On the ratification of the Loan Agreement (Reconstruction of the Shymkent-Tashkent road section) between the Republic of Kazakhstan and the European Bank for Reconstruction and Development

Home / RLA / On the ratification of the Loan Agreement (Reconstruction of the Shymkent-Tashkent road section) between the Republic of Kazakhstan and the European Bank for Reconstruction and Development

Law of the Republic of Kazakhstan dated July 2, 2013 No. 114-V

To ratify Loan Agreement (Reconstruction of the Shymkent–Tashkent road section) between the Republic of Kazakhstan and the European Bank for Reconstruction and Development, signed in Astana on December 12, 2012.

President of the Republic of Kazakhstan N. NAZARBAYEV

LOAN AGREEMENT

reconstruction of the Shymkent–Tashkent road section

between

BY THE REPUBLIC OF KAZAKHSTAN

and

BY THE EUROPEAN BANK

RECONSTRUCTION AND DEVELOPMENT

dated December 12, 2012

table of contents

ARTICLE I – STANDARD TERMS AND CONDITIONS; DEFINITIONS Section 1.01. Inclusion of standard Terms and Conditions Section 1.02. Definitions Section 1.03. Interpretation ARTICLE II – BASIC LOAN TERMS Section 2.01. Amount and currency Section 2.02. Other financial terms of the loan Section 2.03. Withdrawal of funds ARTICLE III – PROJECT EXECUTION Section 3.01. Other affirmative project obligations Section 3.02. Project Implementation Group Section 3.03. Purchases Section 3.04. Environmental and social compliance conditions Section 3.05. Consultants Section 3.06. Periodicity and reporting requirements ARTICLE IV – SUSPENSION; ACCELERATION Section 4.01. Suspension Section 4.02. Shortening the repayment period ARTICLE V – ENTRY INTO FORCE Section 5.01. Conditions prior to entry into force Section 5.02. Legal opinions Section 5.03. Termination of the Agreement due to non-entry into force ARTICLE VI – MISCELLANEOUS Section 6.01. Notifications APPENDIX 1 – PROJECT DESCRIPTION APPENDIX 2 – LOAN CATEGORIES AND WITHDRAWALS

LOAN AGREEMENT

AGREEMENT dated December 12, 2012 between THE REPUBLIC OF KAZAKHSTAN (the "borrower") and the EUROPEAN BANK FOR RECONSTRUCTION AND DEVELOPMENT (the "bank").

THE PREAMBLE

AS the bank was established to provide financing for specific projects that promote the transition to an open, market-oriented economy, as well as the development of private and entrepreneurial initiatives in Central and Eastern European countries committed to and implementing the principles of multiparty democracy, pluralism and market economy; WHEREAS the borrower intends to implement the project as described in Appendix 1, which is intended to assist the borrower in the reconstruction of a 62 km section of road between the Zhibek Zholy international border crossing point on the border with the Republic of Uzbekistan and a post on 742 km of the Shymkent–Tashkent road (the "project"); WHEREAS the borrower has applied to the bank with request for assistance in financing part of the project; WHEREAS the bank has agreed to provide technical cooperation funds free of charge to assist the borrower in the implementation of environmental and social impact assessment; WHEREAS the borrower intends to attract a loan from the Asian Development Bank to assist in financing the 36.7 km long section of road between the 742 km post and the 705 km Shymkent–Tashkent road; WHEREAS the borrower has agreed to provide financial and other assistance in the implementation of the project in accordance with the provisions of this Agreement; WHEREAS the Bank has agreed, based on, among other things, the foregoing, to provide the borrower with a loan of one hundred and forty-two million US dollars (142,000,000 US dollars) in accordance with the terms and conditions set forth or referred to in this Agreement; and SINCE the borrower, in addition to the above, requested the bank to provide additional financing for the project in the amount of fifty-four million five hundred thousand US dollars (54,500,000 US dollars) by redistributing the saved loan funds under the Loan Agreement dated March 30, 2009 between the bank and the borrower regarding the South–West Corridor Road project (International Transit The Western Europe corridor – West China) (the "current Loan Agreement") in accordance with the terms and conditions to be established in the supplementary Agreement to the current Loan Agreement. THUS, the parties hereby agree on the following:

ARTICLE I – STANDARD TERMS AND CONDITIONS; DEFINITIONS

Section 1.01. Inclusion of standard Terms and Conditions

All articles of the Bank's Standard Terms and Conditions dated October 1, 2007 are hereby incorporated into and applied to this Agreement and have the same force and effect as if they were fully set forth in this document (hereinafter referred to as the "standard Terms and Conditions").

Section 1.02. Definitions

The terms defined in the preamble and used in any part of this Agreement (including the preamble and annexes), unless otherwise specified separately or required by the context, have the meanings assigned there, the terms defined in the standard terms and conditions have the meanings assigned there, and the terms below have the following meanings:

"Authorized representative of the borrower"

means the borrower's Minister of Finance.

"The stipulated requirements are for the implementation of projects"

means the requirements for the implementation of projects from 1 to 8 and 10 (or, depending on the requirements of the context, any of these project implementation requirements) project implementation requirements and related to the Bank's environmental and social policy, approved by the Bank's Board of Directors on May 12, 2008 and effective from November 12, 2008.

"Environmental and Social Action Plan"

means the environmental and social Management and improvement plan dated December 12, 2012, prepared by the Bank's environmental consultant, Kazakhstan Limited Liability Company CaspiEcology and approved by the executive agency, and such plan may be amended from time to time with the prior written consent of the bank.

"Legislation in the field of ecology and protection of public interests"

means any applicable national law or rule that relates to: (a) pollution or environmental protection, including related laws or regulations concerning open access to information and participation in decision-making; (b) working conditions and employment; (c) Occupational health and safety; (d) Public health, safety and security; (e) indigenous people; (f) cultural heritage; or (g) resettlement or economically optimal movement of people.

"Environmental and social issues"

It means any issue that falls within the scope of any environmental and social law, any prescribed requirements for the implementation of projects, an environmental and social action plan, or a resettlement plan.

"Fiscal year" –

means the borrower's fiscal year starting on January 1 of each year.

"Executive Agency" –

"Relocation plan" –

means the Ministry of Transport and Communications and the Committee of Highways of the Ministry of Transport and Communications of the borrower.

means the relocation plan for the project dated December 12, 2012, prepared in accordance with the stipulated requirement 5 for the implementation of projects by the bank's environmental consultant, Kazakhstan Limited Liability Company CaspiEcology and approved by the executive agency, while such plan may be changed from time to time with the prior written consent of the bank.

Section 1.03. Interpretation

In this Agreement, a reference to a specific article, section, or appendix is interpreted, except in certain cases specified in this Agreement, as a reference to that specific article, section, or appendix to this Agreement.

ARTICLE II – BASIC LOAN TERMS

Section 2.01. Amount and currency

The Bank agrees to provide the borrower with a loan in accordance with the terms and conditions set forth or referred to in this Agreement in the amount of one hundred forty-two million US dollars ($142,000,000).

Section 2.02. Other financial terms of the loan

(a) The minimum withdrawal amount is two hundred thousand US dollars ($200,000). (b) The minimum early repayment amount is ten million US dollars ($10,000,000). (c) The minimum amount to be cancelled is five million US dollars ($5,000,000). (d) The interest payment dates will be January 15th and July 15th of each year. (e) (1) The borrower shall repay the loan in 28 equal (or as equal as possible) semi-annual installments on January 15 and July 15 of each year, with the first repayment date of the loan being January 15, 2017 and the last repayment date of the loan being July 15, 2030. (2) Notwithstanding the foregoing, in the event that (i) the borrower does not repay the full amount of the loan before the first repayment date specified in Section 2.02. (e) (1), and (ii) the bank extends the last use date of the loan specified in this Section 2.02. (f) below, until the date that occurs after such first repayment date of the loan, then the amount of each withdrawal made on or after the first repayment date of the loan will be distributed for repayment in equal shares over several repayment dates that occur after the date of such withdrawal (the bank adjusts such distributed amounts accordingly in such a way that integers are obtained in each case). The Bank will notify the borrower of such distributions from time to time. (f) The last use date of the loan will be January 10, 2018, or a later date that the bank may set at its discretion and notify the borrower about. (g) The commitment fee rate is 0.5% per annum. (h) The loan is based on a floating interest rate.

Section 2.03. Withdrawal of funds

(a) The available amount may be disbursed from time to time in accordance with the provisions of Annex 2 to cover costs incurred (or, with the consent of the bank, to be incurred) in relation to the reasonable cost of goods, works and services required for the project. (b) Notwithstanding the provisions of section 3.05 (c) of the standard terms and conditions, the borrower prefers to pay a one-time commission not from the available amount, but from its own resources. The borrower's one-time fee will be paid in accordance with section 3.05 (d) of the standard terms and conditions.

ARTICLE III – PROJECT IMPLEMENTATION

Section 3.01. Other affirmative project obligations

In addition to the general obligations set out in article IV of the standard terms and conditions, unless the bank agrees otherwise: (a) The Borrower: (1) will take all measures necessary to secure sufficient funds for the completion of the project; (2) will take or ensure that all measures necessary or appropriate are taken to achieve the objectives of the project and compliance with the provisions of this Agreement; (3) will fulfill all its obligations arising from all contracts concluded in connection with the project. (b) The Borrower will provide, unless otherwise agreed with the bank: (1) that the executive agency will complete the review of standards and standard technical specifications for construction work in the road industry no later than March 30, 2014, in accordance with best industrial practices; (2) that the executive agency will adopt relevant standards and standard technical specifications for construction work in the road industry no later than March 30, 2015; (3) that the executive agency, no later than March 30, 2014, will complete a detailed assessment of the executive agency's potential and develop detailed proposals for the functioning of an independent road agency (a specialized road organization created to manage the national highway network), prepare an action plan for the implementation of such proposals and a corresponding draft amendment to the current legislation; (4) that the executive agency, no later than December 31, 2014, will submit to the Borrower's Government for consideration an action plan for the establishment of an independent road agency, including draft legislative amendments to enable the implementation of the proposed reforms; (5) that the executive agency, no later than December 31, 2013, will complete an assessment of the procurement capacity of the executive agency and develop recommendations in accordance with with best practices under Part C of the project, as defined in Annex 1 and as agreed with the implementing agency; (6) that the executive agency will apply the recommendations referred to in subparagraph (5) above no later than June 30, 2014, and finalize the improvement of the executive agency's procurement functions in accordance with applicable law; (7) that the executive agency will implement the relevant functions no later than June 30, 2015, in the event of the establishment of a road agency. the Road Agency in the field of procurement in accordance with the recommendations mentioned above in subparagraph (5); (8) that the executive agency, no later than March 30, 2014, will complete a study assessing the willingness of the private sector and the ability of the public sector to tender for performance-based maintenance contracts; (9) that the executive agency, no later than March 30, 2015, will prepare tender documents for a multi-year contract for regulatory maintenance and publish such the tender; (10) that the executive agency will submit to the Government of the borrower no later than March 30, 2013, the relevant draft amendments to the legislation on concessions acceptable to the parties to ensure the implementation of PPP-type projects; (11) that the executive agency will prepare all necessary tender documents no later than December 31, 2014 in accordance with the applicable legislation of the borrower. for the pilot concession project and will publish the specified tender according to the schedule agreed with the bank.; and (12) that the section of highway to be reconstructed with the loan funds will be classified as category 1 b after completion of construction work and during the life cycle of the project until the final repayment of the loan.

Section 3.02. Project Implementation Group

In order to coordinate, manage, monitor and evaluate all aspects of the project implementation, including the procurement of goods, works and services for the project, the borrower, through the executive agency, unless otherwise agreed with the bank, will ensure the functioning of the project implementation team with adequate resources and sufficiently qualified staff of the executive agency throughout the project implementation period.

Section 3.03. Purchases

For the purposes of section 4.03 of the standard terms and conditions, the following provisions, unless otherwise agreed by the bank, govern the procurement of goods, works and services required for the project and subject to loan financing: (a) goods, works and services (with the exception of consultant services, which are included in Section 3.03 (c)) are procured through open bidding; (b) for the purposes of section 3.03 (a), the procedures for conducting open bidding are set out in Chapter 3 of the EBRD Procurement Rules; (c) consultants engaged by the borrower to assist in the implementation of the project are selected in accordance with the procedures set out in Chapter 5 of the EBRD Procurement Rules; (d) all contracts are subject to the review procedures set out in the EBRD procurement Rules.

Section 3.04. Environmental and social compliance conditions

Without prejudice to the generally applicable nature of sections 4.02 (a), 4.04 (a) (iii) and 5.02 (c) (iii) of the standard terms and conditions, the borrower, unless otherwise agreed by the bank, undertakes to: (a) except as specified in the environmental and social action plan and the resettlement plan, the borrower will comply with and will ensure that any contractor fulfills the project in accordance with the stipulated project implementation requirements.; (b) without prejudice to the generally applicable nature of the above, the borrower must carefully implement and comply with the environmental and social action plan and the resettlement plan and monitor the implementation of such plans in accordance with the provisions related to monitoring contained in such plans; (c) the borrower and the bank may agree from time to time to amend the environmental and social action plan. social events and a relocation plan in response to changes in the current situation of the project or borrower, unforeseen events and monitoring results. Without prejudice to the generally applicable nature of the above, (1) if there is any adverse environmental or social impact or issue that was not foreseen or envisaged in the environmental and social action plan and the resettlement plan, either in full or to the extent of its severity, (2) if any mitigation measure outlined in terms of environmental and social measures and the resettlement plan, it is insufficient to eliminate or reduce any environmental or social impact to the level of, anticipated by the relevant stipulated project implementation requirements during the time period set out in the environmental and social action plan and the resettlement plan, or (3) if any significant non-compliance with the environmental and social action plan and the resettlement plan or any environmental and social law has been identified by an inspection of a regulatory authority or authority or any audit conducted in accordance with section 3.04 (d). The borrower, as soon as reasonably possible and subject to the consent of the bank, will develop and include in the environmental and social action plan and the resettlement plan such additional or softened measures as may be necessary to achieve compliance with the stipulated requirements for the implementation of the project and applicable legislation in the field of ecology and protection of public interests, in each case in a measure satisfactory to the bank.

Section 3.05. Consultants

(a) In order to assist in the implementation of the project, the borrower, unless otherwise agreed with the bank, will, if necessary, engage or ensure the involvement and use of consultants whose qualifications and experience, as well as terms of reference, are satisfactory to the bank. (b) The borrower, through the implementing agency, will provide, free of charge, any consultants involved in facilitating activities related to the borrower's project or work with all the facilities and support at their disposal necessary to carry out their functions, as well as all documents, materials and other information that may be relevant to their work.

Section 3.06. Frequency and reporting requirements

(a) Starting from the effective date and until the loan amount is fully repaid or cancelled, the borrower, through the enforcement agency, will submit annual reports to the bank on environmental and social issues arising with respect to the borrower or the project within 90 days after the end of the reporting year. Such reports will include information on the following specific issues: (1) information on the borrower's compliance with the stipulated project implementation requirements, as described in section 3.04 (a), and the implementation of the environmental and social action plan and the resettlement plan; (2) information on how the borrower monitored compliance with the stipulated requirements for the implementation of the project and the environmental and social action plan by any contractors employed for the project, and a summary of any significant non-compliance by such contractors with the stipulated requirements for the implementation of the project and the environmental and social action plan and any measures taken to correct such non-compliance; (3) information on the implementation of the stakeholder engagement plan required by the project 10 implementation requirements, including a summary of any complaints received and how such complaints were resolved; (4) information on the borrower's compliance with environmental and social laws regarding the project, including the status of any permits required for the project, the results of any inspections conducted by any regulatory authorities, any violations of applicable laws, regulations or regulations and any related remedial measures or any penalties imposed for any such violations, and a summary of any significant notices, reports, and other communications on environmental and social issues related to the project submitted by the borrower to any regulatory authorities.; (5) information about the occupational health and safety management and the health and safety status of the project, including the number of accidents, accidents resulting in temporary disability, and incidents, any preventive or mitigating measures that have been taken or are planned by the borrower, any occupational health and safety training, and any other health and safety management initiatives that have been implemented or are planned by the borrower; (6) a summary of any changes in environmental and social laws that may have a significant impact on the project; and (7) copies of any information on environmental and social issues periodically provided by the borrower to its shareholders or the public. (b) Starting from the effective date, the borrower, through the implementing agency, will submit periodic project performance reports specified in section 4.04 (a) (iv) of the standard terms and conditions on a quarterly basis no later than 30 days after the end of the reporting period until the project is completed. Such reports should include the following specific data: (1) The following general information: (A) the physical progress achieved in the implementation of the project on the date of the report and during the reporting period; (B) actual or expected difficulties or delays in the implementation of the project and their impact on the implementation schedule, as well as the actual measures adopted or planned to overcome difficulties and avoid delays; (C) expected changes in the project completion date; (D) changes in the core staff of the project implementation team, consultants or contractors; (E) matters that may affect the cost of the project; and (F) any event or activity likely to affect the economic feasibility of any part of the project. (2) A histogram of the progress of the project based on the project implementation schedule, indicating the progress made in each part of the project and including a schedule of actual and planned costs. (3) Financial statements detailing the costs incurred under each part of the project and loan withdrawals, together with a statement showing: (A) the initial estimated cost; (B) the revised estimated cost, if any, with the reasons for the changes; (C) the initially estimated costs and actual costs at that date; (D) the reasons for the deviation of the actual costs at this date from the initial cost estimates at this date; and (E) the estimated costs for the remaining quarters of the year. (4) A brief description of the fulfillment status of each of the conditions contained in this Agreement. (c) Immediately upon the occurrence of any incident or accident related to the project that is likely to have a significant adverse impact on the environment, health or safety, the borrower will notify the bank by fax or telex, indicating the nature of such incident or accident and any steps taken by the borrower or the implementing agency. to eliminate it. Without prejudice to the generally applicable nature of the above, (1) an incident or accident relates to a project if it occurs on any site used for the project, or if it is caused by production facilities, equipment, vehicles, or ships used for or in relation to the project (regardless of whether they are used on which site-either the project area and regardless of whether they are used by authorized or unauthorized persons); (2) an incident or accident is considered to have a significant negative impact on the environment, the public, occupational health or safety if: (A) any applicable law requires that any government agency be notified of such an incident or accident, (B) such an incident or accident results in the death of any person (regardless of whether such person is employed by the borrower), (C) more than one person (regardless of whether such persons are employed the borrower) suffered serious injuries requiring hospitalization, or (D) such an incident or accident has become known or is likely to become known to the public through the media or otherwise. (d) The Borrower will immediately notify the bank of any significant protest by workers or members of the public directed against or concerning the borrower or the project, which may have a significant negative impact on the borrower or the project, or which has become known or is likely to become known to the public through the media or otherwise. Within ten days of any such notification, the borrower will submit a report satisfactory to the bank, determining the outcome of the borrower's investigation of such protest, and any steps taken or proposed to be taken by the borrower to resolve the issues raised in the protest.

ARTICLE IV – SUSPENSION; ACCELERATION

Section 4.01. Suspension

The following is provided for the purposes of section 7.01 (a) (xvii) of the standard terms and conditions: (a) the legislative and regulatory framework applicable to the road industry in the borrower's territory has been modified, suspended, abolished, cancelled or rejected in a manner that has a material and adverse effect on the financial condition of the borrower, or his ability to implement the project, or the fulfillment of any of his obligations under this Agreement.

Section 4.02. Shortening the repayment period

The following is stipulated for the purposes of section 7.06 (f) of the standard terms and conditions: any of the events described in section 4.01 occurred and continues for thirty days after the bank's notification to the borrower.

ARTICLE V – ENTRY INTO FORCE

Section 5.01. Conditions prior to entry into force

The following conditions are specified for the purposes of section 9.02 (c) of the standard terms and conditions as additional conditions for the entry into force of this Agreement: (a) The Bank has been provided with certificates that satisfy the bank in form and content, demonstrating the adoption of a work plan for the transfer of ongoing repairs by the executive agency to the private sector on a pilot basis. (b) The Bank has been provided with certificates that satisfy the bank in form and content, demonstrating the adoption of financing standards for the repair and routine maintenance of highways in the Republic of Kazakhstan with an increase in the average cost of routine maintenance by at least 50 percent in at least one area of the borrower. (c) The Bank should have received an environmental and social action plan and a resettlement plan that satisfied the Bank in form and content.

Section 5.02. Legal opinions

For the purposes of section 9.03 (a) of the standard terms and conditions, the Legal Counsel's opinion or opinions are provided on behalf of the borrower by the Minister of Justice, and the following are specified as additional issues to be included in the opinion or opinions provided to the bank: The borrower's Parliament has ratified this Agreement.

Section 5.03. Termination of the Agreement due to non-entry into force

The date 120 days after the date of conclusion of this Agreement is stipulated for the purposes of section 9.04 of the standard terms and conditions.

ARTICLE VI – MISCELLANEOUS

Section 6.01. Notifications

The following addresses are provided for the purposes of section 10.01 of the standard terms and conditions:

For the borrower:

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

Attention: Minister of Finance

Fax: +7 7172 717762

For the bank:

European Bank for Reconstruction and Development One Exchange Square London EC2A 2JN Great Britain

Attention: Operations Management Department

Fax: +44-20-7338-6100

IN WITNESS WHEREOF, the parties to this Agreement, acting through their duly authorized representatives, have secured the signing of this Agreement, drawn up in four copies in English and delivered to Astana, Republic of Kazakhstan, on December 12, 2012.

REPUBLIC OF KAZAKHSTAN

__________________________ Name: Bolat Zhamishev Position: Minister of Finance

EUROPEAN BANK FOR RECONSTRUCTION AND DEVELOPMENT

__________________________ Name: Thomas Mayer Position: Managing Director

APPENDIX 1 PROJECT DESCRIPTION

1. The purpose of the project is to assist the borrower in the reconstruction of a 62 km long section of road between the Zhibek Zholy international border crossing point on the border with the Republic of Uzbekistan and a checkpoint on 742 km of the Shymkent–Tashkent road. The project is part of the modernization of the Western Europe–Western China International Transit Corridor connecting Europe with China. 2. The project consists of the following parts, subject to such changes as the bank and the borrower may agree on from time to time: (A) construction work on the reconstruction of a 62 km long road section, jointly financed from the loan funds, as well as under the supplementary Agreement to the existing Loan Agreement,1 as follows: - The loan funds will be used to finance the reconstruction of a part of the existing 62 km long road section connecting the Uzbek border at 804.2 km with a 742 km point on the highway, with the technical maintenance of the existing two-lane I-b road and the existing horizontal highway. Since the existing road section is under maintenance, no road expansion is required. - Reconstruction of the road section from the interchange for approximately 799 km to the Zhibek Zholy international border crossing point for 804.2 km from the existing single-lane road of category III standard to a two-lane road of category I-b standard. This will require widening the road by 15 meters. At the entrance to the border crossing point, temporary 6 m wide roads will also be added on both sides to ensure local access. - Local temporary roads will be provided in three locations where housing construction is underway near road and multiple small intersections. These temporary roads will carry local traffic to the main intersections and eliminate the need for frequent side exits onto the main highway M 39. - implementation of road safety works on roads, which include road construction, road markings and road signs. (C) Project supervision and management consultant for construction works: The loan funds will be used to finance consultants who will oversee the execution of work under Part A of the project and provide project management services. (C) Advisory services for the management reform of the road industry: The loan funds will be used to finance consultants assisting the Ministry of Transport and Communications and the Committee of Highways, (i) to strengthen procurement functions and increase the capacity to manage complex procurement contracts, (ii) to analyze the experience of countries where the road industry is managed by independent road agencies, and to support the establishment of an independent road agency in future, (iii) comprehensive review and updating of technical standards, (iv) assessing the willingness of the private sector to launch a competition for performance-based maintenance contracts. 3. The project is expected to be completed by December 31, 2016.

__________________________________ 1IN addition to the above, the borrower requested the bank to provide additional financing for the project in the amount of fifty-four million five hundred thousand US dollars (54 500 000 USD) by redistributing the saved loan funds under the existing Loan Agreement.

APPENDIX 2 CATEGORIES AND WITHDRAWALS OF LOAN FUNDS

1. The table added to this annex sets out the categories, the loan amount allocated to each category, as well as the shares of costs to be financed in each category. 2. Notwithstanding the provisions of paragraph 1 above, no withdrawal of loan funds should be made in respect of: (a) costs incurred prior to the date of signing the Loan Agreement; (b) category 1 costs prior to the proper appointment of the project supervision and management consultant specified in part (B) of the project.

 Addendum to APPENDIX 2