On the ratification of the Loan Agreement between the Government of the Republic of Kazakhstan and the Islamic Development Bank for the Rural Water Supply Project of the Karaganda region in Kazakhstan

Home / RLA / On the ratification of the Loan Agreement between the Government of the Republic of Kazakhstan and the Islamic Development Bank for the Rural Water Supply Project of the Karaganda region in Kazakhstan

On the ratification of the Loan Agreement between the Government of the Republic of Kazakhstan and the Islamic Development Bank for the Rural Water Supply Project of the Karaganda region in Kazakhstan

Law of the Republic of Kazakhstan dated May 26, 2004 No. 555

To ratify the Loan Agreement between the Government of the Republic of Kazakhstan and the Islamic Development Bank for the Rural Water Supply Project of the Karaganda region in Kazakhstan, signed in Almaty on September 2, 2003.

President of the Republic of Kazakhstan

Loan agreement between the Government of the Republic of Kazakhstan and the Islamic Development Bank for the Rural Water Supply Project of Karaganda region in Kazakhstan

This agreement was concluded on 05/07/1424 AH, which corresponds to 02/09/2003, between the Government of the Republic of Kazakhstan (hereinafter referred to as the "Borrower") and the Islamic Development Bank (hereinafter referred to as the "Bank")

Whereas (A) the Borrower has requested a Loan from the Bank to finance part of the cost of a Rural Water Supply Project in the Karaganda Region of Kazakhstan (hereinafter referred to as the "Project") described in Annex II to this Agreement; (B) One of the Bank's objectives is to assist the Bank's member countries by providing loans to finance effective projects and programs; (C) The Project is considered technically sound, economically and socially justified; (D) The Bank has agreed, in particular on the basis of the above, to provide a Loan to the Borrower on the following terms and conditions.; Based on the above, the parties to this Agreement agree on the following:

Article-I General terms and definitions

 Section-1.01. General Terms and Conditions: The Parties to this Agreement accept all provisions of the General Terms and Conditions applicable to the Bank's Loan and Guarantee Agreements dated November 8, 1976 (hereinafter referred to as the "General Terms and Conditions"), which have the same force and effect as if they were fully specified here.

 Section-1.02. Definitions: When used in this Agreement, unless the context requires otherwise, a number of terms defined in the "General Terms" have the meanings specified therein, respectively, and the following additional terms have the following meanings: (a) "Effective Date" means the date on which the Bank announces to the Borrower that the Agreement will enter into force. (b) "Executive Body" means the Committee on Water Resources of the Ministry of Agriculture of the Republic of Kazakhstan (hereinafter referred to as "KVR"), which is the Executive Body responsible for the implementation, operation and management of the Project. (c) "Project" and reference to "parts" of this Project means the Project and part of this Project described in Annex II to this Agreement; (d) the "Islamic Dinar/ID", as defined in Article 4(1)(a) of the Agreement Establishing the Bank, is a settlement a unit of the Bank. One ID is equivalent to one Special Drawing Right of the International Monetary Fund.

Article-II Loan

 Section-2.01. Amount: The Bank agrees to provide the Borrower with an amount from its usual funds not exceeding the equivalent of 7,000,000 ID/- (seven million Islamic dinars) only.

 Section 2.02. Except in cases where the Bank agrees otherwise, contracts for goods and services provided for financing from the funds of this Loan are purchased in accordance with the procedures established by the Bank. In this regard, the Borrower must comply with the Rules of the Organization of the Islamic Conference regarding the boycott of Israel.

Article-III Repayment of debt in installments, service fees and addresses for making payments

 Section 3.01. Repayment of debt in installments The Borrower pays the principal amount of the Loan for 25 (twenty-five) years, including 7 (seven) years of grace period, starting from the date of entry into force of this Agreement, 36 (thirty-six) equal and consecutive installments every six months, as set out in Appendix-1 (A) to this Agreement.

Section 3.02. Service Fee (a) The Borrower will pay the Service Fee to the Bank, initially estimated at 717,990 ID - (seven hundred seventeen thousand nine hundred and ninety Islamic dinars), in accordance with the procedure set out in Appendix 1(B) to this Agreement. (b) There is an agreement and understanding between the parties to this Agreement that the initial amount of the Service Fee referred to in Subsection 3.02(a) of this document is nothing more than a calculation based on the assumption of the implementation period and the repayment period of the full Loan amount, as provided for in this document. It was further agreed that the actual amount of the Service Fee will be calculated after the Project is implemented, provided that the actual amount calculated in this way does not exceed 2.5% (two point five percent) of the Loan amount per year. (c) The service fee will be charged from the date of entry into force of this Agreement.

 Section-3.03. Addresses for making payments All payments, including repayment of the principal amount, will be considered duly made when the funds for such payments are credited to the account specified by the Bank for this purpose.

 Section 3.04. Without prejudice to the generality of the provisions of Section 3.03 of this Agreement, any payment under this Agreement will be deemed to have been duly made: (a) If such payment is made in US dollars, and when one of the following banks confirms to the Bank the receipt of such payment to the Bank's account:

(i) Account No. 159111 Account N: 159111 Gulf International Bank Gulf International Bank (UK) (UK) Limited (GIB) Limited One Knightsbridge One Knightsbridge London SW1X7XS London SW1X7XS United Kingdom UNITED Kingdom Telex No. 8812261/2 SAUDI G Telex No. 8812261/2 SAUDI G SWIFT CODE: SINTGB2L SWIFT CODE: SINTGB2L

(ii)

Account No. At 10507 Account N At 10507 Arab Banking Corporation Arab Banking Corporation P.O.Box: 5698, Manama, Bahrain P.O. Box: 5698, Manama, Bahrain Telex Numbers: 9385, Telex numbers: 9385, 9431/2/3, 9442 9431/2/3, 9442 ABCBAH BN. ABCBAH BN.

(b) If such payment is made in pounds sterling, and when the next bank confirms receipt of such payment to the Bank's account:

Account No. 122432 GBP2520 01 Account No. 122432 GBP2520 01 Gulf International Bank B.S.C. Gulf International Bank 75 King William Street 75 King William Street London EC4N 7DX London EC4N 7DX United Kingdom United Kingdom Telex No. 8812889/8813326 Telex number: 8812889/8813326 GIBANK G GIBANK G SWIFT CODE: GULFGB2L SWIFT CODE: GULFGB2L

(c) If such payment is made in Euro currency, and when the next bank confirms to the Bank that such payment has been received to the Bank's account: Account N: 096965 001 51 Account N: 096965 001 51 Union De Banques Arabes Union De Banque Arabes Et Francaises (UBAF) (UBAF) 92523 Paris, Neuilly Cedex Paris, Newlywedex, 92523 France France Telex No. 610334 UBAF Telex Number: 610334 UBAF SWIFT CODE: UBAFRPPXXX SWIFT CODE: UBAFRPPXXX

Article-IV Withdrawal and use of loan funds

 Section-4.01. Withdrawal of Loan Funds The Loan amount may be withdrawn by the Borrower, subject to compliance with Annex III and other provisions of this Agreement, the General Terms and Conditions and Payment Procedures of the Bank for the purposes set out in this Agreement for the costs incurred in relation to the reasonable cost of goods and services required by the Project and agreed for financing under this Agreement.

 Section-4.02. Date of request for the first payment If, within 180 days from the Effective Date or a later date to be agreed between the Borrower and the Bank, the Borrower does not submit a request for the first payment to the Bank, the Bank may terminate this Agreement by duly notifying the Borrower.

 Section-4.03. The Closing Date of December 30, 2006, or a later date to be agreed between the Borrower and the Bank, is the Closing Date of the Loan withdrawal for the purposes of Section 6.03 (c) of the General Terms and Conditions.

 Section-4.04. Use of Loan funds All amounts withdrawn by the Borrower from the Loan Account will be used exclusively for the purposes of the Bank-funded Project.

Article-V Project execution

 Section-5.01 The borrower undertakes to: (a) carry out the Project with due integrity and efficiency, conduct its operations and conduct business through the Executive Body in accordance with good administrative, financial, engineering and economic practices under the guidance of qualified and experienced management and staff and in accordance with the investment schedule, budget, plans and technical conditions of the Project submitted for consideration in Bank and approved by the Bank; (b) Submit to the Bank for its approval, in such detail as the Bank may reasonably request, any envisaged significant changes to the budget, plans and technical conditions of the project, as well as any significant changes to any contract for services or the purchase of goods related to the implementation of the project.

Section-5.02. Without any reservations or limitations of any of its other obligations under this Agreement, the Borrower will provide the Bank with sufficient and reasonable time to explain any significant changes or any extension of the period stipulated in any contract for the provision of services or the purchase of goods related to the implementation of the Project.

Article-VI Additional preliminary requirements before the payment of funds by the bank

Prior to submitting the first withdrawal request, the Borrower must specify the procedure proposed by him, which should be followed or ensured for competitive bidding in accordance with Sections 2.02 and 7.02 of this Agreement, and must obtain the approval of the Bank for this.

Article-VII Separate arrangements

 The section is 7.01. The Borrower will provide the entire amount immediately, when required, including costs in local currency and cost overruns that will be required to complete the Project on terms that satisfy the Bank.

 Section-7.02. Except in cases where the Bank agrees otherwise, the Borrower enters into all contracts financed from the funds of this Loan for the implementation of the Project as follows: (a) Procurement of Consulting Services, including comprehensive packages of preliminary design studies, detailed planning and construction supervision, will be provided by consultants selected from among consultants included in the final list of qualified consultants from IDB member countries. (b) Civil Engineering procurement (including comprehensive civil engineering packages, equipment supply and installation) will be purchased from pre-evaluated Contractors selected through International Competitive Bidding (ICB), which is limited to IDB member countries. (c) Financial Audit procurement will be secured through Internal Competitive Bidding (CGT). International companies that have offices in Kazakhstan or have joint offices with local auditors may also be eligible to participate in the financial audit tender. The borrower will seek prior approval from the bank for any contract that exceeds the equivalent of one hundred and fifty thousand Islamic dinars (150,000 ID).

 The section is 7.03. The Borrower submits to the Bank, immediately after the Borrower's approval, the development, plans and technical conditions of the Project, its schedule and any significant changes made to it subsequently, in such details as the Bank may periodically request.

 The section is 7.04. The Borrower establishes and maintains accounting documents sufficient to identify the goods financed from the Loan and provide information on their use in the Project, to report on the progress of the Project and to reflect the operations and financial condition of the Executive Body, in accordance with generally accepted accounting practices.

 The section is 7.05. The Borrower will provide all reasonable opportunities for accredited representatives of the Bank to visit for Loan-related purposes, inspect the Project, goods, and any relevant accounting documents and certificates; and provide the Bank with any information that the Bank reasonably requests regarding the costs of the Loan, Project, goods, operations, and financial condition of the Executive Body.

 The section is 7.06. In order to implement and manage the Project, the Borrower undertakes to regulate all relevant activities so that the Executive Body can constantly function in accordance with the rules and instructions in a form and substantially satisfactory to the Bank, and has such powers, management and administration as are necessary for the diligent and effective implementation and operation of the Project.

 The section is 7.07. The borrower insures or provides insurance for all goods financed from the Loan funds by a recognized insurance company. Such insurance will cover transportation by sea, transit and other risks related to the purchase and import of goods into the Borrower's territory and their delivery to the Project location, and will amount to such an amount as is consistent with generally accepted commercial practice. Such insurance is concluded in accordance with the legislation adopted in the Borrower's country, taking into account that the goods will be reinsured by a Company that will pay the insured amounts in foreign currency.

 The section is 7.08. The Borrower will take all actions deemed necessary to provide, at any time when required, the land plots and rights to these plots that will be required for the implementation of the Project, and will provide the Bank, upon request, with evidence satisfying the Bank that such land plots and rights to these plots have been provided for the purposes related to the Project..

 Section-7.09. The Borrower, for its part, will take all necessary measures to assist the Executive Body in the implementation of the Project, and will not take any action or allow any action that would interfere with or hinder the implementation or operation of the Project, or the implementation of any of the provisions of this Agreement.

 Section-7.10. All documents, accounting documents, correspondence and similar materials of the Bank will be considered confidential by both the Bank and the Borrower.

Article-VIII Reports

 Section-8.01. (a) The Borrower and the Bank will cooperate fully to ensure that the Loan objectives are completed. In this regard, each of them will provide the other party with such information as is reasonably requested regarding the general condition of the Loan. On the part of the Borrower, such information will include information about the financial and economic conditions in the territory and the state of the Borrower's balance of payments. (b) The Borrower and the Bank periodically, at the request of one of the parties, exchange views through their representatives on issues related to the purpose of the Loan, provision of services related to it, and fulfillment by the Borrower of its obligations under this Agreement.

 Section-8.02. (a) The Borrower undertakes to ensure that the following reports are submitted or sought to be submitted to the Bank, which fully satisfy the Bank and within the time limits specified for each report: i - Within 30 (thirty) days after the end of each calendar quarter or for any other period that the parties may agree on, Project performance reports in such form as the Bank may periodically determine; ii - Other reports that the Bank may reasonably request regarding the investment of the Loan amounts spent and the progress of the Project; iii - Immediately after the completion of the Project, but in any case, no later than six months after the Closing Date or another date that may be agreed between the Borrower and the Bank for this purpose, The Borrower prepares and submits to the Bank a final report on the completion and initial operation of the Project to the extent and in such details as the Bank reasonably requests. (b) The documents described in this section are certified at the Bank's discretion in such a way as the Bank may reasonably request.

Article IX Validity period

This Agreement will not enter into force until: (A) (1) satisfactory evidence is provided to the Bank that the Borrower's implementation and presentation of this Agreement has been duly officially authorized or ratified by all necessary government actions; (2) The Borrower submits a Legal Opinion acceptable to the Bank, resulting from the Borrower's legal authority and stating that the Loan Agreement is officially authorized and duly signed on behalf of the Borrower. This statement will state that the Agreement establishes a binding obligation on the Borrower in accordance with its terms. (C) The Power of Attorney will be issued by the Ministry of Finance or any other duly authorized body of the Borrower to the Central Bank or the organization that performs the functions of the Central Bank, instructing the Central Bank to ensure that the payment due from the Borrower under this Loan Agreement and service Fees are made by the Central Bank or the organization performing the functions of the Central Bank, as of the due date. A copy of the Power of Attorney, together with confirmation from the Central Bank or the organization performing the functions of the Central Bank, that they have received the said Power of Attorney and that they will strictly follow the instructions contained therein, will be sent by the Borrower to the Bank.

Article-X Termination of the agreement due to non-fulfillment of measures for entry into force

If the Agreement does not enter into force within 12 (twelve) months from the date of its signing, the Agreement and all obligations of the parties under it will terminate, unless the Bank, after considering all the reasons for the postponement, sets a later date for the purposes of this Article. The Bank will immediately notify the Borrower of such a later date.

Article-XI Mixed positions

 Section-11.01. Authorized Representatives The Minister of Agriculture of the Borrower and the person or persons whom he appoints in writing will be considered authorized representatives of the Borrower for the purposes of Section 10.03 of the General Terms and Conditions.

 Section-11.02. Date of Agreement For all purposes of this Agreement, the date of the Agreement will be the date specified in the Preamble to this Agreement.

 Section-11.03. Addresses The following addresses are indicated for the purposes of Section 10.01 of the General Terms and Conditions:

 For the Government of the Republic of Kazakhstan:

_____________________________________ _____________________________________

Telex: Telegraph: Telefax:

 For the Islamic Development Bank:

P.O. Box: 5925 Mailbox: 5925 Jeddah 21432 Jeddah 21432 Kingdom of Saudi Arabia Kingdom of Saudi Arabia

Telex: 601137 ISDB SJ Telex: 601137 Cable: BANKISLAMI JEDDAH Telegraph: BANKISLAMI JEDDAH Telefax: 6366871 JEDDAH Telefax: 6366871 JEDDAH

In witness whereof, the Bank and the Borrower, each acting through their authorized representatives, have signed this Agreement in English on the date and year indicated above.

 For and on behalf of the Government of the Republic of Kazakhstan:

___________________________

 For and on behalf of the Islamic Development Bank

___________________________

Appendix-I(A)

Repayment of the principal amount

Country: Republic of Kazakhstan Project: Rural Water Supply Project Loan amount: 7,000,000 Islamic dinars Loan term: 25 years Grace period: 7 years Service fee: 2,50 % _____________________________________________________________ Number ! Date ! The principal amount (in ID) ------------------------------------------------------------- 1 31.12.2011 194,444 2 30.06.2012 194,444 3 31.12.2012 194,444 4 30.06.2013 194,444 5 31.12.2013 194,444 6 30.06.2014 194,444 7 31.12.2014 194,444 8 30.06.2015 194,444 9 31.12.2015 194,444 10 30.06.2016 194,444 11 31.12.2016 194,444 12 30.06.2017 194,444 13 31.12.2017 194,444 14 30.06.2018 194,444 15 31.12.2018 194,444 16 30.06.2019 194,444 17 31.12.2019 194,444 18 30.06.2020 194,444 19 31.12.2020 194,444 20 30.06.2021 194,444 21 31.12.2021 194,444 22 30.06.2022 194,444 23 31.12.2022 194,444 24 30.06.2023 194,444 25 31.12.2023 194,444 26 30.06.2024 194,444 27 31.12.2024 194,444 28 30.06.2025 194,444 29 31.12.2025 194,444 30 30.06.2026 194,444 31 31.12.2026 194,444 32 30.06.2027 194,444 33 31.12.2027 194,444 34 30.06.2028 194,444 35 31.12.2028 194,444 36 30.06.2029 194,460 ----------------------------------------------------------- Total: 7,000,000 dinars ___________________________________________________________

Appendix-I(B)

Payment of the service fee

1 30.06.2004 28,720 2 31.12.2004 47,866 3 30.06.2005 47,866 4 31.12.2005 47,866 5 30.06.2006 47,866 6 31.12.2006 47,866 7 30.06.2007 47,866 8 31.12.2007 40,207 9 30.06.2008 40,207 10 31.12.2008 40,207 11 30.06.2009 40,207 12 31.12.2009 40,207 13 30.06.2010 40,207 14 31.12.2010 40,207 15 30.06.2011 40,207 16 31.12.2011 40,207 17 30.06.2012 40,207 -------------------------------------------------------------- Total: dinars 717,990 ______________________________________________________________

Annex-II

Project Description

The main goal of the project is to improve the health and quality of life of the rural population of the Karaganda region by providing safe and easy access to drinking water. The scope of the project includes the construction and reconstruction of water supply systems in selected 94 rural settlements of the Karaganda region. This includes construction work on (i) the construction of a water distribution network and transmission water pipes, (ii) drilling wells, (iii) the installation of a pumping station, (iv) the construction of a water treatment plant, (v) a seawater desalination plant, (vi) water tanks, and (vii) water-regulating dams and intake structures (surface waters). Plus, the purchase of equipment, the services of a consultant for detailed design and supervision of the project, the project management team, the audit of the project, seminars on the launch of the project and unforeseen expenses. The IDB will finance the construction cost by 88%, the purchase of equipment by 88%, the services of a consultant for detailed design and supervision of the project by 50%, an audit of the project by 100%, a seminar on the launch of the project by 100% and unforeseen expenses. The purchase of construction works and equipment will be carried out by combining into four packages of construction works and equipment on the basis of an international competitive bid limited to the member countries of the IDB. The procurement of consultant services for detailed design and supervision of the project will be conducted among international consultants from the IDB member countries. The procurement of the services of auditors/audit firms will be conducted among local auditors who cooperate or have representation from an international audit firm. The project will be completed 3 years after the loan agreement comes into force.

Annex-III

Withdrawal of loan funds

in millions of dollarsUSA

___________________________________________________________________ ! The components ! Shared ! Islamic Bank ! The government! ! the cost ! development ! Of Kazakhstan -------------------------------------------------------------------! ! ! The cost ! % ! The cost! % ___________________________________________________________________ 1 Construction work 8,049 7,106 88 0.943 12 2 Equipment 1,098 0.969 88 0.129 12 3 Project Detailed Design and Supervision Consultant 0.914 0.457 50 0.457 50 4 Project management experts 0.165 0.165 100 5 Financial audit of the project 0.050 0.050 100 6 Project workshop 0.010 0.010 100 7 Unforeseen expenses 1,029 0.859 84 0.169 16 8 Total 11,314 9,451 84 1,863 16 ------------------------------------------------------------------

President

Republic of Kazakhstan

Constitution Law Code Standard Decree Order Decision Resolution Lawyer Almaty Lawyer Legal service Legal advice Civil Criminal Administrative cases Disputes Defense Arbitration Law Company Kazakhstan Law Firm Court Cases