On the ratification of the Loan Agreement for the Water Supply Project in the city of Aralsk (Aral Sea region) between the Republic of Kazakhstan and the Kuwait Fund for Arab Economic Development

Home / International аgreements / On the ratification of the Loan Agreement for the Water Supply Project in the city of Aralsk (Aral Sea region) between the Republic of Kazakhstan and the Kuwait Fund for Arab Economic Development

Law of the Republic of Kazakhstan dated March 1, 2001 No. 161

To ratify the Loan Agreement for the Water Supply Project in the city of Aralsk (Aral Sea region) between the Republic of Kazakhstan and the Kuwait Fund for Arab Economic Development, signed in Astana on May 11, 2000.

President of the Republic of Kazakhstan

 Loan agreements Water supply project for the city of Aralsk (Aral Sea region) between the Republic of Kazakhstan and the Kuwait Fund for Arab Economic Development

(Official website of the Ministry of Foreign Affairs of the Republic of Kazakhstan - Entered into force on March 15, 2001)

Agreement dated _______ between the Republic of Kazakhstan (hereinafter referred to as the "Borrower") on the one hand and the Kuwait Fund for Arab Economic Development (hereinafter referred to as the "Fund") on the other. Whereas the Borrower has applied to the Fund for assistance in financing the Water Supply Project for the City of Aralsk in the Republic of Kazakhstan, described in Annex 2 to this Agreement (and hereinafter referred to as the "Project"); Whereas the Project will be implemented by the Committee on Water Resources of the Ministry of Natural Resources and Environmental Protection (hereinafter referred to as the "Committee"), and the operational management and management of the Project will be carried out by the organization "Kzyl-Orda Agricultural Pipeline" (hereinafter referred to as the "Trust"); Whereas the Fund has already provided three hundred and eighty thousand Kuwaiti dinars (380,000 Kuwaiti dinars) as technical assistance contributions to finance the feasibility study of the Project on the basis that the amount actually provided from the amount of these contributions will be included in any loan provided by the Fund subsequently to finance the Project; Whereas, at a meeting held in Almaty on October 8, 1998, Donors agreed on a financing plan for various components of the Water Supply Project, Sanitation and Health Improvement in the Aral Sea Settlements by the Government of the Republic of Kazakhstan, the World Bank, KfW and the Kuwait Fund, which, in particular, provides for financing by the Kuwait Fund and the Government of the Component of the City's Water Supply Project Aralska; Whereas the Borrower and the Fund have agreed to implement the financing plan adopted at the Donors' Meeting to finance the Project; Bearing in mind that the purpose of the Fund is to assist Arab and other reform countries in developing their economies and to provide them with loans necessary for the implementation of projects and programs for their development; Considering that the Fund is convinced of the importance and necessity of the project in the development of the Borrower's economy; and Bearing in mind that the Fund has agreed, subject to the foregoing, to provide the Borrower with a loan on the terms and conditions set forth in this Agreement; Based on the above, the parties to this Agreement agree on the following.

 Article I Loan; Interest and other Charges; Repayment; Place of Payment

Section 1.01 The Fund agrees to provide to the Borrower, on the terms and conditions set forth in this Agreement or referred to in this Agreement, an amount of four million two hundred thousand in terms of Kuwaiti dinars (4,200,000 Kuwaiti dinars), including the amounts actually provided from the deductions for technical assistance to finance the study of the feasibility study The project. The amount provided from these deductions for technical assistance prior to the entry into force of this Agreement is considered withdrawn from the loan account starting from the day when the Fund paid any amount from the loan funds in accordance with the application for the first withdrawal of funds from the account submitted by the Borrower or from the day when the Fund provided a guarantee in accordance with Section 3.02 of the Loan Agreement if such a guarantee is requested in the application for the first withdrawal of funds from the account, regardless of which of these dates comes earlier.

 Section 1.02 The Borrower pays interest at a rate of three percent (3%) per year on the principal amount of the Loan, which is withdrawn from the account and for which there are outstanding amounts at one time or another. Interest is accrued from the established days of withdrawal of amounts from the account in this way.

Section 1.03 An additional fee of zero point five of one percent (S 1%) per year is paid for the amounts withdrawn from the Loan account and for which there are outstanding amounts at one time or another to cover administrative costs and expenses related to the implementation of this Agreement.  

 Section 1.04 The fee payable on special obligations assumed by the Fund at the request of the Borrower pursuant to Section 3.02 of this Agreement shall be paid at a rate of zero point five of one percent (S 1%) per year on the principal amount of any such special obligations for which at any time there are outstanding amounts to be paid.  

Section 1.05 Interest and other fees are calculated on the basis of a 360-day year consisting of twelve months, with each month lasting 30 days for any period of less than one full half-year.  

Section 1.06 The Borrower shall repay the principal amount of the Loan in accordance with the provisions on the gradual repayment of the debt set out in Annex 1 to this Agreement.  

Section 1.07 Interest and other fees are payable semi-annually on January 15th and July 15th of each year.  

 Section 1.08 The Borrower is entitled to pay all accrued interest and all other fees and, by notifying the Fund at least 45 days before the maturity of the debt obligation, make repayment of: (a) the entire principal amount of the Loan that is not currently available for payment or (b) the entire principal amount of any one or more debt obligations that have expired - provided that as of the date of such advance payment for any part of the Loan, the repayment period of which comes after the part for which advance payment is made, there are no amounts not submitted for payment.  

Section 1.09 Payment of the principal amount of the Loan and interest and other fees on it shall be made in Kuwait or other such places as the Fund reasonably requests.  

Article II Currency Regulations Section 2.01 All accounts of financial transactions performed in accordance with this Agreement and all amounts due in accordance with this Agreement shall be paid in Kuwaiti dinars.  

Section 2.02 The Fund will, upon request and acting as an agent of the Borrower, purchase such currencies as may be required to pay for the cost of the goods financed from the Loan funds in accordance with this Agreement or to reimburse such expenses in the currency in which they are actually incurred. The amount that is considered withdrawn from the Loan account in any such case is equal to the amount in Kuwaiti dinars required to purchase the corresponding amount in a foreign currency.

 Section 2.03 When repayment of the principal amount or payment of interest and other fees on a Loan is made, the Fund, upon request and acting as the Borrower's agent, may purchase the amount in Kuwaiti dinars required for such repayment or payment, as appropriate, after the Borrower has paid the amount required for such purchase, in a currency or currencies that may be at one time or another, they are acceptable to the Foundation. Only the payment to the Fund required in accordance with this Agreement, the amount of which has actually been received by the Fund in Kuwaiti dinars at this time and volume, is considered to have been made.

 Section 2.04 At any time when, for the purposes of this Agreement, it is necessary to determine the value of one currency in translation into another, such value is reasonably determined by the Fund.

 Article III Withdrawal from the Account and Use of Loan Funds

Section 3.01 The Borrower has the right to withdraw from the Loan account the amounts to be spent or expended in relation to the Project, in accordance with the provisions of this Agreement. Except in cases where the Fund may decide otherwise, no amount is withdrawn from the Loan account for expenses incurred before January 1, 2000 or to finance local expenses for goods produced in the Borrower's territories.  Section 3.02 At the request of the Borrower and on such terms and conditions as are agreed between the Borrower and the Fund, the Fund may undertake special obligations in writing to pay amounts to the Borrower or others in respect of the cost of goods financed under this Agreement, regardless of any subsequent suspension or cancellation.

Section 3.03 In the event that the Borrower wishes to withdraw any amount from the Loan account or apply to the Fund with a request to assume a special obligation in accordance with Section 3.02, the Borrower submits to the Fund a written application in such form and containing such records, agreements and other documents as the Fund reasonably requests. Requests for withdrawal of funds from the account with the necessary documentation, as provided further in this Article, are submitted immediately with respect to the costs of the Project, unless the Bank and the Fund have agreed otherwise.

 Section 3.04 The Borrower submits to the Fund such documents and other evidence in support of the withdrawal request that the Fund reasonably requests, before or after the Fund has authorized any withdrawal requested in the application.

 Section 3.05 Each withdrawal request and accompanying documents and other confirmations must be sufficient in form and content to convince the Fund that the Borrower has the right to withdraw from the Loan account the amount for which the application is being submitted, and that the amount withdrawn from the Loan account is used only for the purposes specified in this Agreement.

 Section 3.06 The Borrower applies the Loan funds exclusively to finance the corresponding cost of the goods required for the implementation of the Project, which is described in Appendix 2 to this Agreement. The goods financed from the Loan and the methods and procedures for the procurement of such goods are specifically determined by agreement between the Borrower and the Fund, subject to changes based on additional agreements between them.

The Borrower ensures that all the goods financed from the Loan are used exclusively for the implementation of the Project.  

Section 3.08 The payment by the Fund of the amounts that the Borrower has the right to withdraw from the Loan account is made to the Borrower or on behalf of the Borrower. Section 3.09 The Borrower's right to withdraw funds from the Loan account expires on December 31, 2003 or at such later date as may be agreed upon between the Borrower and the Fund at any time.

 Article IV Special Obligations Section 4.01 The Borrower shall take measures acceptable to the Fund to provide Loan funds to the Committee on Water Resources of the Ministry of Natural Resources and Environmental Protection (hereinafter referred to as the "Committee").  

Section 4.02 (a) The Borrower ensures that the Project is carried out in accordance with the relevant requirements and the achievement of the intended results and in accordance with sound technical, financial and administrative practices that may be applicable to the various components of the Project; (b) The Committee is responsible for the overall supervision of the Project and the coordination of Project activities with the support and assistance of the Project Management Team Project implementation and under the overall guidance of the Project Steering Committee; (c) The Borrower shall ensure that the Committee establishes and maintains a Project Implementation Team (hereinafter referred to as the "GWP") to ensure cost-effective and timely implementation of the Project. GWP is responsible for the consistent day-to-day execution of the Project, including the preparation of tender documents, the conduct of the tender and the supervision of construction work, as well as communication between the Borrower, the Committee, the Fund and the contractors according to the Project. The Borrower and the Committee provide: - management of the GWP by a full-time Project Manager acceptable to the Fund; - its staffing by staff whose qualifications meet the established requirements; and - the provision of assistance to the GWP by Project consultants; (d) The Borrower supports the activities of the Project Steering Committee (hereinafter referred to as the "RCP") throughout the project period to: - review all technical plans for the Project; - monitor and coordination of all Project activities, including communication between the departments and institutions of the Borrower involved in the Project; and - holding meetings and meetings in his office premises to discuss important issues related to the Project. The RCP is chaired by the Minister of Natural Resources and Environmental Protection, and its members also include representatives of the Ministry, the Committee, and the Project Manager.

 Section 4.03 During the execution of the Project, the Borrower hires or ensures the hiring of technical consultants acceptable to the Fund and on terms and conditions acceptable to the Fund.

Section 4.04 The conclusion of Project contracts that are financed from the Loan, as well as the amendment and termination of such contracts, are subject to the consent of the Fund.  

Section 4.05 The Borrower shall immediately provide or ensure the immediate provision, as required, of all other amounts that are required in addition to the Loan for the implementation of the Project, all such amounts provided on terms and conditions acceptable to the Fund. Section 4.06 Immediately after their preparation, the Borrower provides the Fund with data on the study and plans and a list of technical conditions of the Project, a schedule for its implementation and any significant changes made to them in the future - in such details as the Fund requests at one time or another.  

Section 4.07 The Borrower shall take all necessary measures to protect the environment in the project areas from adverse effects resulting from the implementation and work on the Project.  

Section 4.08 The Borrower: - maintains or ensures the maintenance of accounting documents that meet the established requirements for classifying goods financed from the Loan, disclosing information about their use in the Project, recording the progress of the Project (including related costs) and reflecting the work and financial situation of the Committee in accordance with firmly applied sound accounting practices; - provides all necessary opportunities for authorized representatives of the Fund to travel for purposes related to the Loan and Project inspection and inspection of goods and related records and documents; and - provides the Fund with all such information that the Fund reasonably requests related to the expenditure of Loan funds, the Project, goods and work and the financial situation of the Committee. In order to keep the Fund informed about the progress of the Project, the Borrower: - every three months, starting from the date of this Agreement, submits to the Fund regular and detailed reports in English on the implementation of the Project, comparing it with the program of its implementation; and - within six months, starting from the date of completion of the Project, submits to the Fund a report in English on the completion of the project, which, in particular, contains a comparison of the actual costs of the Project with the estimated cost and indicates the reasons for any difference between the actual costs of the Project and the estimated cost, as well as specific problems that took place during the execution of the Project. Such a report also indicates the benchmarks that have been achieved in comparison with the initial plans.  Section 4.09 The Borrower: - submits to the Fund copies of any reports related to any proposed study related to its organizational, governance and institutional reforms in bodies related to the exploitation and management of water resources; and - consults with the Fund regarding the application of the recommendations resulting from the aforementioned study.

 Section 4.10 The Borrower: - ensures that the Committee transfers water facilities and property created under the Project to the Trust upon its completion; and - ensures the operation and maintenance of such water facilities in accordance with sound technical, financial and administrative practices.  

Section 4.11 (a) The Borrower performs operational management and maintenance of the Project or ensures their implementation, as well as performs operational management and maintenance of structures, operational management and maintenance, operation and maintenance of other works and facilities not included in the Project, but necessary for its proper and successful management in accordance with rational technical, financial and administrative practice; (b) The Borrower: - takes the necessary measures for daily and periodic maintenance and repair work on various components of the Project, including, in particular, the main water supply pipeline between the settlements of Kosoman and Aralsk; and - annually allocates the necessary financial resources for this purpose.  

Section 4.12 The Borrower shall periodically take measures necessary to adjust water tariffs - water supply to consumers - in the project areas in order to establish prices that are sufficient to generate sufficient income to: (i) cover operating costs, including taxes, if any, interest on the loan and related maintenance; and (ii) make repayment of long-term debt, but only to the extent that such repayment exceeds the reserve for depreciation; and (iii) leave a surplus to fund an appropriate portion of future expansion.  

Section 4.13 The Borrower implements a new program to expand the use of meters at water supply points to consumers or a group of consumers, as needed. The Borrower also ensures that the Trust takes the necessary measures to reduce the billing period to a period of no more than 30 days in all cases.  

Section 4.14 The Borrower ensures that the Trust takes the necessary measures to implement a computer-based billing management system.  

Section 4.15 (a) The Borrower ensures that the Trust develops and implements an effective plan, the purpose of which is to ensure that accounts receivable from various categories of consumers are collected on an ongoing basis so that such amounts, which are not currently available for payment, do not exceed the total amount for which invoices were issued in the previous three months.. (b) In order to maintain a sound financial structure, the Borrower ensures that the Trust maintains the ratio of the total amount of its long-term debt to its funds and available reserves at a level not exceeding 70:30. For the purposes of these regulations, the term "long-term debt" includes any debt or debt guarantee that matures after more than one year. starting from the day when such a debt arose. (c) The Borrower ensures that the Trust conducts its financial transactions in such a way as to ensure that the ratio of its working capital to its short-term liabilities remains at least 1.5:1 and the company's liquidity to debt ratio remains at least 1 : 1.  

 Section 4.16 The Borrower: - ensures that the Trust takes the necessary measures to audit its accounts each year in accordance with sound auditing practices firmly applied by independent auditors acceptable to the Fund; and - ensures that the Trust provides the Fund with copies of its audited annual financial statements (including balance sheet, income statement and related reports) together with the auditor's reports no later than within six months from the end of each financial year of the Trust.  Section 4.17 The Borrower implements a training program for employees involved in the water supply industry in order to enhance their knowledge and skills in the field of damage detection leading to water loss, operation and management of the water supply system, as well as financial and construction management, including project execution. Such a program is submitted to the Fund no later than June 30, 2000 or such later dates as may be agreed with the Fund.  

Section 4.18 The Borrower shall take all necessary measures to reduce water losses to an acceptable level. To this end, the Borrower, in particular, introduces and applies procedures for active monitoring of the condition of facilities in the water supply system to reduce losses in the distribution network and water in places where it is directly used by consumers. The borrower also takes the necessary measures to widely inform the public about the cost and expenses of water supply through pipelines through a public awareness program in educational institutions and through the media, mainly for the purpose of proper use of water.

 Section 4.19 The Borrower and the Fund shall cooperate fully to ensure that the objectives of the Loan are fulfilled. To this end, each party shall provide the other with such information relevant to the general state of affairs related to the Loan as the latter may reasonably request.  

Section 4.20 The Borrower and the Fund periodically exchange views through their representatives on issues related to the purpose of the Loan and its maintenance. The Borrower shall immediately inform the Fund of any circumstances that hinder or may hinder the fulfillment of the Loan's objectives (including a significant increase in Project-related costs) or the maintenance of the Loan.

 Section 4.21 The mutual intention of the Borrower and the Fund is that no external debt takes precedence over the Loan in the form of the right to retain property for debts, which is subsequently created in relation to state property. To this end, the Borrower guarantees that, except in cases where the Fund has decided otherwise, if any right has been created to hold property for debts in respect of any property of the Borrower as collateral for external debt, such right will be by virtue of the very fact in an equal and proportionate manner - and the Fund does not incur any costs. - to ensure payment of the principal amount of the Loan and interest and other fees on it, and that any such right will be provided with a clearly formulated provision in this sense.; provided, however, that the preceding provisions of this Section do not apply to: (i) any retention-of-title created in respect of property at the time of its acquisition solely as security for payment of the purchase price of such property; (ii) any retention-of-title in respect of goods for trade to secure a debt that matures no later than one year after the date on which it originally arose and which is payable from funds from the sale of such goods.; or (iii) any retention-of-title for debts that arose in the normal course of banking transactions and secures a debt that matures no later than one year after its due date. When used in this Section, the term "Borrower's property" includes the property of the Borrower or any of its administrative-territorial divisions or any independent legal entity owned or controlled by the Borrower or any of its administrative-territorial divisions, including the Borrower's Central Bank or any other institution performing the functions of a Central Bank, and the term The "right to hold property for debts" includes mortgages, liens, mortgages, special and preferential rights of any kind.

 Section 4.22 The principal amount of the Loan and interest and all other fees on it are paid without deductions and exempt from any taxes, duties and charges established in accordance with the legislation of the Borrower or legislation in force in its territories, both currently and in the future.

 Section 4.23 This Agreement is not subject to taxes, duties, fees, commissions and fees of any kind, which are established in accordance with the legislation of the Borrower or legislation in force in its territories, both currently and in the future, when it is compiled, published, transferred or registered or in connection with such compilation, publication, transfer or registration, and the Borrower pays or ensures payment of all such taxes, duties, fees and fees, if any, established in accordance with the legislation of any country or countries (other than the State of Kuwait) in whose currency the Loan can be repaid.

 Section 4.24 The principal amount of the Loan, interest and other fees on it are paid free from all restrictions, including restrictions on currency exchange, established in accordance with the legislation of the Borrower or legislation in force in its territories, both currently and in the future.

 Section 4.25 The Borrower entrusts the implementation of the Project to the Committee and the operational management and management of the Project to the Trust, or such of its legal successors, whose appointment may be agreed with the Fund. The Borrower ensures the continuous functioning of the Committee and the Trust in accordance with the rules and regulations acceptable to the Fund and has such powers, governing and administrative bodies as are necessary for the proper and successful implementation, operational management and management of the Project. The Borrower: - informs the Fund of any proposed actions that may change the status or composition of the Committee or Trust in such a way that this could adversely affect the achievement of the Project objectives; and - provides the Fund with all necessary opportunities to exchange views with the Borrower in this regard prior to the start of any such action.

Section 4.26 The Borrower insures or secures insurance from responsible insurers for all goods financed from the Loan funds. Such insurance: - covers maritime, transportation and other risks associated with the purchase and import of goods in the Borrower's territory and their delivery to the Project site; and - is provided for such amounts as are consistent with sound commercial practices. Such insurance is payable in the currency in which the value of the goods insured under such insurance is payable or in a freely convertible currency. The Borrower draws up and maintains or ensures that responsible insurers arrange or maintain insurance against risks associated with the implementation of the Project in such amounts as are consistent with sound administrative and commercial practices.  

Section 4.27 The Borrower performs or ensures the performance of all actions that are necessary on his part for the implementation of the Project and does not perform or allow any actions to be performed that would hinder or interfere with the implementation or obtaining overall beneficial results from the Project or the implementation of any provisions of this Agreement.

Section 4.28 All documents, accounts, correspondence and similar materials of the Fund are considered confidential by the Borrower, and the Borrower provides the Fund with complete immunity from censorship and inspections in relation to them.

Section 4.29 All property and income of the Fund are exempt from nationalization, confiscation and seizure.  

Article V Cancellation and Suspension Section 5.01 The Borrower may, by notifying the Fund, cancel any Loan amount that the Borrower has not withdrawn prior to such notification, unless the Borrower is unable to cancel any Loan amount for which the Fund has made a special commitment pursuant to Section 3.02 of this Agreement.  

Section 5.02 If any of the following events have occurred and are continuing, the Fund may, by notifying the Borrower, suspend, in whole or in part, the Borrower's right to withdraw funds from the Loan account: (a) there has been a default in payment of principal or interest or any other payment required under this Agreement or any other The Loan Agreement between the Borrower and the Fund; (b) there has been a default in fulfilling any other obligations or arrangements on the part of the Borrower under this Agreement; (c) The Fund has fully or partially suspended the Borrower's right to withdraw funds from the account in accordance with any other loan agreement between the Borrower and the Fund due to default on the part of the Borrower; (d) an emergency situation has developed that makes it impossible for the Borrower to fulfill its obligations under this Agreement. Any event that occurred after the date of this Agreement and before the effective date, which would have given the Fund the right to suspend the Borrower's right to withdraw funds from the account if this Agreement had entered into force on the day when such an event occurred, will give the Fund the right to suspend withdrawals from the Loan account, as if the event occurred after the effective date. The full or partial suspension, depending on the circumstances, of the Borrower's right to withdraw funds from the Loan account continues until the termination of the event or events that resulted in such suspension or until the Borrower's Fund notifies that the right to withdraw funds from the account has been restored.; provided, however, that in the case of any such notification of the restoration of the right to withdraw funds from the account, it is restored only to the extent and subject to the conditions specified in such notification, and no such notification affects or impairs the rights, powers or remedies of the Fund in respect of any other subsequent events., which are described in this Section.

 Section 5.03 If there has been any event referred to in paragraph (a) of Section 5.02 and it continues for a period of thirty days after the Fund notified the Borrower, or if there has been any event referred to in paragraph (b), (c) and (d) of Section 5.02, and it continues for a period of sixty days after the Fund has notified the Borrower, in this case, at any time thereafter, with the continuation of such an event, the Fund may, at its discretion, declare the principal amount of the Loan due and payable immediately, and upon any such declaration, such principal amount becomes due and payable immediately, regardless of any provisions of this Agreement to the contrary.  

Section 5.04 If (a) the Borrower's right to withdraw funds from the Loan account is suspended in respect of any Loan amount for a period of thirty days, or (b) on the day specified in Section 3.09 as the Final Date, the Loan amount remains outstanding, the Fund may, by notifying the Borrower, terminate the Borrower's right to make withdrawal of funds from the account in respect of such amount. Upon submission of such notification, such Loan amount is cancelled.  

 Section 5.05 No cancellation or suspension by the Fund shall apply to amounts subject to any special obligation assumed by the Fund pursuant to Section 3.02, except in cases where the provisions of such obligation are explicitly stated.  

Section 5.06 Except in cases where the Fund may decide otherwise, any cancellation is applied proportionally to several contributions to repay the principal amount of the Loan, which are due after the date of such cancellation.

 Section 5.07 Regardless of any cancellation or suspension, all provisions of this Agreement remain in full force and effect, except as specifically provided in this Article.

 Article VI Ensuring Compliance with this Agreement; Non-Enforcement Of Rights; Arbitration Proceedings  

 Section 6.01 The rights and obligations of the Fund and the Borrower under this Agreement are valid and their observance is ensured in accordance with its terms and conditions, regardless of any local law to the contrary. Under no circumstances shall either the Borrower or the Fund have the right to make any claim that any provision of this Agreement is unenforceable or its compliance is not ensured for any reason. Section 6.02 Neither the delay in the exercise of, nor the failure to exercise, any right, authority, or remedy granted to either party under this Agreement in the event of any default shall affect such right, authority, or remedy and shall not be construed as a waiver or acquiescence in such default. Also, the actions of such party in relation to any default or any tacit agreement in any default do not affect or detract from any rights, powers or remedies of such party in relation to any other or subsequent default.  

Section 6.03 Any dispute between the parties in this Agreement and any claim by any party against the other arising from this Agreement shall be resolved by agreement of the parties; if such agreement is not reached, the dispute or claim shall be submitted to the arbitral tribunal, as provided in the following Section.  

Section 6.04 The Arbitral Tribunal shall consist of three arbitrators appointed as follows: - one arbitrator shall be appointed by the Borrower; - the second arbitrator shall be appointed by the Fund; and - the third arbitrator (hereinafter referred to as the "Super Arbitrator") shall be appointed by agreement of the parties or, if no agreement is reached, by the President of the International Court of Justice at the request of either party. If no arbitrator has been appointed by either party, such arbitrator shall be appointed by the President of the International Court of Justice at the request of the other party. In the event of the refusal, death or loss of legal capacity of any of the arbitrators appointed in accordance with this Section, a successor arbitrator shall be appointed in the same manner as indicated above with respect to the originally appointed arbitrator, and such successor shall be vested with all the powers and duties of such originally appointed arbitrator. The arbitration process may be initiated in accordance with this Section upon notification by the party initiating such process to the other. Such notification shall contain a statement that provides information on the nature of the disputed issue or claim being submitted to the arbitral tribunal, the nature and extent of the judicial protection sought, and the name of the arbitrator appointed by the party initiating such proceedings. Within thirty days after the submission of such notification, the opposing party shall inform the party initiating the proceedings of the name of the arbitrator appointed by such opposing party. If, within sixty days after the submission of such notification, from which the trial begins, the parties have not agreed on the appointment of a Super-Arbitrator, either party may request the appointment of a Super-Arbitrator, as provided for in the first paragraph of this Section. The Arbitration Court holds its sessions at such times and in such place as are determined by the Super Arbiter. After that, the place and dates of its meetings are determined by the Arbitration Court. Subject to the provisions of this Section and except in cases where the parties have decided otherwise, the Arbitral Tribunal shall resolve all issues within its competence and determine the procedure for its work. All decisions of the Arbitration Court are made by a majority vote. The Arbitration Court ensures that all parties have a fair hearing of the case and submits its decision in writing. Such a decision may be made in the absence of the failed party. A decision signed by a majority of the members of an Arbitration Court is a decision of such a Court. A signed copy of the decision is transmitted to each party. Any such decision made in accordance with the provisions of this Section is final and binding on the parties to this Agreement. Each party shall comply with and comply with any such award made by the Arbitral Tribunal. The parties shall determine the amount of remuneration or fees of the arbitrators and such other persons as are required to conduct the arbitration process. If the parties have not agreed on such an amount prior to the convening of the Arbitral Tribunal, the Arbitral Tribunal shall assign such an amount as is reasonable in the circumstances. Each party pays its own costs in the arbitration process. The costs of the Arbitration Court shall be divided between the parties, and they shall bear such costs equally. Any issue related to the division of expenses related to the work of the Arbitration Court or the procedure for paying such expenses shall be resolved by the Arbitration Court. The Arbitration Court applies the principles that are common according to the current legislation of the Borrower and the State of Kuwait, as well as the principles of justice.

 Section 6.05 The arbitration provisions set out in the previous Section supersede any other dispute resolution procedure between the parties in this Agreement and any claim by either party against the other related to this Agreement.  

Section 6.06 The service of any notice or court order in connection with any court proceeding under this Article may be performed as provided for in Section 7.01. The Parties to this Agreement may waive any and all requirements for the service of any such notice or court order.  

Article VII Other Provisions  Section 7.01 Any notification or request, the transmission or submission of which is required or permitted under this Agreement, is transmitted or submitted in writing. Except as otherwise provided in Section 8.03, such notification or request shall be deemed to have been duly transmitted or submitted when it is transmitted or submitted by hand or by mail, telex, telegram or cablegram to the party to whom the transmission or submission of such notification or request is required or permitted, at the address of such party. of the party specified in this Agreement or at such other address of such party as such party indicates in the notification to the party transmitting such notification or submitting such request.

 Section 7.02 The Borrower shall provide the Fund with sufficient evidence of the authority of the person or persons who sign the applications referred to in Article III or who, on behalf of the Borrower, perform any other actions or draw up any other documents required or permitted by the Borrower in accordance with this Agreement, and certified samples of signatures of each such person.

 Section 7.03 Any action required or permitted to be performed and any documents required or permitted to be drawn up in accordance with this Agreement on behalf of the Borrower may be performed or drawn up by the Borrower's Minister of Finance or any person authorized in writing by him to do so. Any modification or extension of the provisions of this Agreement may be agreed upon on behalf of the Borrower in a written document drawn up on behalf of the Borrower by his aforementioned representative or another person authorized in writing by him to do so; provided that, in the opinion of such representative, such modification or extension is reasonable in the circumstances and will not lead to significant to increase the obligations of the Borrower in accordance with this Agreement. The Fund may accept the drafting of any such document by such representative or other person as an indisputable confirmation that, in the opinion of such representative, any amendment or extension of the provisions of this Agreement introduced by such document is reasonable in the circumstances and will not lead to a significant increase in the Borrower's obligations under this Agreement.  

Article VIII Effective Date; Termination Section 8.01 This Agreement shall enter into force only after the Fund has been provided with confirmation acceptable to the Fund that the drafting and transmission of this Agreement on behalf of the Borrower has been duly authorized or ratified by all necessary governmental measures.

 Section 8.02 As part of the confirmation provided pursuant to Section 8.01, the Borrower submits to the Fund an opinion or opinions of the competent authority stating that this Agreement has been duly authorized or ratified by the Borrower and drawn up and transmitted on his behalf and is legally binding and binding on the Borrower in accordance with its terms and conditions.  

Section 8.03 Unless otherwise agreed between the Fund and the Borrower, this Agreement shall enter into force and take effect on the day when the Fund telegraphs notification to the Borrower of acceptance of the confirmation required under Section 8.01.

 Section 8.04 If all actions required under Section 8.01 have not been completed before the expiration of ninety days after the signing of this Agreement or such later date as is agreed upon by the Fund and the Borrower, the Fund may terminate this Agreement at any time thereafter at its discretion by notifying the Borrower. Upon submission of such notification, this Agreement and all obligations of the parties under it shall be terminated immediately.

 Section 8.05 If and when the principal amount of the Loan in full and all interest and other fees accrued on the Loan are paid, this Agreement and all obligations of the parties under it therein shall terminate immediately.

Article IX Definitions Section 9.01 Unless the context requires otherwise, the following terms have the following meanings each time they are used in this Agreement or any annex thereto: (1) The term "Project" means: a project or projects or a program or programs for which a Loan is granted, as described in Annex 2 to this Agreement, and in Their description is periodically amended by agreement between the Fund and the Borrower.; (2) The term "goods" means the equipment, supplies and services required for the Project. Each time the value of any goods is referred to, such value is considered to include the cost of importing such goods into the Borrower's territory; (3) The term "Committee on Water Resources" or "Committee" means an institution of the Government of the Republic of Kazakhstan responsible for the design, construction and operation of inter-regional water pipelines for domestic and economic needs.; (4) The term "Trust" means: the organization "Kzyl-Orda Agricultural Water Pipeline", established by the resolution of the Committee dated October 6, 1995, which is responsible for the operation and maintenance of water facilities in the Project areas for industrial, agricultural and domestic use of water; (5) The term "Ministry of Natural Resources and Conservation Environment" means: The Ministry of Natural Resources and Environmental Protection of the Borrower or any of its legal successors; (6) The term "Donors" means: The World Bank, KfW and the Kuwait Fund.

For the purposes of Section 7.01, 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

Another address for sending cables and telexes:

Telex Cablegram Fax communication Ministry of Finance ...... 007-3172-280321

Astana

The address of the Foundation:

Kuwait Fund for Arabic Economic Kuwait Development Fund Economic Development of R.O.Vokh 2921 Postal Subscription Box 2921 Safat Safat Kuwait. - 13030 Kuwait - 13030

Another address for sending cables and telexes:

Telex Cablegram Fax communication

ALSUNDUK 22025 ALSUNDUK (965) 2419091 KUWAIT 22613 KFAED KT (965) 2436289 In witness whereof, the parties to this Agreement, acting through their duly authorized representatives, have secured the signing of this Agreement on their behalf and its transfer to Astana in three copies, each of which is considered to be the original, and all of them have the same validity from the date and year indicated above first.

Republic of Kazakhstan

(signature of the official authorized to sign the documents) ______________________________ (Authorized Representative) Kuwait Fund for Arab Economic Development

(signature of the official authorized to sign the documents) ______________________________ (Authorized Representative)  Appendix 1 Repayment Provisions The principal amount of the Loan funds withdrawn from the account is repaid in 36 semi-annual installments, and the amount and sequence of payment of each installment are as shown in the attached schedule. The first of these contributions is due on the first day on which interest and other fees on the loan are due in accordance with the provisions of the Loan Agreement, after the grace period of 5 years has expired, starting from the date on which the Fund pays the amount from the loan funds in accordance with the first withdrawal request submitted by the borrower or from the date on which the Fund provides a guarantee in accordance with Section 3.02 of the Loan Agreement, if such a guarantee is requested in the first withdrawal request from the account. - no matter which of these two dates comes first. The remaining contributions to the repayment of the principal amount are due to be paid one after the other every six months after the date set as the deadline for the payment of the first installment.

The schedule of gradual repayment of the loan

__________________________________________________________________________

Ordinal ! Payment Of The Principal Amount

The number ! (in Kuwaiti dinars)

__________________________________________________________________________

1 116, 000

2 116, 000

3 116, 000

4 116, 000

5 116, 000

6 116, 000

7 116, 000

8 116, 000

9 116, 000

10 116, 000

11 116, 000

12 116, 000

13 116, 000

14 116, 000

15 116, 000

16 116, 000

17 116, 000

18 116, 000

19 116, 000

20 116, 000

21 116, 000

22 116, 000

23 116, 000

24 116, 000

25 116, 000

26 116, 000

27 116, 000

28 116, 000

29 116, 000

30 116, 000

31 116, 000

32 116, 000

33 116, 000

34 116, 000

35 116, 000

36 140, 000

_____________________________________________________________________

Total 4,200, 000

_____________________________________________________________________

 Appendix 2 Project Description The aim of the project is to increase the volume of water supply to the City of Aralsk, one of the settlements most affected by the environmental disaster on the Aral Sea in the Republic of Kazakhstan. The means to achieve this goal is to increase the efficiency of the existing system, as well as expand the distribution network in the city.

The project consists of the following main components.

1. System Improvement (a) Reconstruction of the existing main water supply pipeline between the Kosaman water source and the city of Aralsk. The work includes: - replacement of worn-out sections, the total length of which is about 12 kilometers of the existing pipeline with a length of 110 kilometers and a diameter of 1000 millimeters; - application of cathodic corrosion protection throughout the pipeline; and - installation of five volumetric meters; (b) Updating the existing distribution network in the City of Aralsk due to: - replacement of worn-out pipes with a total length of about 50 kilometers; - installation of new distribution lines with a length of about 6 kilometers; - installation of 80 water intake columns and fire hydrants; and - construction of five new water towers; (c) Construction of three experimental desalination plants in three settlements near the City of Aralsk in areas to be determined on based on the detailed development of the project. 2. Institutional Support: - supply of control and measuring, testing and control equipment, as well as staff training and hiring experts for operation, maintenance, financial management and detection of damage leading to water loss, to improve the work of the Aral Branch of the Agricultural Water Pipeline Organization. 3. Technical Consulting Services (a) Detailed development and preparation of tender and contract documents and assistance in concluding the contract, as well as supervision of construction work according to the Project; (b) Study of the feasibility study of the Project. The project is expected to be completed by the end of 2003.

Republic of Kazakhstan Date: ___________ year

Kuwait Fund Economic Development Postal Subscription Box 2921, Safat 13030 Safat, Kuwait

Subject: List of goods and works financed from Loan funds. Procurement procedure

dear sirs,

With reference to Sections 3.06, 4.03 and 4.04 of the Loan Agreement dated the same date as this letter, signed between us in order to finance improvements in the Water Supply of the City of Aralsk, we attach a List of Goods and Works, which indicates the types of goods and works to be financed from the Loan, the deduction of funds for each of these types, and the expression as a percentage of their costs for financing. We confirm that the Loan funds will not be used in any other way to pay taxes or duties established in accordance with the legislation of the Republic of Kazakhstan. We confirm that, unless otherwise agreed with the Fund, purchases for the Project will be made on the basis of International Competitive Bidding. Prior to the invitation to tender, the bidders for the construction work on the Project will be given a preliminary assessment. The notification of the invitation of interested contractors to submit applications for a preliminary assessment will be published in at least two international periodicals and in one of the daily newspapers published in Kuwait and will also be sent to the embassies of foreign states accredited in the Republic of Kazakhstan. A report on the evaluation of applications for a preliminary assessment will be prepared and submitted to the Fund for review and approval. The draft tender documents for the implementation of the project will be submitted for consideration and approval by the Fund before the invitation to tender. We will make such changes to the bidding documents or their procedure as are reasonably requested by the Fund. Upon receipt of the contract proposals, an evaluation report will be prepared and submitted to the Fund for review and approval, along with recommendations for concluding the contract. An additional preference of 10% of the value of the lowest-rated offer will be given to Kuwaiti or Kazakh contractors or joint ventures between such contractors or with a foreign contractor. For the purposes of these regulations, a contractor is considered to be Kuwaiti or Kazakhstani if its actual owners in the amount of at least 50% are citizens of the State of Kuwait or the Republic of Kazakhstan. With regard to the selection of technical consultants for the Project, unless the Foundation decides otherwise, we will determine in consultations and with the consent of the Foundation the limits of the competence of such consultants. Such areas of competence will relate to the detailed technical development of the above-mentioned project, the preparation of tender documents and the supervision of construction work, as well as assistance to the Water Resources Committee in evaluating applications from interested contractors for a preliminary assessment. Unless otherwise agreed between the Borrower and the Fund, we will also prepare, in consultation and with the consent of the Fund, a short list of international consulting firms that will be invited to submit proposals. Such consultants will join consultants from Kuwait and submit proposals together with them. After receiving the proposals, they will be evaluated in accordance with criteria based on technical and financial evaluation agreed upon in advance with the Foundation, and we will submit a report on such evaluation to the Foundation for its approval, along with recommendations related to the selection of consultants. We will also submit to the Foundation, for its approval, a draft contract to be concluded with consultants, who have been selected. Any significant change in the tender documents or any contract financed from the Loan, regardless of whether such a change is made before or after the conclusion of the contract, will be submitted for approval by the Fund. After signing any such contract, a certified copy of it will be provided to the Fund for the purposes of payments and its registration. With regard to staff training, the Committee on Water Resources will prepare and submit a detailed training program for consideration and approval by the Fund. Regarding the procurement of equipment and materials according to the institutional support component: they will be made solely on the basis of proposals received from a sufficient number of well-known suppliers of the unit or units of equipment and materials in question, who are manufacturers or marketing agents of manufacturers from an appropriate number of countries, including Kazakhstan.

We would appreciate it if you would give your consent to the attached List of Goods and Works and confirm your agreement with the contents of this letter by signing the attached copy and returning it to us.

Republic of Kazakhstan (signature of the official authorized to sign the documents) ______________________________ (Authorized Representative)

Has accepted:

Kuwait Fund for Arab Economic Development (signed by the official authorized to sign the documents) ______________________________ (Authorized Representative)

 List of goods and works

_________________________________________________________________________

Ordinal ! Type of Product or Work ! Deduction ! As a percentage of

The number ! ! Funds ! Total Cost,

! !(in Kuwaiti! /1/ (in %)

! ! in dinars) !

__________________________________________________________________________

1 Renovation of the main 1,090,000 90

supply pipeline

water

2 Cathodic protection 260,000 90

3 Update

distribution network 1,010,000 90

4 Building

desalination plants

installations 170,000 90

5 Consulting services

Technical services 370,000 100

in detail

design,

preparation of tenders

documents and

monitoring of

construction works

Institutional

support

6 Technical Assistance

(Technical Study- 160,000 100

Economic

Justifications)

7 Unforeseen expenses 380,000/2/ 100

8 760,000

___________________________________________________________________________

Total 4,200,000

___________________________________________________________________________

/1/ Or 100% of the total amount of foreign direct expenditure (CIF) /2/ The amounts actually withdrawn from the technical assistance account are considered to be withdrawn from the loan account from the date of payment of any amount by the Fund or the provision of a guarantee in accordance with Section 3.02 of the Loan Agreement, according to the first request for withdrawal of funds from the account.

Republic of Kazakhstan

Date: ______________________ year

Kuwait Fund For Economic Development Postal Subscription Box 2921, Safat Kuwait, 13030

dear sirs, With reference to the Loan Agreement related to the Water Supply Project in the City of Aralsk, signed today between the Kuwait Fund for Arab Economic Development and the Republic of Kazakhstan, we confirm that we are duly informed that, in accordance with the provisions in force in the State of Kuwait, it is prohibited to use public funds in operations involving entities or companies boycotted under these regulations. In this regard, we guarantee that the funds of the above-mentioned Loan will not be used in any way for direct or indirect financing of goods or services produced or provided by any country, company or institution subject to the boycott in accordance with the provisions in force in the State of Kuwait. We would appreciate it if you could confirm that the above reflects our general agreement by signing the confirmation form on the attached copy of this letter and returning it to us.

Republic of Kazakhstan (signature of the official authorized to sign the documents) _____________________________ ( Authorized Representative)

Has accepted: Kuwait Fund for Arab Economic Development (signed by the official authorized to sign the documents) _____________________________ (Authorized Representative)

(Experts: Umbetova A.M., Sklyarova I.V.)

President

Republic of Kazakhstan

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