On the ratification of the Loan Agreement (Ordinary Operations) (Branch project of water supply and sanitation of rural areas) between the Republic of Kazakhstan and the Asian Development Bank

Home / RLA / On the ratification of the Loan Agreement (Ordinary Operations) (Branch project of water supply and sanitation of rural areas) between the Republic of Kazakhstan and the Asian Development Bank

Law of the Republic of Kazakhstan dated December 6, 2004 No. 7

To ratify the Loan Agreement (Ordinary Operations) (Branch project of water supply and sanitation of rural areas) between the Republic of Kazakhstan and the Asian Development Bank, signed in Astana on February 9, 2004.

 President Republic of Kazakhstan

LOAN NUMBER 2006-KAZ

LOAN AGREEMENT (Normal operations)

(Branch project "Water supply and sanitation of rural areas") between THE REPUBLIC OF KAZAKHSTAN and the ASIAN DEVELOPMENT BANK

DATED February 9th, 2004.

LAL: KAZ 34234

LOAN AGREEMENT (Normal operations)

LOAN AGREEMENT dated February 9, 2004 between the REPUBLIC OF KAZAKHSTAN (hereinafter referred to as the Borrower) and the ASIAN DEVELOPMENT BANK (hereinafter referred to as ADB). WHEREAS (A) the Borrower has applied to ADB for a loan for the purposes of the Project described in Appendix 1 to this Loan Agreement; (B) The Borrower has also applied to the Islamic Development Bank (hereinafter referred to as the IDB) for financing part of the Project, in particular, construction work, purchase of equipment/materials in the city of Karaganda; and (C) ADB has agreed to provide the Borrower with a loan from ADB's ordinary capital resources for the terms and conditions set forth below; the PARTIES HEREBY agree as follows:

ARTICLE I Loan instructions; definitions

Section 1.01. All provisions of the Ordinary Operations Loan Instruction dated July 1, 2001, applicable to loans provided at the LIBOR rate from ADB's ordinary capital resources, hereby apply to this Loan Agreement and have the same force and effect as if they were fully set out in this Agreement (the specified Ordinary Operations Loan Instruction operations are hereinafter referred to as "Loan Instructions"). Section 1.02. Unless otherwise provided by the context, several terms defined in the Loan Instructions, when used in this Loan Agreement, have their respective meanings, and the following additional terms have the following meanings: (a) "MOE" means local public organizations; (b) "CGUP" means the Central Team of Project Management Specialists to be established by the Borrower prior to the effective date of the Loan Agreement; (c) "Ministry of Agriculture" means the Ministry of Agriculture of the Borrower and/or its successor; (d) "MF" means the Ministry of Finance of the Borrower and/or its successor; (e) "Ministry of Health" means the Ministry of Health of the Borrower and/or its successor; (f) "NGO" means a non-governmental organization; (g) "Oblast" means a large administrative-territorial unit; (h) "EiO" means operation and maintenance; (i) "OGUP" means the Regional Project Management Specialist Group to be established by the relevant regional government authorities in each area included in the Project before the effective date of the Loan Agreement; (j) "CCG" means the Project Coordination Commission; (k) "Project Executive Agency" for the purposes and in the meaning provided for in the Loan Instructions, means the Ministry of Agriculture, which is responsible for the execution of the Project; (l) "Project Facilities" means the equipment and facilities to be provided within the framework of the Project; (m) "Area included in the Project" means each of the following areas: Akmola, Karaganda, North Kazakhstan and South Kazakhstan; (n) "Subproject" means any subproject included or to be included in Component A of the Project and meeting the eligibility criteria provided for in paragraphs 5, 6 and 7 of Appendix 5 to this Agreement; (o) "GWP" means a Group of Water Consumers and (p) "CVR" means the Committee on Water Resources within the Ministry of Agriculture and/or its successor.

ARTICLE II Loan

Section 2.01. (a) ADB agrees to provide the Borrower with an amount of thirty-four million six hundred thousand US dollars ($34,600,000) from ADB's ordinary capital resources, as such amount may be converted from time to time by currency exchange in accordance with the provisions of Section 2.07 of this Loan Agreement. (b) The term of the Loan is 25 years, including a grace period of 5 years, as provided in Appendix 2 to this Loan Agreement, Section 2.02. The Borrower pays interest to ADB on the principal amount of the Loan, which is withdrawn from time to time and outstanding, at a rate for each period for which interest is accrued equal to the amount of LIBOR and 0.60%, as provided for in Section 3.02 of the Loan Instructions. Section 2.03. (a) The borrower pays annual loan commitment fees at a rate of three-quarters of a percent (0.75%) per annum. Such fees shall be accrued on the Loan amounts (less amounts withdrawn from the account from time to time) in subsequent periods after sixty (60) days after the date of conclusion of this Loan Agreement in the following order: during the first twelve-month period - by $5,190,000; during the second twelve-month period - by $15 750,000; during the third twelve-month period - for $29,410,000; and subsequently - for the entire Loan amount. (b) In case of cancellation of any Loan amount, the amount of each part of the Loan specified in paragraph (a) of this Section is reduced in the same proportion, since cancellation refers to the full amount of the Loan until the time of its cancellation. Section 2.04. The Borrower pays a one-time commission fee to ADB in the amount of one half of one percent (0.5%) of the Loan amount. Section 2.05. Interest and other charges on the Loan are payable semi-annually on March 15 and September 15 of each year. Section 2.06. The Borrower shall repay the principal amount of the Loan withdrawn from the Loan account in accordance with the provisions of Appendix 2 to this Loan Agreement. Section 2.07. (a) In order to ensure reasonable debt management, the Borrower may at any time request the conversion of the Loan terms into any of the following forms: (i) a change in the currency of the Loan, all or any part of the principal amount of the Loan withdrawn from the account and outstanding or not withdrawn, to the approved currency; (ii) changing the base of the interest rate applied to all or any part of the principal amount of the Loan from a floating to a fixed rate or vice versa; and (iii) setting limits on the floating rate applied to all or any part of the withdrawn and outstanding principal amount of the Loan by setting the interest rate "cap" or the "collar/floor" interest rate at the agreed floating rate. (b) Any conversion requested in accordance with paragraph (a) of this Section, which is accepted by ADB, is considered a "conversion" in accordance with Section 2.01 (6) of the Loan Instructions and is carried out in accordance with the provisions of Article V of the Loan Instructions and the Conversion Guide.

ARTICLE III Use of Loan funds

Section 3.01. The Borrower shall ensure that the Loan funds are used to finance the costs of subprojects in the Akmola, North Kazakhstan and South Kazakhstan regions included in the Project, in accordance with the provisions of this Loan Agreement. Section 3.02. The goods, services and other items of expenditure to be financed from the Loan, as well as the allocation of Loan amounts between different categories of such goods, services and other items of expenditure, are carried out in accordance with the provisions of Appendix 3 to this Loan Agreement, as this Appendix 3 may be amended from time to time by agreement between the Borrower and ADB. Section 3.03. All goods and services to be financed from the Loan funds are purchased in accordance with the provisions of Appendix 3 to this Loan Agreement, except in cases where ADB may agree otherwise. ADB may withdraw from financing the contract if the goods or services have not been substantially purchased in accordance with procedures agreed between the Borrower and ADB, or if the terms and conditions of the contract do not meet the requirements of ADB. Section 3.04. The Borrower shall ensure that all goods and services financed from the Loan are used exclusively for Project implementation purposes, except in cases where ADB may agree otherwise. Section 3.05. The closing date of the Loan for withdrawal of funds from the Loan account in accordance with Section 9.02. of the Loan Instructions is June 30, 2010 or another date that may be periodically agreed between the Borrower and ADB.

ARTICLE IV Special conditions

Section 4.01. (a) The Borrower shall ensure that the Project is carried out in compliance with existing requirements and efficiency, as well as in accordance with and using sound administrative, financial, engineering and environmental practices applied in the field of water supply and sanitation. (b) During the implementation of the Project and the operation of facilities within the framework of the Project, the Borrower fulfills or facilitates the fulfillment of all obligations set out in Appendix 5 to this Loan Agreement, Section 4.02. The Borrower, if necessary, immediately provides co-financing funds, including facilities, services, land and other resources required in addition to the Loan funds and necessary for the implementation of the Project, as well as the operation and maintenance of facilities within the framework of the Project. Section 4.03. (a) During the implementation of the Project, the Borrower shall facilitate the involvement of competent and qualified consultants and contractors acceptable to ADB, in accordance with Appendix 4 to this Loan Agreement, to the extent, on terms and conditions that meet the requirements of the Borrower and ADB. (b) The Borrower shall facilitate the implementation of the Project in accordance with plans, design standards, technical specifications, work schedules and construction methods acceptable to ADB. The Borrower provides or facilitates the provision to ADB of plans, design standards, technical specifications, and work schedules immediately after their preparation, as well as submits any significant changes made subsequently, with a reasonable degree of detail requested by ADB. Section 4.04. The Borrower ensures that the activities of its ministries and departments for the implementation of the Project, as well as the operation of the project facilities, are conducted and coordinated in accordance with reasonable administrative policies and procedures. Section 4.05. (a) The Borrower (i) maintains or facilitates the maintenance of special Project accounts; (ii) organizes annual audits of the accounts and related financial statements using acceptable auditing standards, as appropriate, and with the involvement of independent auditors whose qualifications, experience, and technical specifications are acceptable to ADB; (iii) at the earliest opportunity, but in any case no later than nine months after the end of each financial year, submit to ADB certified copies of the audited accounts and financial statements, as well as the relevant audit opinion (including the auditors' opinion on the use of the Loan funds, compliance with the terms of this Loan Agreement, and compliance with procedures on the advance invoice/expense report) - all in English; and (iv) submits to ADB other information related to such accounts, financial statements and their audit, as reasonably requested from time to time by ADB. (b) At the request of ADB, the Borrower provides ADB with the opportunity to discuss the Borrower's financial reports related to the Project and from time to time review financial issues related to the Project with the Borrower's auditors, and the Borrower authorizes and requires a representative from the auditors to participate in all discussions requested by ADB, provided that such The discussion is conducted only in the presence of an authorized employee of the Borrower, unless otherwise agreed by the Borrower. Section 4.06. The Borrower allows ADB representatives to verify the implementation of the Project, the goods financed from the Loan, as well as any accounting documents and documents related to the Project. Section 4.07. The Borrower ensures the operation, maintenance and repair of facilities related to the Project in compliance with the correct administrative, financial, engineering, environmental management and operation practices applied in the field of water supply and sewerage.

ARTICLE V Entry into force of the Loan Agreement

Section 5.01. The following additional conditions must be met in order for the Loan Agreement to enter into force in accordance with Section 10.01 (f) of the Loan Instructions: (a) The Borrower must (i) hire consultants who are necessary to provide Project management support; (ii) establish a CBM; (iii) facilitate the establishment of CBMs; and (iv) provide or facilitate the provision of appropriate office space and the recruitment of competent technical staff for CBMs and CBMs; (b) In accordance with paragraph 2 of Appendix 5 to this Loan Agreement, the Borrower must establish a CCP; and (c) the Borrower must sign a regulatory act on the implementation of the Project, indicating the respective roles and responsibilities of the Ministry of Finance, Ministry of Health, KVR, local executive authorities and other relevant authorities in the implementation of the Project. Section 5.02. The effective date of the Loan Agreement, in accordance with Section 10.04 of the Loan Instructions, is the date following the expiration of ninety (90) days after the conclusion of this Loan Agreement.

ARTICLE VI Others

Section 6.01. Pursuant to Section 12.02 of the Loan Instructions, the Borrower's Minister of Finance is appointed as the Borrower's representative. Section 6.02. Pursuant to Section 12.01 of the Loan Instructions, the following addresses have been identified:

For the Borrower

473000, Kazakhstan 33 Pobedy St., Astana, Ministry of Finance

Fax number: (7-3172)717785

For ADB Asian Development Bank P.O.Box 789 0980 Manila, Philippines

Cable Address: ASIANBANK MANILA

Telex Numbers: 29066 ADB PH (RCA) 42205 ADB PM (ITT) 63587 ADB PN (ETPI)

Facsimile Numbers: (632) 636-2444 (632) 636-2403

IN WITNESS WHEREOF, the parties to this Agreement, acting through their duly authorized representatives, have facilitated the signing on their behalf of this Loan Agreement, which is to be delivered to ADB headquarters on the above date.

REPUBLIC OF KAZAKHSTAN

_________________________ YERBOLAT DOSAEV Authorized representative

ASIAN DEVELOPMENT BANK

_________________________ KAZUHIKO HIGUCHI Director Permanent Representative Office of the ADB in Kazakhstan

ADDENDUM 1 Project Description

1. The aim of the Project is to improve the living conditions and health of the population in selected rural settlements, especially the poor, by providing Basic Water Supply and Sanitation (VCS) services through (i) assistance to central and local government authorities in providing VCS infrastructure services and (ii) improving technical and financial capabilities local government authorities, as well as groups of water consumers (GWP) in the planning, construction, operation and maintenance of VK facilities. 2. Scope of the Project

 Component A: Physical infrastructure Implementation of sub-projects for construction, development, rehabilitation and modernization in all areas included in the Project: (i) water supply systems, including water intakes, pumping stations, sewage treatment plants, storage reservoirs, main and distribution water pipes, public water intake columns and outlets to private yards and houses; (ii) wastewater disposal facilities; (iii) school and private toilets; and (iv) public baths.

 Component B: Institutional development Providing financial resources for (i) a capacity-building program; (ii) a health education program; and (iii) consultant services to assist in Project management. (i) Capacity Building program: Conducting training programs designed for approximately 2,000 employees of central and local governments and other shareholders on effective planning, implementation, operation and maintenance of VC systems in such areas as: a. EiO, with an emphasis on reducing unaccounted-for water consumption; b. organizational structure; c. planning, engineering support, financing; and d. healthy lifestyle education programs. (ii) The Sanitary and Hygienic Education Program (SGP): a. provision of materials on the SRS for the media on hygiene, sanitation and water quality, preparation of campaigns and educational and informational materials that complement those already available for the school valeology course; b. conducting training and CFS-oriented seminars for district and rural health workers, rural community leaders, and school teachers in the areas selected for the Project; c. providing selected health centers and schools with educational materials and software; and d. Conducting training in the SGP methodology with the involvement of approximately 1,100 teachers to transmit information in rural settlements located in the Project area. (iii) Project management consultant services: Provision of consulting services to assist in Project implementation and facilitate Project management in the following areas: but. Project management and monitoring; b. supervision of construction under subprojects; and c. planning and implementation of the opportunity program and the SGP. 3 program. The project is expected to be completed by December 31, 2009.

ADDENDUM 2 Loan Repayment schedule (Rural Water Supply and Sanitation Project)

1. The following table shows the repayment dates of the principal amount of the Loan and the interest on the entire principal amount of the Loan payable on each Date of repayment of the principal amount (the proportion of the next installment). If the Loan funds are fully withdrawn from the Account on the Date of Repayment of the Principal Amount, the principal amount repaid by the Borrower on each Date of Repayment of the Principal Amount is determined by ADB by multiplying: (a) the entire principal amount withdrawn and outstanding on the Date of the first Payment of the principal amount by (b) the share of the next installment on each Payment Date If necessary, such repayment amount is adjusted to deduct any amounts referred to in paragraph 4 of this Addendum to which currency conversion is applied.

Period  Due date Share of the next installment (expressed in %) 1 March 15, 2009 0.83 2 September 15, 2009 0.87 3 March 15, 2010 0.91 4 September 15, 2010 0.96 5 March 15, 2011 1.01 6 September 15, 2011 1.06 7 March 15, 2012 1.11 8 September 15, 2012 1.16 9 15 March 2013 1.22 10 15 September 2013 1.28 11 15 March 2014 1.35 12 15 September 2014 1.42 13 15 March 2015 1.49 14 15 September 2015 1.56 15 15 March 2016 1.64 16 15 September 2016 1.72 17 15 March 2017 1.81 18 15 September 2017 1.90 19 March 15, 2018 1.99 20 September 15, 2018 2.09 21 March 15, 2019 2.20 22 September 15, 2019 2.31 23 March 15, 2020 2.42 24 September 15, 2020 2.54 25 March 15, 2021 2.67 26 September 15, 2021 2.80 27 March 15, 2022 2.94 28 15 September 2022 3.09 29 March 15 , 2023 3.25 30 September 15 , 2023 3.41 31 March 15 , 2024 3.58 32 September 15, 2024 3.76 33 March 15, 2025 3.94 34 September 15 , 2025 4.14 35 March 15 , 2026 4.35 36 September 15 , 2026 4.57 37 March 15 , 2027 4.79 38 September 15, 2027 5.03 39 March 15, 2028 5.29 40 September 15, 2028 5.54

 100.00

2. If the Loan funds are not fully withdrawn on the Date of the first Repayment of the principal amount, the entire principal amount of the Loan repaid by the Borrower on each Date of Repayment of the principal amount is determined as follows: (a) if any Loan funds are withdrawn on the Date of the first Repayment of the Principal Amount, the Borrower shall repay the amount withdrawn and outstanding on that date in accordance with paragraph 1 of this Addendum. (b) funds withdrawn after the Date of the first Payment of the principal amount are redeemed on each Date of Payment of the principal amount that falls on the date after the withdrawal of such funds. The amount of such repayment is determined by ADB by multiplying the amount of each withdrawal by a fraction, the numerator of which indicates the initial share of the next contribution, as defined in the table in paragraph 1 of this Addendum, carried out on the agreed Date of payment of the principal amount (the initial share of the next contribution), and the denominator - the sum of all remaining initial shares of the next contributions by the Dates of payment of the principal amount, falling on or after this date. If necessary, such repayment amounts are adjusted to deduct any amounts specified in paragraph 4 of this Addendum to which currency conversion applies. 3. For the sole purpose of calculating the principal amount payable on any Date of Payment of the Principal Amount, funds withdrawn within two calendar months prior to any Date of Payment of the Principal Amount will be considered withdrawn and outstanding on the second Date of payment of the principal amount following the date of withdrawal, and are due to be repaid on each Date of Payment of the principal Amount. the amount that starts from the second Payment Date of the principal amount following the withdrawal date. 4. Notwithstanding the provisions of paragraphs 1 and 2 of this Addendum, when all or any part of the withdrawn principal amount is exchanged into an approved currency, the amount thus converted into the approved currency and redeemable on any Date of Payment of the principal amount occurring during the conversion period is determined by ADB by multiplying such amount expressed in the appropriate currency. in the currency immediately prior to such conversion, or: (i) at an exchange rate reflecting the amount of the principal amount in the agreed approved currency, paid by ADB in accordance with the currency hedging operation, related to the specified conversion; or (ii) to the exchange rate at the Current Quote (Screen Rate), if this is determined by ADB in accordance with the Conversion Guidelines. 5. If the principal amount of the Loan withdrawn and repayable is denominated in more than one Loan currency from time to time, the provisions of this Addendum shall apply separately to the amount denominated in each Loan currency in order to establish a separate repayment schedule for each of these amounts.

ADDENDUM 3 Purchases and withdrawals of Loan funds

1. Except in cases where ADB may agree otherwise, the procedures specified in the following provisions of this Addendum apply to purchases of goods and services financed from Loan funds. In this Addendum and its Annex, the term "goods" includes equipment and materials; the term "services" does not include consulting services. 2. Purchases of goods and services are carried out in accordance with the provisions of the ADB Loan Procurement Guidelines dated February 1999 (hereinafter referred to as the Procurement Guidelines), which are amended from time to time, and which were provided to the Borrower and the Ministry of Agriculture. 3. Purchases of goods and services are carried out without any restrictions or preferences regarding any particular supplier or contractor or any particular class of suppliers or contractors, unless otherwise provided in paragraphs 6 and 8 below. 4. (a) Each contract for the supply of equipment or materials with an estimated value of more than $500,000 is concluded on the basis of international competitive bidding, as described in Chapter II of the Procurement Manual. (b) For contracts concluded on the basis of international competitive bidding, a General Procurement Notice must be submitted to the ADB (which the ADB will order to be published separately) as soon as possible, in any case no later than 90 days before the issuance of the first invitation to bid for the Project, in such form and in such details as will be reasonably requested by the ADB. The information required for the annual updating of such a General Procurement Notice should be provided to ADB as long as the procurement of goods through international competitive bidding continues. (c) For contracts concluded through international competitive bidding, procurement activities are subject to review by ADB in accordance with the procedures specified in Chapter IV of the Procurement Manual. Each draft invitation to bid submitted to ADB for approval under such procedures must be received by ADB no later than 42 days prior to its issuance, and must contain information reasonably requested by ADB so that ADB can order the separate publication of such invitation. 5. (a) Each contract for the supply of equipment or materials with an estimated value of $500,000 or less (except for small items) is concluded on the basis of international purchases, as described in Chapter III of the Procurement Manual. (b) Each draft invitation to bid and the related tender document are sent to ADB for approval prior to their issuance. (c) Notwithstanding the provisions of 3.03 (b) of the Procurement Manual, the award of any contract is subject to prior approval by ADB. 6 When comparing proposals for international competitive bidding, at the discretion of the Borrower and in accordance with the provisions of the Annex to this Addendum, a preference margin may be established for goods produced in the Borrower's territory, provided that, to the satisfaction of the Borrower and ADB, the bidder offering such goods ensures that the internal value added is at least 20 percent of the offered price is free of charge for such goods. 7. Construction contracts with an estimated value of less than $1,000,000 may be awarded through local competitive bidding among contractors in accordance with the Borrower's standard procurement rules acceptable to ADB. The selection and involvement of contractors is carried out with the approval of the ADB. As the applications received are evaluated, the contract proposal is submitted to ADB for approval. To do this, three copies of (i) the report on the public opening of bids must be provided to ADB; (ii) summaries and evaluations of bids.; (iii) a proposal for the award of a contract; and (iv) a draft contract or draft letter of acceptance of the proposal. Three copies of the contract are submitted to the ADB immediately after the conclusion of each contract and as they are processed. 8. (a) Some types of simple and minor construction work with an estimated cost of less than $100,000 may be performed by the Borrower based on labor accounting. (b) Small items with an estimated value of less than $100,000 per contract may be purchased through direct procurement. 9. (a) The Borrower ensures that all ADB-funded goods and services (including all computer hardware, software, and systems purchased separately or incorporated into purchased other goods and services) do not infringe or infringe on the industrial or intellectual property rights or patent claims of any third party. (b) The borrower ensures that all ADB-funded contracts for the purchase of goods and services contain appropriate statements and guarantees from the contractor or supplier and, if necessary, compensation for losses on the items specified in subparagraph (a) of this paragraph.

 Withdrawal of funds

10. It is not allowed to withdraw funds from the Loan account to pay any local taxes. 11. Any contract concluded with a local supplier after the entry into force of international competitive bidding or international purchases, in accordance with this Addendum, is financed from a Loan for the following reasons: (a) in cases where goods purchased from a local supplier are manufactured in the domestic market, 100% of the ex-factory price for the delivered goods (excluding any taxes); and (b) in cases where the goods purchased from a local supplier are fully imported, 100% of the contract price is in foreign currency.

 Local expenses

12. (a) Funds in foreign currency up to $7,600,000 may be withdrawn from the Loan account to cover local costs. (b) Unless otherwise provided in this paragraph or ADB agrees otherwise, funds may not be withdrawn from the Loan account to pay local Project costs.

 Advance invoice: Expense report

13. (a) Unless ADB agrees otherwise, immediately after the Effective Date of the Loan Agreement, the Borrower opens an advance account with a commercial bank acceptable to ADB. The opening, management, replenishment and liquidation of the advance account is carried out in accordance with the "ADB Guidelines for Loan Disbursements" dated January 2001, with changes made to it from time to time as a result of the agreement of detailed terms between the Borrower and ADB. The amount deposited to the advance account must not exceed $2,000,000. (b) The Expense Report (PR) procedure may be used to recover eligible expenses and liquidate advance funds deposited into the advance account in accordance with the ADB Loan Disbursement Guidelines dated January 2001, as amended from time to time by agreement of detailed terms between the Borrower and ADB. Any individual payments to be reimbursed or repaid under the PR procedure should not exceed $50,000.

 Terms of withdrawal of funds from the Loan account

14. Notwithstanding any other provisions of this Loan Agreement, withdrawals from the Loan account are not permitted until ADB receives payment of the one-time commission fee referred to in Section 2.04 of this Loan Agreement.

Appendix to Appendix 3

Preferences for domestically produced goods

1. When purchasing goods through international competitive bidding, goods produced in the Borrower's territory may receive a margin of preference in accordance with the following provisions, provided that the bidder meets the requirements of the Borrower and ADB, and that the internal value added is equal to at least 20 percent of the factory's offered price for such goods. Twenty percent of the internal value added applies to the total ex-factory bid for the goods, not just one item on the list. (a) In order to apply local preferences, all eligible bids must first be classified into the following three categories:: Category I - competitive bids offering goods produced in the Borrower's territory and meeting the minimum requirements for internal added value; Category II - competitive bids offering goods produced in the Borrower's territory; and Category III - competitive bids offering imported goods. (b) The lowest priced bid is then determined in each category by comparing all evaluated bids in each category with each other, excluding customs duties and other import duties levied in connection with the import and sale of goods and similar duties levied in connection with the sale or delivery of goods in accordance with the bids. (c) The bids rated as having the lowest prices are then compared with each other and, if as a result of such comparison, it turns out that any bid from Category I or Category II has the lowest price, it must be selected for the contract. (d) However, if, as a result of a comparison in accordance with subparagraph (c) above, the lowest-priced bid is found in Category III, it must then be compared with the lowest-priced bid from Category I. For the purposes of further comparison only, an incremental adjustment should be made with respect to the Category III tender application, assessed as the lowest, by adding either: (i) the amount of customs duties and other import duties that the non-exempt importer will have to pay for the import of goods proposed in the Category III tender application; or (ii) fifteen percent of the proposed CIF price for such goods, if the customs duties and import duties mentioned above exceed 15 percent of the proposed CIF price. If, after further comparison, it is determined that the lowest bid is from Category I, it should be selected for the contract; if not, then the rated lowest bid from Category III should be selected for the contract. 2. (a) Bidders applying for preferences shall provide the justification necessary to establish the acceptability of the competitive offer for preferences, including the minimum internal value added. (b) The tender documentation should clearly specify the preferences received, the information necessary to establish the acceptability of the bid for the claimed preference, as well as all the above procedures that must be followed when comparing bids.

Preferences for local contractors

3. When selecting contractors for construction work, as well as contractors with unified responsibility for the construction and commissioning of turnkey facilities, or contractors on delivery-and-installation terms, in which the cost of CIF goods used for or in permanent work under such contracts is less than 60 percent of the total cost of such Eligible local contractors, as indicated below, may receive a margin of preferences through international competitive bidding in accordance with the provisions set out below: (a) In order to apply local preferences, all eligible bids must first be classified into the following two categories: Category I - bids submitted by local contractors and joint ventures that meet the requirements for preferential treatment in accordance with the applicable criteria set out in paragraph 6 below; and Category II - bids submitted by other contractors. (b) The lowest-priced bid in each category is then determined by comparing all evaluated bids in each category with each other. (c) The bids evaluated as the lowest are then compared with each other and, if as a result of such comparison it is found that any offer from Category I has the lowest price, it is selected for the conclusion of the contract. (d) However, if, as a result of a comparison in accordance with subparagraph (c) above, the lowest-priced bid is found in Category II, it is then compared with the lowest-priced bid from Category I. Only for the purposes of further comparison, an upward adjustment of the tender offer from Category II, estimated as the lowest, is carried out by adding an amount equal to seven and a half percent of the offered price. If, after such a comparison, it is determined that an offer from Category I has the lowest price, it is selected for the conclusion of the contract.; if not, then a competitive offer from Category II, evaluated as having the lowest price, is selected. 4. (a) In order to be eligible for the preferences set out in paragraph 5 above, local contractors must meet the following criteria: (i) firms are registered in the Borrower's territory; (ii) most of the firm's property belongs to citizens of the Borrower's country; and (iii) firms do not subcontract more than 50 percent of the total cost of work to foreign contractors. (b) A joint venture between a local contractor and its foreign partner is considered eligible for preferences if it meets the following criteria: (i) the local partner(s) is individually eligible to receive preferences according to the above criteria; (ii) the local partner(s) without foreign participation may not be qualified to receive a work contract on technical or financial grounds; and (iii) the local partner(s) under the proposed schemes performs at least 50 percent of the contract work, measured in value. (c) Contractors applying for preferences must provide, as part of the information required to determine qualifications, the necessary information, including details of ownership, to determine, based on applicable criteria, whether a particular firm or group of firms meets the requirements for preferences. 5. The tender documentation should clearly specify the preferences received, the information necessary to establish the eligibility of firms to receive the claimed preference, as well as all the above procedures that must be followed when comparing bids. The bidders applying for preferences, at the request of the Borrower and the ADB, provide additional information to substantiate their eligibility for preferences.

ADDENDUM 4 Consultants

1. The services of consultants will be used in the implementation of the Project, in particular, for: (a) project management; (b) engineering support for water supply and sanitation; (c) environmental impact assessment; (d) hydrogeology; (e) well drilling; (f) health education; (g) finance and accounting; and (h) institutional development. Consultant services are funded from the Borrower's own resources. The technical specifications of the consultants will be agreed upon between ADB and the Borrower. 2. (a) The selection and recruitment of international consultants is carried out in accordance with the provisions of the "Guidelines for the Recruitment of Consultants by the Asian Development Bank and its Borrowers" dated April 2002 (hereinafter referred to as the "Guidelines for the Recruitment of Consultants"), which are adjusted from time to time, and which are provided to the Borrower. (b) Local consultants may be selected and engaged in accordance with other rules, subject to prior approval by ADB of their qualifications and experience for the assignment. Shortly after signing the contract, three copies of the signed contract are sent to the ADB. If any significant changes are proposed to the contract after it is finalized, the proposed changes must be submitted to ADB for approval. 3. The selection and hiring of a consulting firm should be carried out by an IA (Executive Agency) using selection procedures based on quality and price (COC) in accordance with the following procedure: (a)An invitation to submit technical and financial proposals. The invitation to submit technical and financial proposals (hereinafter referred to as the "Request for Proposals or RFP"), as well as all necessary documents, must be approved by the ADB before their publication. For this purpose, three copies of the draft RFP, the names of the consulting firms included in the short list, the proposed evaluation criteria for both proposals, the draft contract for the provision of consulting services and other related documents should be submitted to ADB. A period of at least 60 days must be allowed for the submission of both proposals. A copy of the latest version of the RFP in the form in which it was published, along with all related documents, must be submitted to the ADB for information immediately after their issuance. The validity period of technical and financial proposals provided for in the RFP should usually not exceed three months from the date specified as the deadline for submitting technical and financial proposals. Any request for an extension of this period of validity must be approved by the ADB. Except in cases previously agreed with ADB, the validity period, as well as all its extensions, should not exceed a maximum period of six months. If the contract is not signed during the validity period in accordance with the Guidelines for the Use of Consultants, the selection results will be declared invalid, after which the selection and recruitment process provided for in this paragraph must be started again. (b)Evaluation and scoring of technical proposals. Immediately after the technical proposals are evaluated, the results of the evaluation of the technical proposals must be approved by ADB. For this purpose, three copies of the technical proposals should be sent to ADB. (c)Public opening of financial proposals. The financial proposals of firms whose technical proposals meet the minimum qualifying technical requirements are opened publicly after the relevant invitation is handed over to these firms or their representatives to attend the opening of financial proposals. (d)Evaluating and rating financial proposals, as well as determining the rating of technical financial proposals. After the evaluation of financial proposals is carried out, the rating of technical and financial proposals is determined. Prior to negotiations with the first-place consultants, the approval of the ADB for the evaluation of financial proposals and the determination of the rating of technical and financial proposals must be obtained. For this purpose, three copies of the report (i) on the evaluation of financial proposals and (ii) on the determination of the rating of technical and financial proposals should be provided to ADB. (f)Fulfillment of the contract. After the negotiations are completed, but before the contract is signed, the contract in the form in which it was agreed upon must be sent to ADB for approval during the negotiations. Three copies of the signed contract should be sent to ADB immediately after signing the contract. If, after signing the contract, any significant changes to it are proposed, such changes should be sent for approval to ADB. 4. The borrower has requested that consultants hired under international procedures be selected in accordance with paragraph 3 of this Annex, providing for their cooperation with local consultants. ADB has agreed to this request, and for this purpose, proposals submitted to ADB in accordance with paragraph 3 of this Annex should include relevant provisions related to cooperation.

ADDENDUM 5 Project execution and other issues

 Implementation mechanisms

 But. Executive Agency and Executing Agency

1. The Ministry of Agriculture acts as the Executive Agency (IA) and is responsible for the overall coordination of the Project. The Committee on Water Resources (CVR) of the Ministry of Agriculture acts as the Executing Agency and is responsible for the preparation and implementation of development programs, as well as for improving systems to ensure sustainable rural water supply.

 V. The Project Coordination Commission (CCP)

2. The Borrower forms a CCP before the effective date of the Loan Agreement. The CCP coordinates the activities of a wide network of ministries, departments, organizations, as well as local government bodies that are actively involved in and responsible for the water supply industry. In addition, the CCP is responsible for monitoring the implementation of the Project and ensuring coordination with the Government's strategy and programs. The work of the CCP is carried out under the chairmanship of IA, and the CCP includes representatives of the Ministry of Economy and Budget Planning (MEBP), the Ministry of Finance (MOF), the Ministry of Health (MOH), if necessary, and other interested departments. The KKP is also responsible for analyzing reports submitted by the Central Project Management Group (CGUP), provides guidance and, if necessary, gives instructions to the CGUP and OGUPam.

 With. The Central Team of Project Management Specialists (TSGUP)

3. The Borrower forms a CBM before the effective date of the Loan. TSUE implements the Project, including the purchase of goods, works and services, and also concludes contracts in coordination with the Regional Project Management Groups (OGUPs) at the regional centers included in the Project. TSUE is headed by a Project Coordinator/Design and procurement specialist, and has staff specializing in Project areas, including engineering support, financial management, community participation, and institutional development.

 D. Regional Project Management Group (OGUP)

4. Regional Project Management Groups coordinate and manage all Project implementation activities at the regional level. OGUPs submit reports to the TSGUP. When preparing and developing the basic infrastructure, the OGUP coordinate all issues and act under the general guidance of the CGUP. Under the management of the Central State Unitary Enterprise, OGUPs implement all aspects of the Project and coordinate it directly with the relevant technical departments and departments at the regional level. OGUPs initiate and coordinate key Project implementation activities, such as public consultations, selection of subprojects, preparation of tender and tender documentation, construction supervision, monitoring and quality control, maintenance of project accounts, settlement of issues related to environmental impacts. Each OGUP is supported by a technical consultant or a group coordinator of the OGUP, who must consult with the regional akim. Each OGUP should be staffed with specialists in design, construction supervision, social development, accounting and community relations.

Appendix 5

 Selection of subprojects

 But. Localities and subproject selection

5. Settlements should be divided into three main categories: (a) settlements in which the group water pipes (GW) are not in working order; (b) settlements with rare supply of water through GW; and (c) settlements with a different method of individual water supply. When selecting settlements for subprojects, broader criteria will be used, and, at first, priority will be given to settlements in which the water supply is not in working order, as well as to settlements with a rare supply of water through the water supply system. 6. The selection of a subproject will be based on the following: (a) settlements with a large population living below the poverty line; (b) settlements with water sources for drainage; (c) subprojects that meet the economic criteria set out in the ADB Guidelines for the Economic Analysis of Water Supply Projects, and, in particular, the criteria for the least cost; (d) sustainability of the EiO of completed water supply facilities; (e) localities wishing to establish a GWP; and (f) localities in which the relevant regional government body has committed itself, if necessary, to subsidize the cost of EIO. The subprojects must undergo a state environmental assessment at the Ministry of Environmental Protection or its territorial bodies, and will not involve any relocation. The proposed subprojects will have to use acceptable technology and offer the least expensive solutions.

 V. Evaluation and approval

7. The rationale for subprojects should be based on: (a) justifiable economic viability; (b) the adoption of a design that provides affordable and cost-effective solutions; (c) the provision of EI; and (d) the promotion of environmental protection and additional health benefits. 8. The borrower submits each of the first small subprojects, or a subproject with an estimated cost of less than $500,000, proposed from each of the four areas included in the Project, and the first large subproject, or a subproject with an estimated cost of more than $500,000, proposed from each area included in the Project, to ADB for approval. the Project area. Any subsequent subproject with an estimated cost of more than $2,000,000 is submitted to the ADB for approval. In addition, the Borrower must submit to ADB the first 10 subprojects completed in each participating area for review and comments. 9. To approve these subprojects, the CFS submits an application to the ADB, which includes a description and evaluation of the subproject proposal. Subprojects that do not require ADB approval are evaluated by the CGUP/CVR and approved by the CCP. KVR and OGUPy conduct economic and financial analyses of all major subprojects. For small subprojects, the KVR and OGUP carry out simplified financial and economic analysis, including accessibility analysis. All documents related to the subproject proposals and stored in the CVR are provided with access upon request from the ADB.

 Water supply

10. The borrower supports the expansion by local executive authorities of the public water collection network program to increase the volume of water supplied to residents of the relevant subproject area living below the poverty line.

 Environment

11. The borrower shall ensure (a) that the Ministry of Environmental Protection or its territorial authorities immediately obtain a positive conclusion from the state environmental assessment and environmental management permits for each subproject; (b) prepare an initial environmental assessment (EPA) for each subproject in accordance with ADB requirements for environmental assessment, as well as the environmental impact analysis procedure.; (c) the construction and operation of each subproject in accordance with the procedures and recommendations of the Borrower and ADB on environmental protection and the requirements of the legislation of the Republic of Kazakhstan in the field of environmental protection; (d) minimizing any adverse environmental impact caused by the implementation of subprojects by implementing mitigation measures and implementing a monitoring program, as provided for in the Summary of the PEP, for the main subprojects, identifying negative environmental impacts, conducting an environmental impact assessment; and (e) within the framework of project monitoring and analysis - submission to the ADB of a progress report on the implementation of the environmental monitoring program during construction and operation.

 Monitoring of Project results

12. The Borrower ensures that the results of the Project implementation, the effect obtained and, in general, all Project activities are monitored and evaluated annually with the help of the Central State Unitary Enterprise. Within six months from the effective date of the Loan Agreement, the Borrower will improve the Project Results Monitoring System (PSMS), including the use of appropriate financial and technical monitoring indicators and information to ensure that it meets ADB requirements.

 Pricing plans

13. The Borrower shall ensure that the local government authorities and the GWP maintain the Project facilities in accordance with reasonable administrative practices and procedures involving the collection of water charges. In addition, the Borrower encourages local governments to conduct an annual analysis of the size and structure of water tariffs and submit the results to the ADB through the IA within three months of such an analysis.

 Preparation of invoices and collection of payments

14. The borrower ensures that local government authorities and the GWP take appropriate measures to properly collect payments for unpaid water bills, as well as to protect water resources and facilities through strong prosecution for violations such as distortion of water meter readings or theft of water.

 Participation of NGOs, NGOs and women

15. The Borrower ensures that (a) relevant NGOs and NGOs are involved in the planning of subprojects, design, construction, and EiO, as well as actively assist in such Project components as opportunity creation, health and hygiene; (b) women's committees participate in all activities related to Project-related decision-making.; and (c) the Project provided adequate opportunities to involve women in GWP-related activities. At least half of the management positions in the GWP should be occupied by women.

 Audit of accounts

16. In order to ensure compliance with the requirements of the Loan Agreement for the annual submission of audited financial statements, the Loan funds may be used to finance the costs associated with the involvement of private auditors and the translation of audit reports into English, provided that (i) the auditors have the qualifications, knowledge, experience and technical specifications acceptable to ADB(ii) the engagement procedure is acceptable to the ADB.

 Co-financing funds

17. Without prejudice to Section 4.02 of the Loan Agreement, the Borrower ensures the timely provision of all co-financing funds necessary for the implementation of the Project. To do this, the Borrower ensures that local government agencies provide timely co-financing funds and, if necessary, cash allocations for the operation and maintenance of facilities during the Project period on an annual basis.

18. The Borrower must ensure that the Project will be included in the List of Priority Investment Projects (PIP) for 2004.

 Forced relocation

19. Despite the fact that forced relocation is not provided for, the Borrower, prior to concluding construction contracts through the Enforcement Agency, conducts a thorough study of the possible consequences of forced relocation so that there are no cases of loss of land, income, housing, public facilities and resources that will require compensation and other assistance in accordance with the ADB policy on forced relocation. If, as a result of a thorough review, it turns out that forced resettlement is possible, then the Borrower must ensure that resettlement activities are carried out in accordance with the ADB policy on forced resettlement.

 Project Analysis

20. Once a year after the Effective Date of the Loan, the Borrower, together with ADB, evaluates the implementation activities, including the role of the CFS and GWP, as well as the experience gained after the start of the Project. 21. A full-scale analysis is also carried out by the Borrower in the second and fourth years of the Project implementation. Such an analysis should consider the impact of the Project on poverty reduction, the mechanism of Project implementation, public participation, the physical results of the Project, the design and use of technology, the organization of EIO and cost recovery mechanisms, institutional aspects, including training, educational programs in the field of health, as well as the role of women.

President

Republic of Kazakhstan

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