedures and internal controls used in their preparation to confirm the associated withdrawals. Section 4.02 (a) Without limiting the provisions of Section 4.01 of this Agreement, the Borrower shall, within the prescribed time frame, implement an action plan acceptable to the bank to strengthen the financial management system referred to in paragraph (a) of the aforementioned Section 4.01 in order to enable the Borrower to prepare no later than February 15, 2000 or such later the deadline set by the Bank, quarterly project management reports acceptable to the Bank, in each of which: (i) (A) details the actual sources and application of funds for the Project, in aggregate, and for the period to which the above-mentioned report relates, and the planned sources and application of funds for A Project for a period of six months following the period to which the above-mentioned report relates, and (C) separately show the expenditures financed from the Loan during the period to which the above-mentioned report relates and the expenditures proposed for financing from the Loan during the period of six months, following the period to which the above-mentioned report relates; (ii) (A) describes the actual progress of the Project, in aggregate, and for the period to which the above-mentioned report relates; and (C) outlines discrepancies between actual and previously projected performance benchmarks; and (iii) outlines the procurement status in related to the Project and expenses under the contracts financed from the Loan funds at the end of the period to which the above-mentioned report relates. (b) Upon implementation of the action plan referred to in paragraph (a) of this Section, the Borrower shall prepare, in accordance with the rules acceptable to the Bank, and submit to the Bank, no later than 45 days after the end of the calendar quarter, the PMO for such period.

Article V

Bank's Legal Remedies Section 5.01 According to Section 6.02 (p) of the General Terms and Conditions, the following additional cases are specified: (a) the Auxiliary Loan Agreement has been amended, suspended, cancelled, cancelled, or cancelled in such a way that it significantly and adversely affects the ability of Atyrau Regional Akimat to implement the Project; (b) the Project Implementation Agreement has been amended, suspended, cancelled, cancelled, or abandoned in such a way that it significantly and adversely affects the ability of the MF, KVR, Atyrau Regional Akimat, or Atyrau City to implement the Project.; (c) the Project and Support Loan Agreement has been amended, suspended, cancelled, cancelled, or cancelled in a manner that significantly and adversely affects Vodokanal's ability to implement Parts A, B, and C.1 of the Project; and (d) on the part of The Vodokanal organization has failed to fulfill its obligations in accordance with the Agreement on the Implementation of the Project and the Auxiliary Loan. Section 5.02 Pursuant to Section 7.01 (k) of the General Terms and Conditions, the following additional cases are specified, namely, any cases specified in Section 5.01 of this Agreement that occur and continue for a period of sixty (60) days after notification thereof has been given by the Bank to the Borrower.

Article VI

Effective Date; Termination Section 6.01 The following events are listed as conditions additional to the entry into force of the Loan Agreement within the meaning of Section 12.01 (c) of the General Terms and Conditions: (a) The Agreement on the Auxiliary Loan has been executed on behalf of the Ministry of Finance and Atyrau Regional Akimat; (b) The Agreement on the Implementation of the Project and the Auxiliary Loan has been executed on behalf of Atyrau Regional Akimat and Vodokanal organization; and (c) Atyrau Regional Akimat appointed the auditors referred to in Section 4.01 (b)(i) of this Agreement, both KVR and Atyrau Regional Akimat appointed financial and procurement consultants, all in accordance with the limits of competence acceptable to the Bank, and Atyrau Regional Akimat installed accounting system software acceptable to the Bank. Section 6.02 Additional issues within the meaning of Section 12.02 (c) of the General Terms and Conditions are listed below, which are included in the opinion or opinions submitted to the Bank: (a) The Auxiliary Loan Agreement has been duly approved or ratified by the Ministry of Finance and Atyrau Regional Akimat and is legally binding on each of the parties to it in accordance with its provisions; and (b) The Project Implementation Agreement has been duly approved or ratified by MF, KVR, Atyrau Regional Akimat and Atyrau City and is legally binding on each of the parties to it in accordance with its provisions; and (c) the Project Implementation and Support Loan Agreement is duly

It has been duly approved or ratified by the Atyrau Regional Akimat or the Vodokanal organization and is legally binding on each of the parties to it in accordance with its provisions. Section 6.03 The date coming ninety (90) days after the date of this The Agreement is specified for the purposes of Section 12.04 of the General Terms and Conditions.

Article VI

The Borrower's Representative; Addresses Section 7.01 The Borrower's Minister or Deputy Minister of Finance is designated as the Borrower's representative for the purposes of Section 11.03 of the General Terms and Conditions.

Section 7.02 For the purposes of Section 11.01 of the General Terms and Conditions, the following addresses are indicated: Borrower's Address: Ministry of Finance Ministry of Finance 60 Republic Avenue 60 Republic Avenue 473000 Astana 473000 Astana Republic of Kazakhstan Republic of Kazakhstan Telex: 264126 (FILIN) Telex: 264126 (FILIN) Bank Address: International Bank for Reconstruction International Bank and Development for Reconstruction and Development 1818 St., N.W. 1818 St. N, Northwest Washington, D.C. 20433 Washington, DC 20433 United States of America United States of America Cable address: Telegraphic address: INTBAFRAD INTBAFRAD Washington, D.C. Washington, D.C. Telex: 248423 (MCI) or Telex: 248423 (MCI) or 64145 (MCI) 64145 (MCI)

In witness whereof, the parties to this Agreement acting through

their duly authorized representatives have secured the signing of this Agreement on their behalf in the District of Columbia, United States of America, on the date and year indicated at the beginning above. Republic of Kazakhstan Signature of the official authorized to sign the document ________________ Authorized Representative of the International Bank for Reconstruction and Development Signature of the official authorized to sign the document__________________ Acting Vice President for Europe and Central Asia Appendix 1 Withdrawal Of Loan Funds 1. The table below shows the Categories of positions financed from the Loan, the deduction of Loan amounts for each Category, and the percentage of expenses for positions thus financed in each Category.: _________________________________________________________________________ Loan Category | Amount, Which is | Funded | | Deducted | Expenses | | (Expressed in | % | | converted to US Dollars | | /) | | _________________________________________________________________________| (1) Engineering- 11,180,000 80 % construction work -------------------------------------------------------------------------- (2) Consultant services 2,500,000 100 % -------------------------------------------------------------------------- (3) 620,000 goods 100% of foreign expenses, 100% of local expenses (ex-factory expenses) and 80% of local expenses for other items, purchases for which are carried out within the given area ---------------------------------------------------------------------------- (4) Additional 500,000 80% Operating Costs ---------------------------------------------------------------------------- (5) Refinancing of 1,000,000 Amounts due under Loans for the Preparation of Section 2.02 (c) of this The project Agreements ---------------------------------------------------------------------------- (6) Commission Fee 165,000 The amount due under Section 2.04 of this Agreements ---------------------------------------------------------------------------- (7) Not distributed 535,000 ---------------------------------------------------------------------------- Total 16,500,000 ---------------------------------------------------------------------------- 2. For the purposes of this Application:

(a) the term "foreign expenses" means expenses in the currency of a country other than the Borrower's country for goods or services supplied or provided from the territory of a country other than the Borrower's country; (b) the term "local expenses" means expenses in the Borrower's currency or for goods or services supplied or rendered from the Borrower's territory; (c) The term "Additional Operating Costs" means additional operating costs incurred due to the performance of Project management and ongoing control costs, including the cost of office supplies, utilities, communications, transportation, travel expenses, consultant fees, including audit services and oversight costs, but not including salaries and salaries of officials of the Borrower. 3. Notwithstanding the provisions of paragraph 1 above, no withdrawal of funds shall be made in respect of payments made in respect of expenses prior to the date of this Agreement. 4. The Bank may require withdrawal of funds from the Loan Account based on expense reports in respect of: (a) goods under contracts, each of which has a value in terms of US dollars of less than 75,000; (b) works under contracts, each of which has a value in terms of US dollars of less than 100,000; and (c) additional operating costs, all in accordance with such terms and conditions as the Bank specifies in the notification to the Borrower.

Appendix 2 Project Description

The aim of the Project is to enhance the capabilities of Vodokanal in providing the City of Atyrau with usable and clean drinking water and wastewater disposal in an efficient, reliable and environmentally friendly manner. The Project consists of the following parts, which may be modified in such a way that the Borrower and the Bank may coordinate periodically to achieve such goals: Part A of the Reconstruction Of The Water Supply and Wastewater Disposal System Improvement of water supply and sewerage systems - in the residential districts of Privokzalny and Atyrau City Center, due to the reconstruction and replacement of water pipes, the construction of a new substandard pumping station, the construction of an inverted siphon, the replacement and reconstruction of sewer pipes and the reconstruction of pumping stations and pipeline systems. Part B Emergency Repairs Emergency repairs of water supply and sewerage systems and replacement of meters, pumps and other work determined by the Vodokanal organization during the Project, which can make immediate and significant improvements in the operating costs of the Vodokanal organization and increase operational efficiency by financing goods and works. Part C Project Management and Institutional Strengthening

1. Technical assistance in improving the institutional, management, and financial capabilities of Vodokanal, including the study of leakage and water consumption management, the study of wastewater and drainage disposal options, the implementation of a financial and accounting system, and the preparation of a draft contract for financial and business activities. 2. Technical assistance in improving institutional capacity, strengthening financial management and administration in the City Atyrau, including the preparation of a medium-term plan for the reorganization of the city's infrastructure. 3. Technical assistance to the KVR and Atyrau Regional Akimat in the management, implementation and supervision of the Project, including the development and implementation of a financial management and accounting system, preparation of accounts and financial reports, as described in the Article

IV of this Agreement and the audit of the accounts and financial statements referred to above by financing additional operating costs, including external audit services. The project is expected to be completed by March 31, 2004.

Appendix 3

Loan Repayment Schedule in Installments ________________________________________________________________ Stipulated Payment Term | Repayment of the Principal Amount | | (in US dollars)* | ---------------------------------------------------------------- 15 February 2005 365,000 ---------------------------------------------------------------- 15 August 2005 375,000 ---------------------------------------------------------------- 15 February 2006 385,000 ---------------------------------------------------------------- August 15, 2006 395,000 ---------------------------------------------------------------- 15 February 2007 405,000 ---------------------------------------------------------------- 15 August 2007 415,000 ---------------------------------------------------------------- 15 February 2008 425,000 ---------------------------------------------------------------- 15 August 2008, 440,000 ---------------------------------------------------------------- February 15, 2009 450,000 ---------------------------------------------------------------- 15 August 2009 460,000 ---------------------------------------------------------------- 15 February 2010 475,000 ---------------------------------------------------------------- 15 August 2010 485,000 ---------------------------------------------------------------- 15 February 2011 500,000 ---------------------------------------------------------------- August 15, 2011 515,000 ---------------------------------------------------------------- 15 February 2012 530,000 ---------------------------------------------------------------- 15 August 2012 545,000 ---------------------------------------------------------------- 15 February 2013 555,000 ---------------------------------------------------------------- 15 August 2013 575,000 ---------------------------------------------------------------- February 15, 2014 590,000 ---------------------------------------------------------------- 15 August 2014 605,000 ---------------------------------------------------------------- 15 February 2015 620,000 ---------------------------------------------------------------- 15 August 2015 635,000 ---------------------------------------------------------------- 15 February 2016 655,000 ---------------------------------------------------------------- August 15, 2016 675,000 ---------------------------------------------------------------- 15 February 2017 690,000 ---------------------------------------------------------------- 15 August 2017 710,000 ---------------------------------------------------------------- 15 February 2018 730,000 ---------------------------------------------------------------- 15 August 2018 750,000 ---------------------------------------------------------------- February 15, 2019 770,000 ---------------------------------------------------------------- 15 August 2019 775,000 ---------------------------------------------------------------- * The figures in this column represent the amount in US dollars to be redeemed, except as provided in Section 4.04 (d) of the General Terms and Conditions.

Appendix 4

Procurement and Consulting Services Section 1 Procurement of Goods and Provision of Works Part A General Provisions Goods are purchased and work is provided in accordance with the provisions of Section 1 of the IBRD and IDA Loan Procurement Rules, published by the Bank in January 1995 and revised in January and August 1996, September 1997 and January 1999 (Rules) and the following provisions of this Section. Part B International Competitive Bidding

1. Except as otherwise provided in Part C of this Section, goods are procured and work is provided in accordance with contracts concluded in accordance with the provisions of Section II of the Rules and paragraph 5 of Annex 1 thereto.

2. Purchases within the Country Goods whose estimated value in terms of US dollars is less than 75,000 according to the contract and collectively in terms of US dollars does not exceed 200,000 may be purchased under contracts concluded on the basis of procurement procedures within the country in accordance with the provisions of paragraphs 3.5 and 3.6 of the Rules. 3. Provision of Secondary Works Works estimated to cost less than 100,000 in US dollars under the contract and collectively in US dollars not exceeding 600,000 may be provided under fixed-price contracts concluded on the basis of proposals received from three (3) eligible domestic contractors in response a written invitation. The invitation includes a detailed description of the work, including the main characteristics, the required completion dates, the basic form of the agreement acceptable to the Bank and the corresponding drawings, if necessary. The order is given to the contractor who offers the lowest price quotation for the required work and has the experience and funds sufficient to successfully fulfill the contract.

Part D

Review of Procurement Decisions by the Bank 1. Procurement Planning Prior to the announcement of an invitation to receive a preliminary assessment in connection with tenders or to participate in tenders for contracts, the proposed procurement plan in connection with the Project is submitted to the Bank for its consideration and approval in accordance with the provisions of paragraph 1 of Annex 1 to the Rules. Purchases of all goods and provision of all works are carried out in accordance with the procurement plan approved by the Bank and the provisions of the above-mentioned paragraph 1. 2. Preliminary Review (a) For each contract acquired in accordance with Part B.1 of this Annex, the procedures set out in paragraphs 2 and 3 of Annex 1 to the Rules shall apply. (b) In respect of each contract acquired in accordance with Part C.1 of this Annex and the first two contracts acquired in accordance with In accordance with Paragraphs C.2 or C.3 of this Annex, the following procedures apply: (i) prior to the selection of any supplier or the execution of any contract in accordance with the procurement procedures, the Borrower submits to the Bank a report on the comparison and evaluation of the proposals received; (ii) prior to the selection of any supplier or the execution of any

the Borrower shall provide the Bank with a copy of the specifications and draft contract; and (iii) the procedures set out in paragraphs 2 (f) and 2 (g) and 3 of Annex 1 to the Rules shall apply. 3. Follow-Up Review For each contract that is not governed by the provisions of paragraph 2 of this Part, the procedures referred to in paragraph 4 of Annex 1 to the Rules shall apply. Section II Hiring Consultants Part A General Provisions The services of consultants are purchased in accordance with the provisions of Introductory Part and Section IV of the "Rules: Selection and Hiring of Consultants Borrowers of the World Bank", published by the Bank in January 1997 and revised in September 1997 and January 1999 (Rules on Consultants) and the following provisions of Section II of this Annex. Part B Selection based on Quality and Cost Except as otherwise provided in Part C of this Section, consultant services are purchased in accordance with contracts concluded in accordance with the provisions of Section II of the Consultant Rules, paragraph 3 of Annex 1 thereto, Annex 2 thereto, and the provisions of paragraphs 3.13 to 3.18, inclusive, applicable to the selection of consultants based on quality and cost.. Part C Other Procedures For The Selection Of Consultants 1. Selection from a Single Source

Financial technical assistance services in accordance with Part C.1 of the Project, the estimated cost of which in terms of US dollars does not exceed a total of 100,000 US dollars, may, with the prior consent of the Bank, be purchased in accordance with the provisions of paragraphs 3.8 and 3.11.

including the Rules about Consultants. 2. Private Consultants Services in accordance with Part C of the Project that comply with the requirements set out in paragraph 5.01 of the Consultant Rules are purchased in accordance with contracts concluded with private consultants in accordance with the provisions of paragraphs 5.1 to 5.3 inclusive of the Consultant Rules. Part D The Bank's Review Of The Selection Of Consultants 1. Selection Planning

Before submitting any requests for proposals to the consultants, the proposed plan for the selection of consultants in connection with the Project is submitted to the Bank for its consideration and approval in accordance with the provisions of paragraph 1 of Annex 1 to the Rules on Consultants. All consultant services are selected in accordance with the selection plan approved by the Bank and the provisions of the above-mentioned paragraph 1.2. Preliminary Review (a) For each contract for the recruitment of consulting firms, the procedures set out in paragraphs 1, 2 (other than the third subparagraph of paragraph 2 (a) and 5 of Annex 1 to the Rules on Consultants) are applied. (b) For each contract for the hiring of private consultants, the Bank is provided with information on the qualifications, length of service, scope of competence and conditions of hiring consultants for its preliminary review and approval. The contract is concluded only after the above mentioned

approval will be given. 3. Follow-up Review For each contract that is not governed by the provisions of paragraph 2 of this Part, the procedures referred to in paragraph 4 of Annex 1 to the Rules on Consultants shall apply.

Appendix 5

Execution Program 1. The borrower:

(a) implements a strategy and follows procedures that, in accordance with relevant requirements, enable it to continuously monitor and evaluate, in accordance with indicators agreed between the Borrower and the Bank, the implementation of the Project and the achievement of its objectives; (b) prepares, in accordance with the limits of competence acceptable to the Bank, and submits to the Bank, no later than three (3) weeks after the end of each quarter of each year during the implementation of the Project, a report describing the implementation of the Project during that quarter; (c) prepares, in accordance with the limits of authority acceptable to the Bank, and submits to the Bank, no later than January 31 of each year during the implementation of the Project, a report describing the implementation of the Project during that year, including the results of the semi-annual review of Vodokanal's performance and work and annual work plans for the following year.; (d) prepare, in accordance with the limits of authority acceptable to the Bank, and submit to the Bank on or about June 30, 2001, a report summarizing the results of ongoing monitoring and evaluation activities carried out in accordance with paragraph (a) of this Section on the results achieved in the implementation of the Project during the period preceding the date the above-mentioned report and which outlines the recommended measures to ensure the successful completion of the Project and the achievement of its objectives during the period following such date; and (e) conduct with the Bank, by July 31, 2001, or such later date as the Bank requests, a review of the report referred to in subparagraph (d) of this paragraph and thereafter take all necessary measures to ensure the successful completion of the Project and the achievement of its objectives, based on the findings and the recommendations in the above-mentioned report and the Bank's opinion on the issue. 2. For the purposes of Section 9.07 of the General Terms and Conditions and without limitation, the Borrower shall prepare, on the basis of rules acceptable to the Bank, and submit to the Bank, no later than six (6) months after the Closing Date or such later date as may be agreed for this purpose between the Borrower and the Bank, a plan for future Project work and provides the Bank with an appropriate opportunity to exchange views with the Borrower on the above-mentioned plan. 3. Until September 30, 2001, the Atyrau Regional Akimat adopts regulations authorizing the Vodokanal organization to collect fees for the use of water and wastewater disposal sufficient to ensure that the planned revenues of the Vodokanal organization from its core activities are sufficient to cover the planned expenses of the Vodokanal organization in accordance with Annex 7, subparagraph 2(g).

Appendix 6

Special Account 1. For the purposes of this Application: (a) The term "Acceptable Categories" means Categories (1), (2), (3) and (4), which are indicated in the table in paragraph 1 of Annex 1 to this (b) the term "eligible expenses" means expenses in relation to the corresponding cost of goods and services required for the Project and financed from Loan funds, allocated periodically in acceptable Categories in accordance with the provisions of Annex 1 to this Agreement. Agreement; and (c) the term "Authorized Contribution" means the amount, in terms of US dollars, of 1,000,000 withdrawn from the Loan Account and deposited in a Special Account in accordance with paragraph 3 (a) of this Annex, provided, however, that unless the Bank decides otherwise, the Authorized Contribution is limited to the amount, in terms of in US dollars, amounting to 500,000 until the total amount of funds withdrawn from the Loan Account, plus the total amount of all outstanding amounts for special obligations, assumed by the Bank in accordance with Section 5.02 of the General Terms and Conditions, will not be equal to or exceed 4,000,000 in terms of US dollars. 2. Payments from the Special Account are made exclusively in respect of eligible expenses in accordance with the provisions of this Applications. 3. After the Bank receives confirmation acceptable to it that the Special Account is properly opened, the withdrawal of funds from the Authorized Deduction and subsequent withdrawal of funds to replenish the Special Account are performed as follows: (a) In order to withdraw funds from the Authorized Deduction, the Borrower submits to the Bank a request or requests for depositing in a Special Account an amount or amounts that do not exceed the total amount of the Authorized Deductions. Based on such request or requests, the Bank, on behalf of the Borrower, withdraws from the Loan Account and deposits in a Special Account the amount or amounts that the Borrower has requested. (b) (i) In order to replenish the Special Account, the Borrower submits deposit requests to the Bank in the Special Account as regularly as the Bank determines. (ii) Prior to or at the time of each such request, the Borrower submits to the Bank the documents and other evidence required under paragraph 4 of this The application, payment, or payments for which replenishment is requested. On the basis of each such request, the Bank, on behalf of the Borrower, withdraws from the Loan Account and deposits in a Special Account the amount that the Borrower has requested and which is indicated in the above-mentioned documents and other confirmation of payment from the Special Account in respect of acceptable expenses. All such deposits are withdrawn by the Bank from the Loan Account in acceptable Categories, respectively, in the appropriate amounts according to the recalculation, as justified by the above-mentioned documents and other confirmation. 4. For each payment made by the Borrower from a Special Account, the Borrower, within such time limits as the Bank reasonably requests, submits to the Bank such documents and other confirmation showing that such payment was made solely in respect of acceptable expenses. 5. Regardless of the provisions of paragraph 3 of this Annex, the Bank may not make further deposits in a Special Account.: (a) if at any time the Bank has determined that subsequent withdrawals must be made in full by the Borrower directly from the Loan Account in accordance with the provisions of Article V of the General Terms and Conditions and paragraph (a) of Section 2.02 of this Agreement; (b) if the Borrower has not submitted to the Bank, within the time period specified in Section 4.01 (b) (ii) of this Agreement, any of the audit reports required to be submitted to the Bank in accordance with the aforementioned Section in relation to the audit of accounting documents and Special Account accounts; (c) if at any time The Bank has notified the Borrower of its intention to suspend, in whole or in part, the Borrower's right to withdraw funds from the Loan Account in accordance with the provisions of Section 6.02 of the General Terms and Conditions; or (d) as soon as the outstanding Loan amount in the aggregate, deductible in acceptable Categories minus the aggregate of all amounts not submitted for payment under special obligations assumed by the Bank in accordance with According to Section 5.02 of the General Terms and Conditions for the Project, it will be equal to the amount of the Permitted Deduction multiplied by two according to the recalculation. After that, when withdrawing the remaining outstanding Loan amount from the Loan Account, which is deducted in acceptable Categories, the procedures that the Bank defines in the notification to the Borrower are followed. Such further withdrawals are made only after and to the extent that the Bank has verified that all such amounts remaining in the Special Account on the date of such notification will be used in making payments for acceptable expenses. 6. (a) If the Bank has determined at any time that any payment from a Special Account: (i) incurred in respect of expenses or in an amount unacceptable in accordance with paragraph 2 of this Annex; or (ii) is not justified by the confirmation provided to the Bank, the Borrower immediately upon receipt of the Bank's notification: (A) submits such additional confirmation as the Bank may request; or (B) deposits in a Special Account (or, if the Bank so requests, returns to the Bank) an amount equal to the amount of such payment or a portion thereof, not being acceptable or justified in this way. Unless the Bank has decided otherwise, no further deposit of funds by the Bank in a Special Account is made until the Borrower submits such confirmation or makes such deposit or refund, depending on the circumstances. (b) If the Bank has determined at any time that any amount not presented for payment to the Special Account will not be required to cover further payments for eligible expenses, the Borrower shall immediately refund such outstanding amount to the Bank upon receipt of the Bank's notification. (c) The Borrower may, by notifying the Bank, refund to the Bank all or part of the funds held in the Special Account. (d) Refunds made to the Bank pursuant to paragraphs 6 (a), (b) and (c) of this Annex shall be credited to the Loan Account for further withdrawal or cancellation in accordance with the relevant the provisions of this Agreement, including the General Terms and Conditions.

Appendix 7

Terms and Conditions of the Project Execution Agreement and Subsidiary Loan; Procedures and Terms and Conditions of the Annual Agreements on the Implementation of Financial and Economic Activities 1. The Agreement on the Implementation of the Project and the Subsidiary Loan provides that: (a) the principal amount of the auxiliary loan is repaid by Vodokanal in the Borrower's currency in equal semi-annual installments over a period of twenty years, including a grace period of five years; (b) the principal amount of the ancillary loan to be repaid by Vodokanal is, in terms of US dollars (as determined on the date or corresponding repayment dates), the value of the currency or currencies withdrawn from the Loan Account in respect of works and goods financed from the Loan and provided to the organization Vodokanal in accordance with the Agreement on the Implementation of the Project and the Auxiliary Loan; (c) Interest is denominated in United States dollars and accrued on the withdrawn and unpaid balance of the ancillary loan at a rate equal to the rate payable periodically by the Borrower pursuant to Section 2.05 (a) of this Agreement; any interest payable during the grace period may be capitalized against the principal amount of the ancillary loan; (d) the loan commitment fees for the amount of the ancillary loan, which is not withdrawn from time to time, are equal to the percentage of the loan commitment fees paid by the Borrower to the Bank in accordance with Section 2.04 of this Agreement. 2. The Agreement on the Implementation of the Project and the Auxiliary Loan requires, in particular, that Vodokanal: (a) carry out and work on the project in accordance with existing requirements and with the achievement of the intended results under the supervision of qualified and experienced management personnel with the help of an appropriate number of competent specialists and in accordance with sound technical, engineering, environmental protection, financial and management practices; (b) operated and maintained its enterprises, machinery, equipment and other property and periodically, immediately as needed, carried out all necessary repairs and upgrades, all in accordance with sound environmental engineering and technical practices; (c) maintained accounting records and accounts that meet the relevant requirements. the requirements for reporting the work and financial situation of the Vodokanal organization in accordance with sound reporting practices and recorded separately the operations, funds and expenses related to the Project.; (d) maintained accounting documents, accounts and prepared financial statements related to the Project for each financial year, the report of which was conducted in accordance with the relevant auditing principles regularly applied by independent auditors acceptable to the Borrower and the Bank, and submitted To the Borrower, no later than within six (6) months after the end of each such year, certified copies of the financial statements for the year so audited and a report on such audit conducted by the auditors in such volume and in such detail, which the Borrower and the Bank reasonably request; (e) enable the Borrower, individually or jointly with representatives of the Bank, if the Bank so requests, to inspect the goods and work sites, works, enterprises and facilities financed in connection with the Project, their operation and all relevant records and documents, including financial accounting records documents of the Vodokanal organization related to the Project; (f) select and maintain, with responsible insurers, such risk insurance and in such amounts as are consistent with sound business practices, including insurance covering the risks associated with the purchase, transportation and delivery of Loan-financed goods to the place of use or installation, a guarantee under such loss insurance, which should to be provided for the replacement or repair of such goods; specialists and in accordance with sound technical, environmental, financial and managerial practices; (b) operated and maintained its enterprises, machinery, equipment and other property and periodically, immediately as needed, carried out all necessary repairs and upgrades, all in accordance with sound engineering related to environmental protection and technical practices; (c) maintained accounting documents and accounts that meet the relevant requirements for reflecting the work and financial situation of Vodokanal in accordance with sound accounting practices and recorded separately the transactions, funds and expenses related to the Project; (d) maintained accounting documents, accounts and prepared financial statements related to the Project for each financial year, the report of which was conducted in accordance with the relevant auditing principles regularly applied by independent auditors acceptable to the Borrower and the Bank, and submitted To the Borrower, no later than within six (6) months after the end of each such year, certified copies of the financial statements for the year so audited and a report on such audit conducted by the auditors in such volume and in such detail, which the Borrower and the Bank reasonably request; (e) enable the Borrower, individually or jointly with representatives of the Bank, if the Bank so requests, to inspect the goods and work sites, works, enterprises and facilities financed in connection with the Project, their operation and all relevant records and documents, including financial accounting records documents of the Vodokanal organization related to the Project; (f) select and maintain, with responsible insurers, such risk insurance and in such amounts as are consistent with sound business practices, including insurance covering the risks associated with the purchase, transportation and delivery of Loan-financed goods to the place of use or installation, a guarantee under such loss insurance, which should to be provided for the replacement or repair of such goods; (g) (i) ensure that, for each financial year during the Project, Vodokanal's planned operating income is sufficient to cover Vodokanal's planned expenses for that financial year.; (ii) by or before August 1 of each fiscal year, at the time of the Project, the Atyrau Regional Akimat shall, based on forecasts prepared by Vodokanal and acceptable to the Bank, review whether Vodokanal can comply with the requirements set out in paragraph (g) (i) above with respect to of such year and the financial year following it, and submits to the Bank a copy of such review upon its completion.; (iii) if any such review shows that the Vodokanal organization is unable to comply with the requirements set out in paragraph (g) (i) with respect to the financial year of the Vodokanal organization to which such review relates, the Atyrau Regional Akimat immediately accepts and ensures that the Vodokanal organization accepts all necessary measures (including, but not limited to, adjustments to the structure or level of its rates) in order to comply with such requirements; and (iv) for the purposes of this subparagraph (g): (A) the term "planned income from core activities" means: the amount of income collected from all sources related to the work of the organization, consumer contributions, current subsidies received by the Vodokanal organization and consumer contributions to construction assistance; (B) the term "planned operating expenses" means all expenses related to the work of the organization, including management, proper maintenance and taxes and payments in lieu of taxes (other than provision for depreciation and other non-cash current charges), interest payable on all debts related to the work of the Vodokanal organization and larger depreciation deductions or gradual repayment of the loan, all cash dividends and other cash distributions of retained earnings and other cash outflows other than capital expenditures; (C) the term "short-term liabilities" means all obligations that are due and payable or that, under current circumstances, may be required to be paid within twelve months, including accounts payable, customer loans, debt service claims, taxes and payments in lieu of taxes and dividends; (D) The term "capital expenditures" means all costs incurred in connection with fixed assets, including interest accrued on construction related to the work of the organization;

(E) the term "debt service requirements" means: the total repayment amount (including payments to the depreciation fund, if any) debt and interest and other amounts of payment for it; (F) whenever, for the purposes of this paragraph, it is necessary to assess, in translation into the Borrower's currency, a debt payable in another currency, such assessment shall be made on the basis of the existing legal exchange rate at which such other currency is available at the time of such assessment for the purposes of servicing such debt, or in the absence of such a rate based on the exchange rate the rate acceptable to the Bank. (j) prepare and immediately submit to the Borrower all such information that the Borrower or the Bank reasonably requests related to the management, operation and financial situation of Vodokanal; (k) agree on an action plan acceptable to the Bank, including: (i) the introduction of billing based on readings of measuring instruments and consumption in the Project area before January 1, 2001 or until the time when reconstruction works according to The project will be completed, regardless of which of these events occurs first.; and (ii) strengthening organizational, managerial, financial, commercial, technical and investment planning and enhancing the evaluation capabilities of Vodokanal; (l) granted the Borrower the right to suspend or terminate Vodokanal's right to use goods and works financed from the ancillary loan if Vodokanal fails to fulfill its obligations in accordance with with a Project Execution Agreement and an Ancillary Loan; and (m) and, upon completion of the Project, provided the Borrower with a Project completion report in a manner and within a time frame acceptable to the Borrower. 3. The Agreement on the Implementation of the Project and the Auxiliary Loan is supplemented by Annual Agreements on the Implementation of Financial and Economic Activities for a specific year. In connection with the preparation and implementation of each Annual Agreement on the Implementation of Financial and Economic Activities, the following procedures are carried out: (a) by December 15 of each calendar year, Atyrau Regional Akimat prepares a proposed Annual Agreement on the Implementation of Financial and Business Activities (its draft) for the next calendar year, which contains the terms and conditions, set out in paragraph 4 of this Annex 7 and submits such proposed Annual The Agreement on the Implementation of Financial and Economic Activities to the Bank for its consideration and comment; and (b) upon consideration by the Bank and the absence of objections from its side regarding the proposed Annual Agreement on the Implementation of Financial and Economic Activities, Atyrau Regional Akimat and Vodokanal organization immediately conclude an Annual Agreement on the Implementation of Financial and Business Activities. 4. Each Agreement on the Implementation of Financial and Business Activities includes economic and financial goals that must be achieved by Vodokanal during the year.

(Specialists: Tsai L.G. Sklyarova I.V.)

President

President

Republic of Kazakhstan

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