On the ratification of the Loan Agreement (Normal Operations) (CAREC Investment Program Corridor 2 [Sites in Mangystau Region] – Project 2) between the Republic of Kazakhstan and the Asian Development Bank

Home / RLA / On the ratification of the Loan Agreement (Normal Operations) (CAREC Investment Program Corridor 2 [Sites in Mangystau Region] – Project 2) between the Republic of Kazakhstan and the Asian Development Bank

On the ratification of the Loan Agreement (Normal Operations) (CAREC Investment Program Corridor 2 [Sites in Mangystau Region] – Project 2) between the Republic of Kazakhstan and the Asian Development Bank

The Law of the Republic of Kazakhstan dated December 26, 2013 No. 154-V SAM

To ratify Loan Agreement (Normal Operations) (CAREC Corridor 2 Investment Program [sites in Mangystau Region] – Project 2) between the Republic of Kazakhstan and the Asian Development Bank, signed in Astana on June 18, 2013.

President of the Republic of Kazakhstan N. NAZARBAYEV

LOAN NUMBER 2967-KAZ

LOAN AGREEMENT (Normal operations)

(CAREC Investment Program Corridor 2 [sites in Mangystau region] – Project 2)

between

BY THE REPUBLIC OF KAZAKHSTAN

and

BY THE ASIAN DEVELOPMENT BANK

DATE June 18, 2013

LOAN AGREEMENT (Normal operations)

LOAN AGREEMENT dated June 18, 2013 between the REPUBLIC OF KAZAKHSTAN (hereinafter referred to as the "Borrower") and the ASIAN DEVELOPMENT BANK (hereinafter referred to as the "ADB").

TAKING INTO ACCOUNT THE FOLLOWING:

(A) Based on the financing framework agreement dated April 7, 2011 between the Borrower and ADB, ADB agreed to provide a multi-tranche financing mechanism to the Borrower to finance projects under the CAREC Corridor 2 Investment Program (Mangystau Region Sites) (the "Investment Program"); (B) based on a periodic financing request dated October 30, 2012, as completed by the Borrower through the loan negotiation protocol dated November 28, 2012, the Borrower requested a loan from ADB to implement the Project described in Annex 1 to this Loan Agreement; and (C) ADB agreed to provide a loan to the Borrower from ADB's ordinary capital resources under the conditions set forth in this document. Taking into account the above, the parties to this Agreement have agreed on the following:

ARTICLE I Loan rules; Definitions

Section 1.01. All provisions of the Loan Rules for Ordinary Operations applicable to loans at the London Interbank Rate allocated from ADB's ordinary capital resources dated July 1, 2001 (hereinafter referred to as the Loan Rules) are hereby deemed to apply to this Loan Agreement with the same force and effect as if they were set forth in the text of this Agreement. Agreements, however, subject to the following changes: (a) Section 3.03 has been deleted and replaced by the following:

Reservation Fee; Loan (a) The Borrower undertakes to pay the reservation fee for the unclaimed loan amount at the rate and terms stipulated in the Loan Agreement.

(b) ADB undertakes to provide the Borrower with a loan at the rate stipulated in this Loan Agreement, and such loan will remain fixed until the end of the loan term. ADB undertakes to apply the loan amount to the interest payable by the Borrower.

(b) Section 3.06 has been deleted and replaced by the following:

Compensation. (a) Upon each notification to ADB that the fixed spread applicable to new loans will be reduced, ADB undertakes to provide refunds to each Borrower with an unclaimed loan to which a higher fixed spread applies. The amount of the refund will be determined by multiplying (i) the difference between the fixed spread applicable to the unclaimed loan and the fixed spread applicable to new loans (expressed as an annual percentage value) by (ii) the principal amount of the unclaimed loan, on which the Borrower undertakes to pay interest for all interest periods starting from and after the effective date of the reduced fixed spread applicable to new loans. (b) Upon each notification from ADB that its calculations of the financing margin in respect of any loan currency (or approved currency) in any half-year have resulted in savings for ADB, ADB undertakes to reimburse the Borrower. The amount of the refund will be determined by multiplying (i) the margin of the financing cost (expressed as an annual percentage) by (ii) the principal amount of the loan, on which the Borrower undertakes to pay interest during the interest period beginning immediately after the half-year for which the financing margin was calculated. ADB undertakes to apply the refund amount to the interest payable by the Borrower during the interest period beginning immediately after the half-year for which the financing margin was calculated.

An additional amount. (a) After each notification to ADB that the fixed spread applicable to new loans will be increased, each Borrower with an unclaimed loan to which a lower fixed spread applies undertakes to pay an additional amount to ADB. The amount of this additional amount will be determined by multiplying (i) the difference between the fixed spread applicable to new loans and the fixed spread applicable to unclaimed loans (expressed as an annual percentage value) by (ii) the principal amount of the unclaimed loan, on which the Borrower undertakes to pay interest for all interest periods starting from from and after the effective date of the increased fixed spread applicable to new loans.

(b) Upon each notification to ADB that its calculations of the financing margin in respect of any loan currency (or approved currency) in any half-year resulted in additional costs incurred by ADB, the Borrower undertakes to pay the additional amount to ADB. The amount of this additional amount will be determined by multiplying (i) the financing cost margin (expressed as an annual percentage) by (ii) the principal amount of the loan, for which the Borrower undertakes to pay interest during the interest period beginning immediately after the half-year for which the financing cost margin was calculated. ADB undertakes to add the amount of the additional payment to the interest payable by the Borrower during the interest period beginning immediately after the half-year for which the financing margin was calculated.

Section 1.02. In each case of use in this Loan Agreement, unless otherwise required by the context, the following terms, defined in the Loan Terms, have the corresponding meanings set forth in them. The additional terms used in this Loan Agreement have the following meanings:

(a) "TSAREC" means the Central Asian Regional Economic Cooperation; (b) "TSAREC Transport Corridor 2" means the transport corridor starting in Istanbul, Turkey, and proceeding through the ports of Baku in Azerbaijan and Aktau in the Mangistau region and the territories of Uzbekistan, Tajikistan and the Kyrgyz Republic to the ports of Lianyungang, Tianjin and Shanghai in the People's Republic of China; (c) "Guidance on the Use of Consulting Services" means guidance on the use of consultants by the Asian Development Bank and its Borrowers (2010, as periodically amended); (d) "Consulting services" means the services that will be financed from the loan, as described in paragraph 3 (b) of Annex 1 to this Loan Agreement; (e) "EAP" means the environmental assessment framework document prepared for the investment program, including the amendments made to it, agreed between the Borrower and ADB, and included by reference in the Financing Framework Agreement; (f) "EIA" means an environmental impact assessment of the project, including any changes made to it, prepared and submitted by the Borrower in accordance with the requirements set out in the EAP and clarified by ADB; (g) "EMP" means an environmental management plan included in the environmental impact assessment (EIA); (h) "Environmental protection measures" means the principles and requirements set out in Chapter V, Annex 1 and Annex 4 (if applicable) Permanent residence; (i) "Mechanism" means the multi-tranche financing mechanism provided by ADB to the Borrower to finance projects under the investment program; (j) "RAM" means the guidance on the administration of the mechanism under the investment program, agreed between the Borrower and ADB, with periodic changes in accordance with the relevant procedures of the Borrower and ADB; (k) "RSF" means the financing framework agreement dated April 7, 2011 (as amended and amended) between ADB and the Borrower regarding the mechanism; (l) "Investment Program" means the CAREC Corridor 2 Investment Program (road sections in Mangystau Region); (m) "Involuntary Resettlement Policy" means the principles and requirements set out in Chapter V, annex 2 and Annex 4 (if applicable) (n) "Km" means the location indicated by a specific kilometer on the sign on the project road, as defined below, and "km" means the kilometer; (o) "GDPR" means the framework document for land purchase and resettlement under the investment program, including any changes agreed upon between the Borrower and ADB, and incorporated by reference into the Financing Framework Agreement; (p) "GDPR" means the land purchase and resettlement plan under the project, including any amendments to it, drawn up and submitted by the Borrower in accordance with the requirements set out in the GDPR and clarified by the ADB; (q) "Loan Disbursement Handbook" means the ADB Loan Disbursement Handbook (dated 2012, as periodically amended); (r) "MTK" means the Ministry of Transport and Communications of the Borrower or any of its successors; (s) "Oblast" means the territorial administrative unit of the Borrower; (t) "RFP" means a periodic request for financing submitted or to be submitted by the Borrower for each loan in accordance with the mechanism, and under this Loan Agreement means a periodic request for financing dated October 30, 2012, subject to amendments and modifications made by the Borrower in the protocol of loan negotiations for project purposes dated October 28. November 2012; (u) "Procurement Manual" means the ADB Procurement Manual (dated 2010, as periodically amended); (v) "Procurement Plan" means the procurement plan for the project dated November 16, 2012, agreed between the Borrower and ADB, as amended periodically in accordance with the procurement guidelines, guidelines for consulting services and other activities agreed with ADB; (w) "Project Execution Agency" for the purposes and within the framework of the definition of the Loan Rules, it means the MTK responsible for the execution of the project; (x) "Project facilities" means facilities whose construction or provision is determined by the project; (y) "Project Road" means a section of road to be reconstructed in accordance with the project, as detailed in subparagraph 3 (a) of Annex 1 to this Loan Agreement; (z) "Protective Measures Monitoring Report" means each report prepared and submitted by the Borrower to ADB, describing the results of the implementation and compliance of the EMP and PRSP (if applicable), including any corrective and preventive actions; (aa) "PRM" means the policy on protective measures (dated 2009); and (bb) "Works" means construction or civil engineering works financed by loan funds, including services such as drilling or mapping, as well as project-related services provided as part of a single commitment or turnkey construction contract, with the exception of consulting services.

ARTICLE II Loan

Section 2.01. (a) ADB agrees to provide a loan to the Borrower from ADB's ordinary capital resources in the amount of three hundred seventy-one million three hundred thousand US dollars (371,300,000 US dollars), and this amount may be converted periodically as part of the conversion in accordance with the provisions of section 2.06 of this Loan Agreement.

(b) The loan assumes a principal repayment period of 15 years and a grace period as defined in paragraph (c) of this section. (c) The definition of "grace period" used in paragraph (b) above means the period preceding the first payment date for repayment of the principal amount of the loan in accordance with the repayment schedule set out in annex 2 to this Loan Agreement.

Section 2.02. The Borrower undertakes to pay interest to ADB on the principal amount of the loan, demanded and unclaimed, periodically at the rate of each interest period equal to the amount of:

(a) LIBOR; and

(b) 0.60% per year in accordance with Section 3.02 of the Loan Rules minus a loan of 0.20% per year in accordance with Section 3.03 of the Loan Rules.

Section 2.03. The Borrower undertakes to pay a reservation fee in the amount of 0.15% annually. This commission is charged on the full loan amount (minus the amounts withdrawn periodically), starting from the date 60 (sixty) days after the date of signing this Loan Agreement.

Section 2.04. Interest and other loan payments are payable once a half-year on April 15 and October 15 of each year.

Section 2.05. The Borrower undertakes to pay the principal amount of the loan claimed from the Loan Account in accordance with the provisions of Appendix 2 of this Loan Agreement.

Section 2.06. (a) The Borrower may at any time request any of the following loan conversions in order to ensure sound debt management: (i) a change in the loan currency of the full or partial loan amount, paid and unclaimed and or unpaid, to the approved currency; (ii) a change in the base interest rate applicable to the full or partial the principal amount of the loan, demanded and unclaimed, with a floating interest rate to a fixed one and vice versa; and (iii) setting limits on the floating interest rate applicable to the full or partial principal amount of the loan, claimed or unclaimed, by setting a fixed maximum interest rate or minimum of any specified floating interest rate. (b) Any conversion request pursuant to paragraph (a) of this section approved by ADB should be considered "Conversion" as defined in section 2.01(6) of the Loan Rules, and effective in accordance with the provisions of article V of the Loan Rules and the conversion guidelines.

Article III Use of loan funds

Section 3.01. The Borrower undertakes to use the loan funds to finance the project costs in accordance with the provisions of this Loan Agreement. Section 3.02. All loan funds must be distributed and withdrawn in accordance with the provisions of Annex 3 of this Loan Agreement, subject to periodic changes to this annex in consultation with the borrower and ADB. Section 3.03. Unless otherwise specified by ADB, the Borrower shall conduct or arrange for the procurement of all items of expenditure in accordance with the applicable provisions of Annex 4 of this Loan Agreement. ADB has the right to refuse to finance a contract for which all such items have not been substantially procured under the procedures agreed upon by the Borrower and ADB, or if the terms and conditions of the contract do not meet the requirements of ADB. Section 3.04. Unless ADB agrees otherwise, the Borrower undertakes to ensure that all expenditure items financed from the loan are used solely for the purpose of executing the project. Section 3.05. The closing date for withdrawal of funds from the loan account for the purposes set out in Section 9.02 of the Loan Terms is October 31, 2017, or such other date as may be periodically agreed between the Borrower and ADB.

ARTICLE IV Special conditions

Section 4.01. (a) The Borrower undertakes to ensure that the project is executed with due responsibility and efficiency and in accordance with sound engineering, financial, economic, legal, and development practices. (b) During the implementation of the project and the operation of the project facilities, the Borrower undertakes to fulfill or ensure the fulfillment of all obligations set out in Appendix 5 of this Loan Agreement. Section 4.02. The borrower undertakes to immediately, as necessary, provide, in addition to the loan funds, funds, facilities, services, land and other resources necessary for the execution of the project and the operation and maintenance of the project facilities. Section 4.03. (a) During the implementation of the project, the Borrower undertakes to ensure the hiring of competent and qualified consultants and contractors acceptable to ADB, to the extent and for the duration and on terms that meet the requirements of the Borrower and ADB. (b) The Borrower undertakes to ensure that the project is implemented in accordance with plans, design decisions, specifications, work schedules and construction methods acceptable to the Borrower and ADB. The Borrower undertakes to provide or ensure the provision to ADB immediately after their preparation of these plans, design decisions, specifications and work schedules, as well as any significant changes to these documents made subsequently with the degree of detail that ADB reasonably requires. Section 4.04. The Borrower undertakes to ensure that all actions of its departments and organizations regarding the execution of the project and the operation of project facilities are carried out and coordinated in accordance with the applicable laws of the Borrower and sound administrative policies and procedures. Section 4.05. (a) The Borrower undertakes to (i) maintain separate accounts and accounts for the project; (ii) prepare annual financial statements for the project in accordance with accounting principles acceptable to ADB; (iii) conduct an annual audit of financial statements by independent auditors whose qualifications, work experience, and area of competence meet ADB requirements in accordance with international standards on Auditing or national standards acceptable to ADB; (iv) as part of each such audit, auditors should prepare a report (including an auditor's report on the use of loan funds) and A letter to management (outlining deficiencies in the internal control of projects that were identified during the audit, if any); and (v) provide ADB, no later than six months after the end of each relevant fiscal year, with copies of the audited financial statements, the auditors' report, and a letter to management in English; as well as other information relevant to these documents and the audit at ADB's periodic reasonable request. (b) ADB Undertakes to disclose the annual audited financial statements for the project and the auditor's report on the financial statements within 30 days from the date of their receipt, publishing them on the ADB website. (c) The Borrower undertakes to grant ADB the right, at the request of ADB, to discuss the financial statements for the project and the Borrower's financial affairs related to the project with auditors hired by the Borrower in accordance with the above subsection (a), (iii) and undertakes to authorize and require any representative of the auditors to participate in this discussion during the time of such audits at the request of the ADB. Provided that any such discussion will be conducted only in the presence of an authorized representative of the Borrower, unless the Borrower has agreed otherwise. Section 4.06. The borrower undertakes to provide an opportunity for ADB representatives to inspect the project and project facilities, as well as any relevant records and documents. Section 4.07. The Borrower undertakes to ensure that all project facilities are operated, maintained and repaired with sound engineering, financial and commercial practices, development practices, as well as in accordance with procedures for the operation and maintenance of roads.

ARTICLE V Entry into force

Section 5.01. The date after 90 (ninety) days after the date of signing this Loan Agreement is considered the effective date of the Loan Agreement for the purposes set out in Section 10.04 of the Loan Terms.

ARTICLE VI Other provisions

Section 6.01. The Borrower's Minister of Finance acts as the Borrower's representative for the purposes set out in Section 12.02 of the Loan Rules. Section 6.02. The following details are provided for the purposes set out in Section 12.01 of the Loan Terms:

For the Borrower

Ministry of Finance of the Republic of Kazakhstan 11 Pobedy Avenue Astana, 010000 Republic of Kazakhstan

Fax number:

+7 (7172) 717-785

For the ADB

Asian Development Bank 6 ADB Avenue Mandaluyong City 1550 Metro Manila Philippines

Fax number:

(632) 636-2444 (632) 636-2428.

IN SUPPORT OF THE ABOVE, the parties to this Agreement, represented by their authorized representatives, have ensured that this Loan Agreement is signed with appropriate signatures and delivered to ADB headquarters on the date and year indicated above.

REPUBLIC OF KAZAKHSTAN __________________________ Authorized representative

ASIAN DEVELOPMENT BANK _____________________________ Authorized representative

APPENDIX 1

Project Description

1. The objective of the Investment Program is to increase transport connectivity and efficiency, as well as institutional efficiency, through the following activities: (a) road development (reconstruction of about 790 km of road sections of the CAREC 2 transport corridor in Mangystau Region), (b) capacity-building in planning, project management and asset management, and (c) improvement of border infrastructure and facilities. 2. As part of the Investment Program, the project is aimed at increasing transport links and efficiency in the Mangystau region. 3. The project includes the following components: (a) reconstruction of the approximately 170 km (632.3 Km to 802 Km) road section between Shetpe and Aktau city; and (b) construction supervision; which are detailed in the periodic funding request. 4. The project is expected to be completed by April 30, 2017.

APPENDIX 2

Loan repayment schedule

(TSAREC Corridor 2 Highway Investment Program [Sections in Mangystau Region] – Project 2)

1. The following table shows the repayment dates of the loan principal and the percentage of the total loan principal payable on each repayment date of the loan principal (regular installment). If the loan funds have been fully withdrawn at the time of the first repayment date for the repayment of the principal amount of the loan, the principal amount of the loan to be repaid by the Borrower on each payment date of the principal amount of the loan will be determined by ADB by multiplying: (a) the total principal amount of the loan claimed and unclaimed at the time of the first repayment date for the repayment of the principal amount loans; (b) the next installment for each payment date for repayment of the principal loan, such repayment amount will be modified as necessary to deduct any amounts described in paragraph 4 of this annex to which currency conversion applies.

Payment date The next installment (expressed in %)

April 15th, 2018

3.333333

October 15th, 2018

3.333333

April 15th, 2019

3.333333

October 15th, 2019

3.333333

April 15th, 2020

3.333333

October 15th, 2020

3.333333

April 15th, 2021

3.333333

October 15, 2021

3.333333

April 15th, 2022

3.333333

October 15, 2022

3.333333

April 15th, 2023

3.333333

October 15, 2023

3.333333

April 15th, 2024

3.333333

October 15th, 2024

3.333333

April 15th, 2025

3.333333

October 15th, 2025

3.333333

April 15th, 2026

3.333333

October 15, 2026

3.333333

April 15th, 2027

3.333333

October 15th, 2027

3.333333

April 15th, 2028

3.333333

October 15th, 2028

3.333333

April 15th, 2029

3.333333

October 15th, 2029

3.333333

April 15th, 2030

3.333333

October 15, 2030

3.333333

April 15th, 2031

3.333333

October 15th, 2031

3.333333

April 15th, 2032

3.333333

October 15th, 2032

3.333343

Total

100.000.000

2. If the loan funds have not been fully claimed at the time of the first repayment date of the principal loan, the principal amount of the loan payable by the Borrower on each repayment date of the principal loan will be determined as follows: (a) To the extent that any loan funds that should have been claimed at the time of the first payment date in repayment of the main loan, the Borrower undertakes to pay the amount claimed and unclaimed at the time of that date in accordance with paragraph 1 of this annex. (b) any withdrawal made after the first repayment date of the principal loan is due on each repayment date of the principal loan falling after the date of the withdrawal in amounts determined by ADB by multiplying the amount of each withdrawal by a fraction, the numerator of which is the initial installment indicated in the table in paragraph 1 of this annex for the above-mentioned payment date for repayment of the main loan (initial regular installment), and the denominator, which amounts to the sum of all remaining initial regular contributions for the repayment dates of the main loan due on or after this date, these payment amounts will be modified, if necessary, to deduct the amounts specified in paragraph 4 of this annex, to which currency conversion applies. 3. Withdrawals made within two calendar months prior to any of the principal repayment dates, solely for the purpose of calculating the principal amounts payable on any day of the principal repayment, should be considered claimed and unclaimed at the time of the second principal repayment date after the withdrawal date, and this amount is payable on each date. repayment of the principal loan, starting from the second payment date for repayment of the principal debt after the withdrawal date. 4. Regardless of the provisions of paragraphs 1 and 2 of this annex, when converting currencies in full or in part of the required funds of the loan principal amount into an approved currency, the amount of funds converted into the aforementioned approved currency, which is due to be repaid on any of the repayment dates of the principal amount during the conversion period, will be determined by ADB by multiplying this amount in the currency denominations immediately prior to the aforementioned conversion to either: (i) a currency exchange rate reflecting the principal amounts in the specified approved currency, payable to ADB as part of a currency hedging transaction related to the aforementioned conversion; or (ii) as decided by ADB in accordance with the guidelines for conversion to the exchange rate component of the established rate. 5. If the principal amount of a loan, claimed and unclaimed, is periodically denominated in more than one loan currency, the provisions of this annex should be applied separately to the amounts denominated in each loan currency in order to develop a separate repayment schedule for each of these amounts.

APPENDIX 3 Allocation and withdrawal of loan funds

General provisions

1. The table in this annex sets out the categories of expenditure items financed from the loan, as well as the distribution of loan amounts for each such category (hereinafter referred to as the "Table"). (The reference to the concepts of "Category" in this appendix refers to the category of the table).

The basis for withdrawing funds from the loan account

2. Unless otherwise agreed by ADB, each of the cost items will be financed from the loan funds based on the percentage values shown in the table.

Redistribution

3. Regardless of the allocation of the loan funds and withdrawal percentages shown in the table, (a) if the loan amount allocated to any category is insufficient to finance all agreed expenses of that category, ADB may, by notifying the borrower, (i) reallocate funds for that category to the extent necessary to fill the shortfall by funds allocated for another category, but in the opinion of the ADB, not necessary to finance other expenses, and (ii) if this reallocation cannot fully cover the calculated shortfall, reduce the percentage of withdrawals for these expenses so that further withdrawals for this category are made until all expenses have been covered; and (b) if the loan amount allocated to any category, If the amount exceeds all agreed expenses in this category, ADB has the right, by notifying the Borrower, to redistribute such excess amount in favor of another category.

Loan repayment procedure

4. Unless otherwise agreed by the ADB, the loan funds are payable in accordance with the ADB Loan Disbursement Handbook.

Addendum to Appendix 3

table

LOAN ALLOCATION AND WITHDRAWAL (TSAREC Corridor 2 Highway Investment Program [Sections in Mangystau Region] – Project 2)

category

Works

333 300 000

100 % of the total requested cost amount *

Consulting services

4 700 000

100 % of the total requested cost amount *

Unallocated funds

33 300 000

Total

371 300 000

*Excluding the value added tax levied on the territory of the Borrower.

APPENDIX 4

Purchase of works and consulting services

General provisions

1. Procurement of works and consulting services is subject to execution and control in accordance with the procurement manual and the consultant engagement manual, respectively. 2. All terms used in this appendix and not otherwise defined in this Loan Agreement are defined in the procurement manual and/or the consultant engagement manual, as appropriate.

Purchase of works

3. Unless otherwise agreed by the ADB, the works will be purchased on the basis of international competitive bidding. 4. The procurement procedure, among other conditions, is subject to execution in accordance with the detailed arrangements and thresholds specified in the procurement plan. The borrower has the right to modify the procurement procedure or threshold costs only subject to prior agreement with ADB, and all changes should be reflected in the additions to the procurement plan.

Conditions for the award of the contract

5. The Borrower should not award contracts for work involving environmental impacts until: (a) the completed EIA has been approved by the Borrower's relevant authorities; and (b) until the Borrower has incorporated the relevant provisions from the EMP into the contract of work. 6. The Borrower must not enter into contracts for work that include forced relocation until the Borrower has prepared and submitted to ADB a final PRA based on a working draft and has received ADB approval for such PRA.

Consulting services

7. Unless otherwise specified by ADB, the Borrower will use a quality-to-price selection method in selecting and engaging consulting services.

Industrial or intellectual property rights

8. (a) The Borrower undertakes to ensure that the purchased works (including, but not limited to, all computer hardware and software, computer systems purchased either separately or as part of other goods and services) do not infringe or infringe on any third-party industrial or intellectual property rights. (b) The borrower undertakes to ensure that all contracts for the procurement of works contain appropriate representations, guarantees and, if necessary, guarantees of damages from the contractor or supplier in respect of the cases specified in subparagraph (a) of this paragraph. 9. The borrower undertakes to ensure that all contracts with consultants funded by ADB contain appropriate assurances, guarantees and, if necessary, guarantees of compensation from consultants, while ensuring that the consulting services provided do not violate or infringe on the rights or claims of third parties to industrial or intellectual property.

ADB review of procurement decisions

10. All contracts acquired in accordance with international competitive procedures and consulting services contracts are subject to prior review by ADB, unless otherwise agreed between the Borrower and ADB and specified in the procurement plan. 11. With respect to the work contract, which must be submitted to ADB in advance for review, the Borrower receives prior approval from ADB for any changes or waivers to the terms of the contract, including: (a) an extension of the specified period for completion of work under the contract for a period of 1 month or more, or a possible postponement of the closing date for withdrawal of funds from the loan account; (b) the total amount of the increase in the initial price by more than 5% (for the avoidance of doubt, such an increase should take into account all previous changes under this contract). 12. In the case of a work contract that is submitted to ADB for review, ADB considers making the necessary changes to the contract or canceling the contract and submits a response to the Borrower as soon as possible, but no later than 1 month after receiving the required document. 13. The borrower submits to ADB copies of all documents on extensions, amendments and deviations from the provisions of the contracts (including amendments) within 1 month after the amendments to the contract.

APPENDIX 5

Project execution; financial issues

Implementation procedure

1. The borrower and the MTC are required to ensure that the project is implemented in accordance with certain measures outlined in the Framework. Any subsequent changes to the Framework will take effect only after approval of such changes by the Borrower and ADB. In the event of any inconsistency between the Loan Agreement and this Loan Agreement, the provisions of this Loan Agreement will prevail.

Environment

2. The Borrower must instruct the ITC to ensure that the preparation, design, construction, implementation, operation and decommissioning of the project and all project facilities comply with: (a) all applicable laws and regulations of the Borrower related to the environment, health and safety, (b) environmental protection measures, (c) EAP; and (d) all measures and requirements set out in the EIA and EMP, and any corrective or preventive actions set out in the protective measures monitoring report.

Land purchase and forced relocation

3. The borrower will instruct the local executive authorities and the ITC to ensure that all land and allotment areas required for the project and project facilities are available for contract work in accordance with the agreed schedule in the relevant work contract, and all acquired land and resettlement activities are carried out in accordance with (a) all applicable laws and regulations of the Borrower related to land acquisition and forced relocation, (b) forced relocation policy, (c) IDR; and (d) all measures and requirements set out in the PRSP, as well as any corrective or preventive measures set out in the protective measures monitoring reports. 4. Without limiting the application of the forced resettlement policy, the GDPR or the GDPR, the Borrower will instruct the local executive authorities and the ITC to ensure that neither physical nor economic resettlement takes place in connection with the project as long as: (a) compensation or other payments are provided to the victims in accordance with the GDPR; and (b) the total income program and the means of subsistence have been established in accordance with the GDPR.

Local population

5. The borrower must instruct the local executive authorities and the ITC to ensure that the project does not have any impact on the local population in the understanding of the PMZ. If such an impact occurs, the Borrower should instruct the ITC to prepare, disclose, and implement a plan for the local population in accordance with all applicable laws and regulations of the Borrower related to the local population and the LME.

Human and financial resources to implement the requirements of protective measures

6. The borrower ensures the availability of the necessary budgetary and human resources for the full implementation of the EMP and PRSP.

Provisions concerning protective measures in tender documents and work contracts

7. The borrower must instruct the ITC to ensure that all tender documents and work contracts contain provisions that oblige contractors: (a) comply with the contractor-related measures set out in the EIA, EMP and PRSP, and any corrective or preventive actions set out in the protective measures monitoring report; (b) provide budgetary funds for all environmental and social protection measures; (c) provide written notification to the ITC of any unforeseen risks related to the environment, resettlement or local population, and impacts that arise during the construction, implementation or operation of the project and have not been addressed in the EIA, EMP and PRA; (d) ensure appropriate documentation of the condition of roads, agricultural lands and other infrastructure facilities prior to the start of transportation of materials and construction, and (e) upon completion of construction, restore tracks, local infrastructure and agricultural land to at least the condition they were in before the start of the project.

Monitoring of protective measures and reporting

8. The Borrower instructs the MTK to perform the following: (a) submit protective measures monitoring reports to ADB (i) semi-annually during construction and (ii) annually during the first 3 years of operation of the project road, and disclose relevant information from such reports to affected persons immediately after submission; (b) if any social and/or environmental risks and impacts arise during the construction or implementation of the project that are not provided for in the EIA, EMP and PRSP, it is necessary to inform ADB in a timely manner about the occurrence of such risks or impacts, providing a detailed description of the events and a plan of corrective actions.; (c) ensure that qualified and experienced independent specialists acceptable to ADB are selected and engaged by the Borrower under the first draft of the Investment Program (loan No. 2728) to confirm information obtained as a result of project monitoring, as well as to facilitate any verification activities performed by independent specialists, and (d) to inform any actual or potential violations of compliance with the measures and requirements set out in the EMP or PRA as soon as such violation becomes known.

List of prohibited investments

9. The borrower must ensure that no loan funds are used to finance any activity included in the list of prohibited investment activities provided for in Appendix 5 of the PMZ.

Occupational safety and health

10. The Borrower instructs, and the ITC ensures, that all work contracts include special provisions that ensure (a) contractors comply with applicable labor laws and regulations of the Borrower; (b) facilitate the employment of women and local populations, including representatives of vulnerable populations living in the project area; (c) familiarization of construction workers with safety information on work sites; (d) Equal pay for women and men who perform the same work; (e) Safe working conditions and separate common areas for men and women, and (f) non-use of child labor. The borrower instructs the ITC to ensure that all social impacts that the project may have are monitored and that the results of this monitoring are presented to ADB once every six months.

Co-financing

11. Without limiting the general meaning of Section 4.02 of this Loan Agreement, the Borrower undertakes to ensure the availability of all co-financing funds necessary for the timely and effective execution of the project in the form of annually allocated budgetary funds for the ITC and undertakes to ensure that the necessary resources are provided in a timely manner to the ITC. The borrower undertakes to ensure that the MTK includes all modified financing needs for the project, which were included in its annual development programs.

Governance and the fight against corruption

12. The Borrower and the ITC commit to: (a) follow ADB's Anti-Corruption Policy (from 1998 as amended to the present) and agree that ADB has the right to investigate, directly or through its agents, all alleged cases of corruption, fraud, collusion or coercion related to the project, and (b) cooperate to fully and facilitate any such investigation to the extent necessary to provide support for the satisfactory conclusion of any such investigation. 13. The borrower will instruct the ITC to ensure that anti-corruption provisions acceptable to ADB are included in the tender documents and contracts, including provisions defining ADB's right to audit and verify the records and accounts of all contractors, suppliers, consultants, and other service providers related to the project.

Construction quality

14. The borrower will instruct the ITC to ensure that the project is executed in accordance with applicable technical specifications and plans, and that construction supervision, quality control and project management are carried out in accordance with applicable standards and international best practices.

Road safety

15. The borrower will instruct the ITC to (a) ensure that all work contracts include the contractor's commitment to comply with road safety measures; and (b) monitor the frequency of traffic accidents and traffic intensity during the operation of the road project.

Operation and maintenance

16. The borrower will ensure that the project road is properly operated and maintained after the completion of the project.

I hereby certify that this translation corresponds to the text of the Loan Agreement (Normal Operations) (CAREC Corridor 2 Investment Program [Sites in Mangystau Region] – Project 2) between the Republic of Kazakhstan and the Asian Development Bank in English, signed in Astana on June 18, 2013.

Head of the Department of Document Management and Control, Development of the State Language of the Ministry of Finance of the Republic of Kazakhstan B.Akhmetzhanova

RCPI's note! The following is the text of the Agreement in English.

President

Republic of Kazakhstan

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