On the ratification of the Loan Agreement (Normal Operations) (CAREC Transport Corridor 1 [Zhambyl Region Sites] [Western Europe-Western China International Transit Corridor] Investment Program - Project 2) between the Republic of Kazakhstan and the Asian Development Bank

Home / RLA / On the ratification of the Loan Agreement (Normal Operations) (CAREC Transport Corridor 1 [Zhambyl Region Sites] [Western Europe-Western China International Transit Corridor] Investment Program - Project 2) between the Republic of Kazakhstan and the Asian Development Bank

On the ratification of the Loan Agreement (Normal Operations) (CAREC Transport Corridor 1 [Zhambyl Region Sites] [Western Europe-Western China International Transit Corridor] Investment Program - Project 2) between the Republic of Kazakhstan and the Asian Development Bank

Law of the Republic of Kazakhstan dated March 31, 2010 No. 260-IV

To ratify the Loan Agreement (Normal Operations) (CAREC Transport Corridor 1 [Zhambyl Region Sites] [Western Europe-Western China International Transit Corridor] Investment Program - Project 2) between the Republic of Kazakhstan and the Asian Development Bank, signed in Astana on December 3, 2009.

President of the Republic of Kazakhstan N. NAZARBAYEV

_____________________________________________________________________

LOAN NUMBER 2562-KAZ

LOAN AGREEMENT (Normal operations)

(CAREC Transport Corridor 1 [Zhambyl Region Sites] [Western Europe-Western China International Transit Corridor] Investment Program - Project 2) between THE REPUBLIC OF KAZAKHSTAN and the ASIAN DEVELOPMENT BANK

DECEMBER 3, 2009

____________________________________________________________________

LAL:KAZ 41121

LOAN AGREEMENT (Normal operations)

LOAN AGREEMENT dated December 3, 2009 between the REPUBLIC OF KAZAKHSTAN (hereinafter referred to as the Borrower) and the ASIAN DEVELOPMENT BANK (hereinafter referred to as ADB).

TAKING INTO ACCOUNT THE FOLLOWING

(A) Pursuant to the financing framework agreement dated January 13, 2009, concluded between the Borrower and ADB, ADB agreed to provide a multi-tranche Financing Facility (MMF) in accordance with the following terms to the Borrower to finance projects under the Borrower's Investment Program for sections in the Zhambyl Region of the CAREC 1 Transport Corridor (hereinafter referred to as the Investment Program); (B) by providing the Borrower with a periodic financing request dated August 17, 2009 and further amended on August 28, 2009, the Borrower requested ADB to provide a Loan for the purposes of the Project described in Annex 1 of this Loan Agreement and which is part of the Investment Program; and (C) ADB has agreed to provision of a Loan to the Borrower from ADB's ordinary capital resources on the terms and conditions set out below;

TAKING INTO ACCOUNT THE ABOVE, the parties to this agreement have agreed on the following:

ARTICLE 1 Loan Rules; Definitions

Section 1.01. All Loan provisions for ordinary operations applicable to loans at the London Interbank Rate allocated from ADB's Ordinary Capital Resources dated July 1, 2001, are hereby deemed to apply to this Loan Agreement and to be in full force as if they were set out in the text of this Agreement, but subject to the following amendments (the aforementioned The Loan Rules for Ordinary transactions with changes as such are hereinafter referred to as the Loan Rules): (a) Section 3.03 has been deleted and replaced by the following: Reservation fee; Credit. (aa) The Borrower undertakes to pay a reservation fee for the unclaimed loan amount at the rates and conditions stipulated in this Loan Agreement. (bb) ADB undertakes to provide the Borrower with a loan at the rates stipulated in this Loan Agreement, and such loan is not subject to change until the end of the Loan term. ADB undertakes to apply the amount of this loan in relation to the interest payable by the Borrower. (b) Section 3.06 has been deleted and replaced by the following: Compensation. (aa) Upon each notification from 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. (bb) Upon each notification from ADB that its calculations of the financing cost 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 cost of financing (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 margin of the cost of financing was calculated, ADB undertakes to deduct the amount of the refund to interest, payable by the Borrower during the interest period beginning immediately after the half-year for which the financing margin was calculated. (c) Section 3.07 has been deleted and replaced by the following: An additional amount. (aa) Upon each notification from 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. This 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 and after the effective date of the increased fixed spread applicable to new loans. (bb) 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 resulted in additional costs incurred by ADB, the Borrower undertakes to pay the additional amount to ADB. This amount will be determined by multiplying (i) the margin of the financing cost (in the form of an annual percentage value) 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 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 their respective meanings, as well as several additional terms have the following definitions: (a) "CAREC Transport Corridor 1" means the Western Europe-Western China International Transit Corridor running from Khorgos on the border with the People's Republic of China (PRC) through Almaty and Shymkent to the western border with the Russian Federation; (b) "Guidance on Attracting Advisory Services" means the ADB Guidance on Attracting Advisory Services by the Asian Development Bank and its Borrowers (dated 2007, as periodically amended); (c) "KAD" means the Committee of Highways of the Borrower's MTK and any of its successors; (d) "CEOO" means the concept of environmental assessment (e) "EIA" means an Environmental Impact Assessment prepared for the Project by the Borrower and agreed with ADB.; (f) "EPA" means the Environmental Protection Plan included in the Environmental Impact Assessment (EIA); (g) "Goods" means the equipment and materials to be financed from the Loan, including related services such as transportation, insurance, installation, commissioning, training, and initial maintenance, but excluding consulting services: (h) "Facility" means a multi-tranche financing facility provided by ADB to the Borrower for the purpose of financing projects under the Investment Program; (i) "RSF" means the financing framework agreement dated January 13, 2009, concluded between ADB and the Borrower regarding the Mechanism; (j) "Investment Program" has the meaning given in the declarative part (A) of this Loan Agreement; (k) "Loan Repayment Guidelines" means the ADB Guidelines Loan Repayment (dated 2007, as periodically amended); (l) "km" means kilometer; (m) "OVZP" means the Basics of Land Purchase and Resettlement agreed between the Borrower and ADB and included by reference in Appendix 5 of the RSF; (n) "PRSP" means the Land Purchase and Resettlement Plan within the framework of the Project; (o) "Loan 2503-KAZ" means the Loan Agreement between the Borrower and ADB dated March 30, 2009; (p) "MF" means the Ministry of Finance of the Borrower and any of its legal successors; (q) "MTK" means the Ministry of Transport and Communications of the Borrower; (r) "RFP" means a periodic financing request submitted or being submitted by the Borrower for the purpose of obtaining a Loan under the Mechanism and for the purposes of this Loan Agreement means a periodic financing request dated August 17, 2009, as further amended on August 28, 2009; (s) "CBM-ADB" means a group of consultants Project Management Company established under Loan 2503-KAZ; (t) "PRC" means the People's Republic of China; (u) "Procurement Manual" means the ADB Procurement Manual (dated 2007, as amended periodically); (v) "Procurement Plan" means the procurement plan for the Project dated September 28, 2009, agreed between the Borrower and ADB, with periodic updates in accordance with the Procurement Manual, Guidance on Consulting Services and other activities agreed with ADB; (w) "Project", as generally defined in the Rules (x) "Project Area" means the Borrower's Zhambyl Region, as described in Appendix 1 to this Loan Agreement.; (y) "Project Execution Agency" or "IA", for the purposes and within the framework of the definition of the Loan Rules, means the ITC and any of its legal successors responsible for the execution of the Project; (z) "Project Facilities" means facilities that will be built or provided as part of the Project; (aa) "Project "road" means the sections of the CAREC 1 Transport Corridor from km 310.5 to km 389.4 in the Project area to be reconstructed as part of the Project; (bb) "Area" means the administrative unit of the Borrower; (cc) "Works" means construction or Loan-funded construction work, including services such as drilling or mapping, and Project-related services provided as part of a single commitment or turnkey construction contract, with the exception of consulting services.

ARTICLE 2 Loan

Section 2.01. (a) ADB agrees to provide a loan to the Borrower from ADB's ordinary capital resources in the amount of one hundred eighty-seven million US dollars ($187,000,000), 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 twenty (20) years, and a grace period in accordance with paragraph (c) of this Section. (c) The definition of "grace period" used in paragraph (b) of this Section 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 of 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 the London Interbank Rate and 0.60% per year in accordance with Section 3.02 of the Loan Terms, minus the loan 0.40% per year in accordance with Section 3.03 of the Loan Terms. 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 amounts withdrawn periodically), starting from the date sixty (60) days after the date of signing this Loan Agreement. Section 2.04. Interest and other Loan payments are payable semi-annually on April 1 and October 1 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 or unpaid, to the approved currency; (ii) A change in the base interest rate applicable to the full or partial Loan amount, in-demand and unclaimed, from floating to fixed interest rates 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 request for changes, in accordance with paragraph (a) of this Section, approved by ADB, should to be considered a "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 3 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. Goods, works and consulting services, as well as other expenses financed from the Loan, and the allocation of Loan amounts to various categories of goods, works, consulting services and other items of expenditure must be carried out in accordance with the provisions of Annex 3 of this Loan Agreement, while periodic changes in this Annex are permitted for agreement between the Borrower and the ADB. Section 3.03. Unless otherwise specified by ADB, all goods, works and consulting services financed from the Loan must be procured in accordance with the provisions of Annex 4 of this Loan Agreement. ADB has the right to refuse to finance a contract for which goods, works or consulting services have not been substantially procured within 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 goods, works, and consulting services financed from the Loan are used solely for Project execution purposes. 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 considered to be June 30, 2015, or such other date agreed between the Borrower and ADB.

ARTICLE 4 Special conditions

Section 4.01. (a) The Borrower undertakes to ensure that the Project is carried out with due responsibility and efficiency and in accordance with sound administrative, financial, engineering, environmental and social safety measures, procedures for construction, maintenance and operation of roads. (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 for the operation and maintenance of the Project Facilities. Section 4.03. (a) During the implementation of the Project, the Borrower undertakes to ensure the involvement of competent and qualified consultants and contractors acceptable to ADB, to the extent and for a period 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 standards, specifications, work schedules, and construction methods acceptable to ADB. The Borrower undertakes to provide or ensure the provision to ADB, immediately after their preparation, of these plans, design standards, 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 in relation to Project execution and operation of Project Facilities are carried out and coordinated in accordance with sound administrative policies and procedures. Section 4.05. (a) The Borrower undertakes (i) to maintain or ensure the maintenance of separate accounts for the Project; (ii) conduct an annual audit of these accounts and related financial statements in accordance with the strict application of relevant auditing standards, with the involvement of independent auditors whose qualifications, work experience and area of competence meet the requirements of the ADB; (iii) provide ADB, as soon as it receives, but in no case later than six (6) months after the end of each relevant fiscal year, certified copies of these audited accounts and financial statements and the relevant auditors' report (including the auditors' report on the use of Loan funds and compliance with financial in accordance with the terms of this Loan Agreement), in English; and (iv) provide ADB with other information relevant to these accounts and financial statements and the audit, upon ADB's periodic reasonable request. (b) The Borrower undertakes to grant ADB the right, at the request of ADB, to periodically discuss the Borrower's financial statements for the Project and its financial affairs related to the Project with auditors hired by the Borrower in accordance with the above Section 4.05(a) and undertakes to authorize and require any representative of the auditors to participate in this discussion., at the request of 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 the Project Facilities financed by the Loan, 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 in accordance with sound administrative, financial, engineering, environmental and social safety measures, as well as in accordance with procedures for the operation and maintenance of roads.

ARTICLE 5 Entry into force

Section 5.01. The date sixty (60) days after the date of signing this Loan Agreement is considered to be the effective date of the Loan Agreement for the purposes set out in Section 10.04 of the Loan Terms.

ARTICLE 6 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 11 Pobedy Avenue Astana, 010000 Republic of Kazakhstan

Fax number:

+7(7172)71 77 85

For the ADB

Asian Development Bank P.O. Box 789 0980 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 BOLAT BIDAKHMETOVICH ZHAMISHEV Minister of Finance

ASIAN DEVELOPMENT BANK ______________________ SHAOYU ZHAO Vice President (Operations Group 1)

APPENDIX 1

Project Description

1. The purpose of the Investment Program is to promote the sustainable economic development of the Borrower. 2. As part of the Investment Program, the Project aims to develop an efficient transport system in the Project Area through the reconstruction of the Project Road. The project will consist of selected contract packages, described in more detail in PPF. 3. The Project is expected to be completed by December 31, 2014.

APPENDIX 2

Loan Repayment Schedule (CAREC Transport Corridor 1 [Zhambyl Region Sites] [Western Europe - Western International Transit Corridor China] Investment Program - 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 were fully withdrawn at the time of the first repayment date for 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 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.

Sequence

Payment date

The next installment (expressed in %)

1 Apr 2015

2.500000

October 1, 2015

2.500000

1 Apr 2016

2.500000

October 1, 2016

2.500000

1 Apr 2017

2.500000

October 1, 2017

2.500000

1 Apr 2018

2.500000

October 1, 2018

2.500000

1 Apr 2019

2.500000

October 1, 2019

2.500000

1 Apr 2020

2.500000

October 1, 2020

2.500000

1 Apr 2021

2.500000

October 1, 2021

2.500000

1 Apr 2022

2.500000

October 1, 2022

2.500000

1 Apr 2023

2.500000

October 1, 2023

2.500000

1 Apr 2024

2.500000

October 1, 2024

2.500000

1 Apr 2025

2.500000

October 1, 2025

2.500000

1 Apr 2026

2.500000

October 1, 2026

2.500000

1 Apr 2027

2.500000

October 1, 2027

2.500000

1 Apr 2028

2.500000

October 1, 2028

2.500000

1 Apr 2029

2.500000

October 1, 2029

2.500000

1 Apr 2030

2.500000

October 1, 2030

2.500000

1 Apr 2031

2.500000

October 1, 2031

2.500000

1 Apr 2032

2.500000

October 1, 2032

2.500000

1 Apr 2033

2.500000

October 1, 2033

2.500000

1 Apr 2034

2.500000

October 1, 2034

2.500000

Total

100.000000

2. If the Loan funds were not fully claimed before the first payment date for repayment of the main Loan, the principal amount of the Loan payable by the Borrower on each payment date for repayment of the main Loan will be determined as follows: (a) To the extent of the Loan funds that should have been claimed before the first payment date for repayment of the main Loan, the Borrower undertakes to pay the amount required and not required 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 to be repaid 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. This Application is for the above-mentioned payment date for repayment of the main Loan (Initial Regular Installment), and the denominator of which is 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 repayment dates of the main Loan, solely for the purpose of calculating the principal amounts payable on any day of the main repayment, should be considered claimed and unclaimed at the time of the second repayment date of the main Loan after the withdrawal date, and this amount is payable on each date. repayment of the principal Loan, starting from the second date of repayment of the principal debt after the date of withdrawal of funds. 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 by the currency of the denomination 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 double currency conversion related to the aforementioned Conversion; or (ii) as decided by ADB in accordance with the Conversion Guidelines, to a component of the exchange rate 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 Goods, works, consulting services and other expenses financed by the Loan, as well as the distribution of Loan amounts for each such Category (hereinafter referred to as the Table). (References to the concepts of "Category" or "Categories" in this Appendix refer to the Category or Categories of the Table).

Percentage values of ADB financing

2. Unless otherwise agreed by ADB, the expenditures of the Categories listed in the Table 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 for the account of funds allocated for another category, but in the opinion of the ADB, not needed 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 for financing works, consulting services and other items of expenditure are payable in accordance with the ADB Loan Disbursement Handbook.

Addendum to Appendix 3

table

ALLOCATION AND WITHDRAWAL OF LOAN FUNDS (CAREC Transport Corridor 1 [Sites in Zhambyl Region] [International Transit Corridor Western Europe - Western China] Investment Program - Project 2)

category

THE BASIS OF ADB FINANCING

Number

Name

Total amount allocated for ADB financing $ Category

Percentage of ADB financing from the Loan account

Works

166,000,000

85 percent of the total requested cost

Consulting services

4,000,000

100 percent of the total requested cost amount*

Unallocated funds

17,000,000

Total

187,000,000

* Not including taxes and duties levied on the territory of the Borrower

APPENDIX 4 Procurement of goods, works and consulting services

A. General provisions

B. Procurement of goods and works

3. Unless otherwise agreed by ADB, the goods and works will have to be purchased based on the procurement procedures set out below.:

International competitive bidding

National competitive bidding

4. Procurement procedures, among other conditions, are subject to execution in accordance with detailed agreements and the threshold cost specified in the Procurement Plan. The borrower has the right to modify the procurement procedure or the threshold cost only subject to prior agreement with ADB, and all changes should be reflected in the additions to the Procurement Plan. 5. National competitive bidding. The Borrower and ADB will ensure that the Borrower's government competitive bidding procedures are consistent with the Procurement Guidelines prior to any procurement activities based on the national competitive bidding procedure. Any changes or clarifications to such procedures agreed between the Borrower and ADB will be indicated in the Procurement Plan. Any subsequent modification of the agreed amendments or clarifications will take effect only after written approval of such modification by the Borrower and ADB.

C. Selection of consulting services

6. Selection based on evaluation of the quality and price of services. Unless otherwise specified by the ADB, the Borrower undertakes to instruct the IA to select and engage consulting services for construction supervision based on an assessment of the quality and price of the services. The borrower has the right to change the method of selection of consultants or their scope of services with the prior consent of ADB, and the changes should be reflected in the additions to the Procurement Plan.

D. ADB review of procurement decisions

7. All contracts purchased under international competitive bidding 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.

E. Industrial and intellectual property rights

8. (a) The Borrower undertakes to instruct IA 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 right or claim. (b) The borrower undertakes to instruct IA 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 instruct IA to ensure that all contracts with consultants funded by ADB contain appropriate representations, guarantees and, if necessary, guarantees of compensation from consultants, in order to ensure that the consulting services provided do not infringe or infringe on any third-party right to industrial or intellectual property, or the requirement.

APPENDIX 5

Project execution and operation of Project facilities

I. IMPLEMENTATION PROCEDURE

1. The Borrower appointed MTK as the Executive Agency for the Project and KAD as the organization responsible for the implementation of the Project. 2. The Project Director, appointed by the ITC, assumes responsibility for the day-to-day implementation of the Project. The Project Director will be supported by the MTK staff responsible for engineering, financial, legal and procurement issues. The CBM-ADB will be formed to provide support to the Project Director in the following areas: Project management, procurement, finance, administration, evaluation, monitoring and reporting, as well as comprehensive review of subsequent projects. 3. The Borrower will ensure that (a) competent MTK staff has been appointed to support the Project Director throughout the Project period; and (b) MTK has mobilized consultants responsible for construction supervision prior to the start of work.

II. OPERATIONAL OBLIGATIONS

Co-financing

4. 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. The Borrower undertakes to ensure that the MTK includes all modified financing needs for the Project in its annual development programs.

Construction quality

5. The Borrower undertakes to 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 best international practices.

Ensuring road safety

6. The Borrower undertakes to instruct the ITC to (a) ensure that all construction contracts include the contractor's commitment to comply with road safety measures; and (b) monitor the accident rate and traffic intensity during the operation of the Project Road.

Environment

7. The Borrower undertakes to instruct the ITC to ensure that (a) design decisions, construction, operation, and maintenance of Project Facilities are carried out in accordance with the ADB Environmental Policy (2002), the Borrower's environmental legislation and regulatory requirements, the Environmental Impact Assessment, and the overall environmental impact assessment prepared for the Investment Program and agreed with the ADB, and the EIA; and (b) the potential harmful environmental impact of the Project has been reduced by taking all minimization and monitoring measures as specified in the EPA. 8. The Borrower undertakes to instruct the ITC to additionally ensure that (a) the EPA is updated prior to issuing any notice of commencement of work; (b) sufficient resources are provided to execute, monitor, and report on the implementation of the EPA; (c) Semi-annual environmental reports are prepared and submitted to ADB within three (3) months after each reporting period.; (d) The reports include, but are not limited to, an overview of achievements in the implementation of the EPA, issues and measures to address these issues; (e) the detailed engineering plan and construction contracts for the Project include the applied environmental measures outlined in the EIA and EPA; and (f) contractors are monitored to ensure compliance with the requirements of the EIA and EPA.

Acquisition of land and resettlement

9. The Borrower undertakes to instruct the ITC to ensure that the Project is executed in accordance with the applicable laws and regulations of the Borrower, the ADB Policy on Forced Resettlement (1995) and the HIA and HIA, including, but not limited to, the following provisions: (a) The EPA must be communicated to the affected residents in accordance with the provisions of the EPA; (b) The EPA must be submitted for review and approval by ADB before any construction contracts are awarded.; (c) All land and allotment rights required for the Project must be acquired and provided in a timely manner; (d) All compensation and resettlement assistance will be provided to the affected persons prior to their eviction and dispossession, and the DWP compensation program must be fully implemented before any notification is issued. (e) Effective complaint resolution mechanisms should be in place to help affected individuals resolve issues and complaints, if they arise, in a timely manner.; (f) Competent personnel and resources should be provided to monitor the implementation of the PRA. An independent monitoring organization acceptable to ADB will conduct external monitoring and evaluation of the PRSP and present the results to ADB at the beginning and at the end of the PRSP implementation process.; and (g) If any terrain changes, road closures, or additional environmental impacts and/or relocation are identified during the implementation period of the PRA, it is necessary to amend the PRA and obtain the prior approval of ADB and relevant government authorities prior to the subsequent implementation of the PRA.

Execution of work contracts

10. The Borrower undertakes to instruct the ITC to ensure that, after the conclusion of work contracts, no notice of commencement of work is issued to the contractor for the relevant segments or sections of the Project Road until the relevant provisions of the PRRA (including, in particular, timely payment of compensation to affected persons), as well as the provisions of the EIA and the updated EPA.

Occupational safety, health, gender equality and social protection

11. The borrower will instruct the ITC to ensure that: (a) provisions are included in construction contracts to ensure that construction contractors comply with (i) the applicable basic standards of the Labor Code, labor laws and the application of relevant workplace safety standards; (ii) equal pay for men and women for equal work; (iii) non-use of child labor during construction and road maintenance activities; and (iv) maximize the employment of the local poor and disadvantaged population for the construction purposes of the Project, provided that the requirements for work and efficiency are adequately met, and (b) disseminate information on the risks of sexually transmitted diseases, including HIV/AIDS, among employees of contractors involved in the Project and among local residents living in close proximity to the Project Road.

Fight against corruption

12. The Borrower undertakes to follow the ADB's Anti-Corruption Policy (dated 1998, as amended). The Borrower, in accordance with its commitment to good governance, accountability, and transparency, agrees 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 that the Borrower will cooperate fully and facilitate any such investigation to the extent necessary. to provide support, including providing access to relevant reports and records, as necessary, for the satisfactory completion of any such investigation. In addition, the Borrower will instruct the ITC to (a) conduct periodic reviews of contractors' actions related to Loan withdrawals and disbursements; (b) ensure that all contracts financed by ADB under the Project include provisions establishing ADB's right to audit and verify the records and accounts of all contractors, suppliers, and suppliers., consultants, as well as service providers related to the Project; (c) ensure that the construction supervision consultant verifies contractors' payment certificates in accordance with the working drawings and specifications of the contract; and (d) ensure that the anti-corruption plan developed for the Investment Program and agreed with ADB is implemented.

Financial management system

13. The Borrower undertakes to instruct MTK to ensure that by April 30, 2010, the MTK financial management system will be established and operational, including the creation of an automated accounting system capable of recording and reporting Project transactions on an annual basis and preparing interim financial reports.

Project operation monitoring System

14. The Borrower undertakes to instruct the MTK to establish the SMFP within six (6) months from the Effective Date and to collect the initial data for monitoring the operation. The key indicators and assumptions listed at the impact and outcome levels in the project plan and monitoring mechanism constitute the primary data needed for analysis.

Project Overview

15. The Borrower undertakes to instruct MTK to submit to ADB: (i) quarterly reports on Project achievements within two (2) weeks after the end of each reporting quarter, and (ii) other performance and monitoring reports submitted to ADB once every six months. A consolidated interim review should be conducted two (2) years after entry into force. The interim review should cover the engineering, environmental and social safety measures of the Project, compliance with the terms of the Loan and the obligations set out in the RSF. The Review will provide for any necessary interim amendments to ensure the successful implementation and achievement of the objectives of the Project and the Investment Program.

I hereby certify that this translation corresponds to the text of the Loan Agreement (Normal Operations) (CAREC Transport Corridor 1 [Sections in Zhambyl Region] [Western Europe-Western China International Transit Corridor] Investment Program - Project 2) between the Republic of Kazakhstan and the Asian Development Bank in English, signed in Astana 3 December 2009.

Head of the HR and Document Management Department of the Ministry of Finance of the Republic of Kazakhstan N. Shabanov

President

Republic of Kazakhstan

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