On ratification of the Loan Agreement (Special Operations) (Basic Education Project) between the Republic of Kazakhstan and the Asian Development Bank dated February 23, 1998

Home / RLA / On ratification of the Loan Agreement (Special Operations) (Basic Education Project) between the Republic of Kazakhstan and the Asian Development Bank dated February 23, 1998

Law of the Republic of Kazakhstan dated July 2, 1998 No. 262

To ratify the Loan Agreement (Special Operations) (Basic Education Project) between the Republic of Kazakhstan and the Asian Development Bank dated February 23, 1998. President of the Republic of Kazakhstan Loan Agreement (Special Operations) (Basic Education Project) between the Republic of Kazakhstan and the Asian Development Bank dated February 23, 1998

Loan Agreement dated 02/23/98 between the Republic of Kazakhstan (hereinafter referred to as the Borrower) and the Asian Development Bank (hereinafter referred to as the Bank). Whereas (A) The Borrower has applied to the Bank for a Loan from its regular capital resources and the resources of the special fund for the purposes of the Project described in Appendix 1 to this Loan Agreement; (C) By agreement of the specified date between the Borrower and the Bank (hereinafter referred to as the "Loan Agreement (Ordinary Operations)"), the Bank agreed to provide the Borrower with a loan of thirty-five million dollars (35,000,000 USD) from its ordinary capital resources for the purposes of the project (hereinafter referred to as the "Loan for Ordinary Operations"); (C) The Borrower's Government has also applied to the Bank for technical assistance to strengthen the administration of education and management at the central local government levels, and for this purpose the Bank has agreed to provide a grant equivalent to six hundred thousand dollars (USD 600,000) (Technical Assistance); and (D) the Bank has agreed to provide the Borrower with a loan from its resources. Of the Special Fund on the terms further established; the parties hereby have come to the following agreement:

Article I Loan Regulations; Definitions Section 1.01. All provisions included in the Regulations of the Bank on Special Operations on Loans, dated December 7, 1982, are hereby applied to this The Loan Agreement to the same extent as if they were fully set out in this document, subject, however, to the following changes (mentioned The Provisions on special Operations on loans, as amended in this way, are hereinafter referred to as the Loan Provisions): Section 4.05 is omitted. Section 1.02. Several terms defined in the Loan Provisions, wherever used in this Loan Agreement, unless the context requires otherwise, have the relevant meanings set forth therein, and the following additional terms have the following meanings: (a) "CFS" means the External Borrowing Committee of the Republic of Kazakhstan or any of its successors; (b) "OO" means the Department of Education at the regional level or any of its successors; (c) "IPO" means the Institute of Education at the Ministry Education (MO) or any of its successors; (d) "SUI" means the Information Management System as described in Part D of Annex 1 of the Loan Agreement dated April 26, 1996 between the Borrower and the Bank for Loan No. 1420-KAZ(SF): Educational Rehabilitation and Management Improvement Project (ERMIR); (e) "MO" means the Ministry The Borrower's entity or any of its successors; (f) "NBK" means the National Bank of the Republic of Kazakhstan, the central bank of the Borrower or any of its successors; (g) "Oblast" means the administrative unit of the Borrower, or any of its successors; (h) "PI" means a pedagogical institute; (i) "RIU" means a Project Implementation Unit established within the Ministry of Defense, as defined in Paragraph 1 of Annex 6 of the Loan Agreement; (j) "Agency responsible for the implementation of the project" for the purposes and within the meaning of the Loan Provisions means the Ministry of Defense, which is responsible for the implementation of the project; (k) "NCP" means the Project Supervisory Committee as described in Paragraph 3 of Annex 6 of this Loan Agreement; (l) "PU" means the Pedagogical University; (m) "RSE" means the Project's Working Group, as defined in paragraph 2 of Annex 6 of this Loan Agreement; (n) "RIUU" means the Republican Institute for Advanced Training Teachers or any of its successors; (o) "IUU" means an Institute for Teacher Development at the level of.

Article II Loan Section 2.01. The Bank agrees to provide to the Borrower from the Bank's Special Fund an amount in various currencies equivalent to seven million two hundred and forty-one thousand in various currencies for Special Drawing Rights (SDR 7,241,000). Section 2.02. The Borrower makes a service payment to the Bank in the amount of one percent (1%) per year from the loan amount withdrawn from the loan account and remaining unpaid from time to time. Section 2.03. The service fee and other loan fees are paid once every six months on April 1st and October 1st of each year. Section 2.04. (a) Subject to the provisions of paragraphs (b) and (c) below The borrower repays the principal amount of the loan withdrawn from the loan account in accordance with the depreciation schedule set out in Appendix 2 to this Agreement. Loan agreement. (b) If the Bank decides, after appropriate consideration by the Board Considering that (i) the Borrower's gross national product per capita (GNP per capita) exceeds USD 690 at the constant rate of 1985 for the next five years, and (ii) the Borrower has reached the ability to borrow from current bank assets, the Bank may, by notifying the Borrower, modify the repayment terms of the Loan by increasing one hundred (100) percent of each amount due after that, until the entire loan amount is fully repaid. However, at the request of the Borrower, the Bank may, instead of increasing the amounts due in this way, charge interest at an annual rate agreed between the Borrower and the Bank on the principal amount of the loan, which is withdrawn and remains unpaid from time to time in such a way and to such an extent as to receive the same payment that would have been received according to the above-described increase in the amounts due. (c) If, at any time after the modification of the loan terms in accordance with the provisions of paragraph (b) above, the Bank, after due consideration by its Board of Directors, determines that the Borrower's economic situation has significantly deteriorated, the Bank may, at the request of the Borrower, restore the original loan terms in respect of the remaining loan amount withdrawn and unpaid.

Article III Use of Loan funds Section 3.01. The Borrower uses the borrowed funds to finance Project costs in accordance with the provisions of this Loan Agreement. Section 3.02. The goods and services and other items of expenditure financed from the loan and the allocation of Loan amounts among the various categories of such goods, services and other items of expenditure comply with the provisions of Annex 3 to this Loan Agreement, as such Annex may be amended from time to time by agreement between the Borrower and the Bank. Section 3.03. Except in cases where the Borrower and the Bank may agree otherwise, all goods and services financed from borrowed funds are purchased in accordance with the provisions of Annexes 4 and 5 to this Loan Agreement. The Bank may refuse to finance a contract for which goods or services have not been purchased in accordance with procedures agreed between the Borrower and the Bank, or if the terms of the contract do not satisfy the Bank. Section 3.04. Except in cases where the Borrower and the Bank may agree otherwise, the Borrower takes all measures to ensure that all goods and services financed from borrowed funds are used exclusively for the implementation of the Project. Section 3.05. Withdrawals from the loan account in respect of goods and services are made only as a result of expenses related to goods and services that: (a) are produced and supplied by such member countries of the Bank as are determined from time to time by the Bank as acceptable sources for the purchase of goods and services, and (b) meet other eligibility requirements that are time-limited. the time period is indicated by the Bank. Section 3.06. The final date for withdrawal from the loan account for the purposes of Section 8.03 of the Loan Regulations is dated June 30, 2003. or another date, which may be agreed from time to time between the Borrower and the Bank.

Article IV Special Conditions Section 4.01. (a) The Borrower shall take all measures to comply with A project with due diligence and efficiency, and in accordance with sound administrative, financial practices, and taking into account environmental conditions and educational level. (b) In carrying out the Project and using the Project's facilities, the Borrower will fulfill or contribute to the fulfillment of all obligations set out in Annex 6 to this Loan Agreement. Section 4.02. The Borrower provides, as necessary, the funds, conditions, services and other resources that are necessary, in addition to the borrowed funds, for the implementation of the Project and for the purpose of operating and maintaining conditions conducive to the implementation of the Project. Section 4.03. During the implementation of the project, the Borrower will ensure the hiring of competent and qualified consultants and contractors, in accordance with the terms of the Borrower and the Bank. Section 4.04. The Borrower will ensure that the activities of its offices and agencies in relation to the implementation of the Project and the operation of the Project are carried out and coordinated in accordance with reasonable administrative policies and procedures. Section 4.05. (a) The Borrower will prepare arrangements to the satisfaction of the Bank for insurance of equipment, materials and training materials financed from borrowed funds to the extent, against such risks and to the extent consistent with reasonable practice. (b) Without limiting the general meaning of the above, the Borrower guarantees or takes measures to insure the goods imported for Projects and financed from borrowed funds against the risks associated with their acquisition, transportation and delivery to the place of use, or installation, and for such insurance, any amount in a currency freely used to replace or repair such products is paid. Section 4.06. (a) The Borrower retains or takes measures to maintain records and accounts sufficient to identify goods and services and other expenditure items financed from borrowed funds and to disclose their use in the Project, to record the development of the Project (including its cost) and to reflect, in accordance with currently applicable accounting principles, operations and financial position of the Ministry of Defense and other agencies of the Borrower responsible for the implementation of the Project and the operation of the Project mechanisms, or any part thereof to the extent appropriate to the Project. (b) The Borrower (i) maintains or takes measures to maintain separate accounts for the Project; (ii) has at its disposal such accounts and related financial statements, which are audited annually in accordance with appropriate standards by independent auditors whose qualifications, experience and contractual terms are acceptable to the Bank; (iii) to provide the Bank, to the extent possible, but in any case no later than 12 months after the end of each relevant fiscal year, certified copies of such audited accounts and financial statements and audit reports (including the auditors' conclusions on the use of borrowed funds and compliance with the terms of this Loan Agreement), all in English; and (iv) provide the Bank with such other information regarding such accounts, financial statements and their audit as may be reasonably requested by the Bank from time to time. Section 4.07. (a) The Borrower provides or takes measures to provide the Bank with all such reports and information that the Bank reasonably requests in relation to (i) the Loan and the expenditure of borrowed funds, related services (ii) goods, services and other expenditure items financed from borrowed funds; (iii(iv) the administration, operations and financial situation of the Borrower's agencies responsible for the implementation of the Project or any part thereof; (v) the financial and economic situation in the Borrower's territory, and the situation of the Borrower's international balance of payments; and (vi) other issues related to the objectives and objectives of the Project. (b) Without limiting the general meaning of the above, the Borrower provides or takes measures to provide the Bank (quarterly) reports on the implementation of the Project and on the operation and management of the Project mechanisms. Such reports shall be submitted in such form, with such details and within such time as the Bank reasonably requests, and, among other things, indicate the success achieved and the problems encountered during the period under review, the measures taken and envisaged to address these problems, the proposed action program and the expected progress over the next quarter.. (c) Shortly after the physical completion of the Project, but in any case no later than (3) three months thereafter, or at such later date as may be agreed between the Borrower and the Bank, the Borrower shall prepare and submit to the Bank a report in such form and with such details as the Bank may request from a sufficient reason for the implementation and initial action of the Project, including its cost, the fulfillment by the Borrower of its obligations under the Loan Agreement and the implementation of the Project objectives. Section 4.08. The Borrower provides an opportunity for the Bank's representatives to check the Project, the goods financed from borrowed funds, and any relevant reports and documents. Section 4.09. The Borrower ensures that the Project mechanisms operate, are maintained and corrected in accordance with reasonable administrative, financial, operational practices, taking into account logistical support and educational level. Section 4.10. (a) It is the mutual intention of the Borrower and the Bank that no other external debt to a lender other than the Bank takes precedence over the Loan by holding the Borrower's assets for debt. To this end, the Borrower shall take measures to ensure that (i) except in cases where the Bank may agree otherwise, any deduction is imposed from any assets of the Borrower for debts as a guarantee of any external debt, such a right, by virtue of evidence, would adequately guarantee the payment of the principal amounts, service fees, and other loan fees; and (ii) that the Borrower, when creating or facilitating the creation of any such right, would promptly secure such right. (b) The provisions of paragraph (a) of this Section do not apply to (i) any right to hold property in debt at the time of its purchase, solely as a guarantee of payment of the purchase price of such property; or (ii) to any right of retention of property for debts arising from the normal course of banking operations and the guarantee of debt, the repayment date of which occurs no more than one year after its maturity. (c) The term "Borrower's assets", as used in paragraph (a) of this Section, includes the assets of any administrative unit or any organization of the Borrower, and the assets of any organization of any such administrative unit, including the NBK and other institution acting as the central bank for the Borrower.

Article V Suspension; Cancellation; Early Termination Section 5.01. The following is defined as an additional case of suspension of the Borrower's right to withdraw an amount from the loan account for the purposes of Section 8.02 (1) of the Bank's Regulations on Special Loan Operations: The borrower must necessarily fulfill any of his obligations under Loan agreement (Normal operations). Section 5.02. The following is defined as an additional case of early termination for the purposes of section 8.07 (d) of the Bank's Regulations on Special Operations on Loans: the case defined in section 5.01. of this agreement must arise.

Article VI Entry into Force Section 6.01. The following condition is an additional condition for the entry into force of this loan Agreement for the purposes of Section 9.01 (f) of the Loan Terms and Conditions: The Loan Agreement (Normal Transactions) must be duly executed and officially submitted on behalf of the Borrower, and all conditions for its entry into force (other than the conditions, which requires the entry into force of this Loan Agreement) must be fulfilled.

Section 6.02. A period of ninety (90) days after the date of this Loan Agreement is set for the entry into force of the Loan Agreement for the purposes of Section 9.04 of the Loan Regulations.

Article VII Other matters Section 7.01. The Minister of Finance is appointed as the Borrower's representative for the purposes of Section 11.02 of the Loan Regulations. Section 7.02. For the purposes of Section 11.01 of the Loan Regulations, the following addresses are indicated: For The Borrower Republic of Kazakhstan Almaty 480091 Ave. Ablay Khan 97 Ministry of Finance Fax No: (7-3272) 636984/622770 For The Bank Asian Development Bank N/a 789 0980 Manila, Philippines Telegraphic Address: Asian Bank Manila Telex : 63587 AD in RN (ETRI) 42205 AD IN RM (ITT) 29066 AD IN PH (RSA) Fax number: (632) 636-2444 (632) 636-2404.

In witness whereof, the parties, acting through their representatives duly authorized, have ensured the signing of this agreement. The Agreement under their respective names and its delivery to the Bank's head office on the day and year indicated above.

Appendix 1 Project Description

1. The objectives of the Project are to provide services to support and reform basic education by: (i) supporting the ongoing rationalization of basic education, (ii) reforming the educational management system at the national and regional levels, (iii) improving the quality of basic education, (iv) strengthening teacher training, (v) providing the necessary visual materials (including textbooks) and equipment for selected primary and secondary schools, with a focus on rural schools. 2. The project consists of the following five parts: Part A: Reforming the educational governance system (i) creating an enabling environment for policy implementation By the Ministry of Education and Culture in the Borrower's country and setting standards, (ii) facilitating the decentralization of the management system in Education Departments at regional levels, (iii) improving the skills of school leaders and principals in the educational sector, (iv) improvement of the information management system in the Ministry of Education and Culture and in regional Education Departments. Part B: Improving the quality of basic education (i) supporting reforms in the training and retraining of teaching staff, developing and improving training courses, teaching aids, conducting local seminars, participating in foreign symposiums and using research contracts; (ii) purchasing equipment for the Institute of Educational Problems in order to improve training courses. Part C: Professional development of teaching staff (i) strengthening the role of teacher training institutes and training programs, (ii) providing visual materials, a language laboratory and computer equipment for: (a) 20 selected pedagogical institutes/universities located throughout the Borrower providing teacher training services; and (b) 15 selected teacher training institutes located throughout the Borrower's territory that provide teacher training. Part D: Provision of necessary supplies for urban and rural schools, their repair and rehabilitation (i) purchase of basic classroom equipment, library books, furniture, scientific equipment, language laboratory equipment and/or classroom computers for approximately: (a) 400 urban elementary and secondary schools, (b) 400 rural primary and secondary schools, and (ii) carrying out necessary repairs and rehabilitation of the structure and equipment of pedagogical institutes, universities, teacher training institutes and schools included in the project. Part E: Textbook development (i) support for reforms in textbook development systems through foreign and local learning, (ii) development of new textbooks and teacher manuals, and (iii) purchase of approximately 1.4 million essential textbooks for primary and secondary schools, including: (a) approximately three-Four new titles to be distributed in the country, contributing to the Borrower's primary school curriculum (approximately 750,000 copies in total), and (b) approximately 13 basic textbooks for secondary schools (about 650,000 copies) to assist in the new training course and the use of equipment installed under the project, in particular in relation to history, geography, Kazakh language and literature, foreign languages and computer manuals. 3. The project also includes the provision of consulting services. The project is scheduled to be completed by December 31, 2002.

Appendix 2

Amortization schedule

(Basic Education Project) Due date Payment of the principal amount (expressed in Special Drawing Rights) April 01, 2008 90,500 October 01, 2008 90,500 April 01, 2009 90,500 October 01, 2009 90,500 April 01, 2010 90,500 October 01, 2010 90,500 April 01, 2011 90,500 October 01, 2011 90,500 April 01, 2012 90,500 October 01, 2012 90,500 April 01, 2013 90,500 October 01, 2013 90,500 April 01, 2014 90,500 October 01, 2014 90,500 April 01, 2015 90,500 October 01, 2015 90,500 April 01, 2016 90,500 October 01, 2016 90,500 April 01, 2017 90,500 October 01, 2017 90,500 April 01, 2018 181,000 October 01, 2018 181,000 April 01, 2019 181,000 October 01, 2019 181,000 April 01, 2020 181,000 October 01, 2020 181,000 April 01, 2021 181,000 October 01, 2021 181,000 April 01, 2022 181,000 October 01, 2022 181,000 April 01, 2023 181,000 October 01, 2023 181,000 April 01, 2024 181,000 October 01, 2024 181,000 April 01, 2025 181,000 October 01, 2025 181,000 April 01, 2026 181,000 October 01, 2026 181,000 April 01, 2027 181,000 October 01, 2027 181,000 April 01, 2028 181,000 October 01, 2028 181,000 April 01, 2029 181,000 October 01, 2029 181,000 April 01, 2030 181,000 October 01, 2030 181,000 April 01, 2031 181,000 October 01, 2031 181,000 April 01, 2032 181,000 October 01, 2032 182,000 Total: 7,241,000

*The data in this column represents the SDR equivalents determined on the respective withdrawal dates. Payment of each amount is made in accordance with the terms of Sections 3.04 and 4.03 of the Loan Regulations.

Appendix 3

Allocation and withdrawal of loan funds The general part

1. The table attached to this Annex contains The categories of goods, services, and other items to be financed from the Loan, and the distribution of Loan amounts by each Category (hereinafter referred to as the Table). (The reference to "Category" or "Categories" in this Appendix refers to the Category or Categories of the Table).

2. Taxes No funds are withdrawn from the loan account in respect of any local taxes. Interest on bank financing

3. Except in other cases provided for in this Annex, Articles The categories and Subcategories listed in the Table will be financed from the loan funds based on the percentages shown in the Table.

4. Despite the paragraph

5 of this Annex, any contract awarded to a local supplier after international competitive bidding or international procurement in accordance with the relevant provisions of Annex 4 to this Loan Agreement shall be financed from the loan on the following basis: (a) if the products purchased from a local supplier are locally produced, 100% of the cost of the ex-factory supplied products will be financed (excluding any taxes); and (b) if the products purchased from a local supplier were fully imported, the currency component of the contract price is financed. Local expenses

5. (a) Loan funds in the amount of SDR 612,000 may be withdrawn from the loan account in foreign currency for the purpose of financing local expenses. (b) Unless specifically provided for in this paragraph and specifically agreed with the Bank, no amounts will be deducted from the loan account in respect of any local Project costs. Service fee

6. The amount allocated to Category 5 is intended to pay for maintenance during the Project implementation period. The Bank has the right to withdraw from the loan account and pay itself, on behalf of the Borrower, the amounts required for the loan service fee upon maturity. Redistribution

7. Despite the allocation of loan funds and interest withdrawals shown in the Table and in accordance with paragraph 5 of this annex, (a) if the loan amount allocated for any Category is insufficient to finance all agreed expenses for that Category, (i) the Bank may, upon notifying the Borrower, redistribute to that Category, to the extent necessary to cover a certain deficit, amounts that have been allocated to another Category but which, in the Bank's opinion, are not required for other expenses, and (ii) if such a reallocation cannot cover the established deficit, reduce the deductible percentage in relation to such expenses so that further withdrawals in this category can continue until all expenses for this category are covered. (b) if the loan amount previously allocated to any Category is higher than all agreed expenses for that Category, the Bank may, by notifying the Borrower, redistribute such excess amount to any other Category. Retroactive financing

8. The loan account must be opened for disbursements of borrowed funds (Normal transactions) and withdrawals from the loan account may be made for allowable expenses incurred under the Project from February 28, 1997 to the effective date in connection with the selection and hiring of consultants and preparatory procurement activities up to a maximum amount equivalent to two hundred thousand dollars (200,000 USD). Special Operations Loan Account

9.(a) Except in cases where there is another agreement between the Bank and the Borrower, the Borrower must open, immediately after the effective date, an advance loan account (special operations) (in the bank of the International Monetary Fund) to speed up the repayment of the loan funds. The loan account (special operations) must be opened, managed and liquidated in accordance with the terms and conditions acceptable to the Bank and the Bank's "Loan Repayment Guidelines" (June 1996), as well as detailed implementation agreements reached between the Bank and the Borrower. The initial amount to be invested in a loan account (special operations) should not exceed the equivalent of 50,000 US dollars. (b) The Bank's Expense statements (SOE) may be used to pay off mandatory expenses and eliminate advance payments received into the loan account (special operations), in accordance with the Loan Repayment Guidelines and detailed agreements reached between the Borrower and the Bank. Individual payments that can be repaid or

The amount liquidated under the expense statements should not exceed $50,000. (c) The borrower must ensure that (i) the loan account (special operations) and expenses covered under the expense statements are reviewed; and (ii) the auditors' report on this matter is included separately in the audit reports required under section 4.06 (b) of this Loan agreements. (Supplement to Appendix 3) Table ________________________________________________________________________ Allocation and withdrawal of loan funds from the account (Basic Education Project) ___________________________________________________________________________ Category ! The percentage of the bank ! financing ___________________________________________________________________________ № ! The article !Distributed Sum(SDR)!A percentage! The base for removal ! !Category Subcategory ! !funds from the loan account ____________________________________________________________________________ 1 !Equipment!(5,602,000 ! ! 100 ! The percentage of foreigners !for a part !USD) ! ! ! expenses !(D)(i)(b) ! ! ! ! ____________________________________________________________________________ 2 !Furniture !(283,000 ! ! 100 ! The percentage of foreigners !for a part !USD) ! ! ! expenses !(D)(i)(b) ! ! ! 60 ! Percentage of local expenses ___________________________________________________________________________ 3 !Specified !(301,000 ! ! 100 ! The percentage of foreigners !materials !USD) ! ! ! expenses !for a part ! ! ! 75 ! Percentage of local expenses !(D)(i)(b) ! ! ! ! ____________________________________________________________________________ 4 !Consultaci-!(87,000 ! ! 100 ! The percentage of foreigners !on-line services!USD) ! ! ! expenses ___________________________________________________________________________ 5 !The fee for !(238,000 ! ! 100 ! The percentage due !services !USD) ! ! ! amounts ___________________________________________________________________________ 6 !Not distributed- !(730,000 ! ! 100 ! !leno !USD) ! ! ! ___________________________________________________________________________ !Total: !(7,241,000 ! ! ! ! !USD) ! ! ! ___________________________________________________________________________

Appendix 4 Procurement

1. Unless otherwise agreed with the Bank, the procedures referred to in the following paragraphs of this Annex relate to purchases of goods and services financed from the loan. The term "services" in this Appendix does not include consulting services.

2. Purchases of goods and services are subject to the provisions of the Asian Development Bank Loan Procurement Guidelines, as amended from time to time, revised in January 1994, and made available to the Borrower.

3. Purchases of goods and services are carried out without any restrictions in relation to or with preference to any particular supplier or contractor, unless otherwise provided in paragraphs 6 or 7 below.

4. (a) Unless otherwise provided in paragraph 7 below, each engineering and construction contract with an estimated value equivalent to US$ 1,000,000 or more and each contract for the supply of equipment or materials with an estimated value equivalent to US$ 500,000 or more shall be awarded based on international competitive bidding. bidding, as described in Chapter II of the Procurement Manual. (b) For contracts awarded through international competitive bidding, the Bank is provided with a General Procurement Notice as soon as possible and in any case no later than 90 days before the publication of the first invitation to tender for the Project (which the Bank will publish separately) in such form, with such details, and with the content of such information that the Bank reasonably requests. The Bank is provided annually with the necessary information to update such a General Procurement Notice as soon as it is necessary to purchase any goods based on international competitive bidding. (c) For contracts concluded on the basis of international competitive bidding, procurement activities are subject to verification by the bank in accordance with the procedures set out in Chapter IV of the Procurement Manual. Each draft invitation to international competitive bidding submitted to the Bank for approval in accordance with such procedures is received by the Bank at least 42 days before publication and contains such information so that the Bank can arrange for a separate publication of such invitation.

5. Each contract for the supply of equipment and materials with an estimated value of less than the equivalent of US$ 500,000 (as opposed to small parts) is awarded based on international procurement, as described in chapter III of the Procurement Manual.

6. When comparing local bids with foreign bids according to the system of international competitive bidding, limits of preferences may be provided for the Borrower's choice and in accordance with the provisions of the Addendum to this Annex for goods produced in Kazakhstan, provided that the bidder offering such goods confirms to the satisfaction of the Borrower and the Bank that the added value is at least 20% of the ex-factory price for such goods specified in the tender offer.

7. a) Engineering and technical work contracts for major repairs and rehabilitation of physical structures and equipment of pedagogical institutes and universities, teacher training institutes and schools included in the project may be awarded to local suppliers hired by the Borrower in accordance with competitive bidding procedures acceptable to the Bank. After the award, three copies of each such contract must be submitted to the Bank. (b) Contracts for the supply of furniture, textbooks and educational materials may be awarded through local competitive bidding or direct procurement in accordance with procedures acceptable to the Bank. The selection and hiring of suppliers is subject to the approval of the Bank. After the award, three copies of each contract must be sent to the Bank.

Addendum to Appendix 4

Purchases

Addendum to Appendix 4

Preference for goods produced in the country 1. When purchasing through international competitive bidding for goods manufactured in the Borrower's country, preference limits are set in accordance with the following provisions, provided that the person offering the goods confirms to the satisfaction of the Borrower and the Bank that the value added is at least 20% of the ex-factory price indicated in the tender offer. (a) In order to apply the preference for domestically produced goods, all eligible bids are first classified into the following three categories: (i) Category I: bids for goods manufactured in the Borrower's country that meet the minimum value added requirement; (ii) Category II: bids for other goods manufactured in the Borrower's country; (iii) Category III: bids offering imported goods. (b) The lowest bid for each category is then determined by comparing all prices within each Category, excluding customs duties and other import taxes imposed in connection with importation, sales taxes and similar taxes imposed in connection with the sale or delivery of goods under the terms of the bid. (c) Such bids with the lowest price are further compared with each other, and if, as a result of such comparison, the price for Category I or Category II turns out to be the lowest, it is selected for the conclusion of the contract. (d) If, however, as a result of the comparison under subparagraph (c) above, the lowest price turns out to be in category III, then it is further compared with the lowest bid from Category I.

Addendum to Appendix 4

Only for the purpose of further comparison, the lowest price of Category III is adjusted upward by adding: (i) the amounts of customs duties and other import taxes that the non-exempt importer must pay for the import of goods offered under category III; or (ii) 15% of the C.I.F. bid price for such goods, if the customs duties and taxes on imports referred to in paragraph (i) above, exceed 15% of the C.I.F. bid price. If, after such a comparison, the bid from Category I has the lowest price, it is selected for the award of the contract; otherwise, the contract is awarded to the bid with the lowest price from Category III.

2. Bidders applying for a preference must provide the necessary information to establish the right to a preference, including the minimum value added.

3. The bidding documents must contain a clear description of the preference provided, the information necessary to establish the right of this tender offer to preference, and the procedures to be followed when comparing the prices offered, i.e. everything as described above.

Appendix 5 Consultants

1. The services of consultants are used in the execution of the project, in particular in (i) procurement of equipment, including detailed specifications of project equipment, tender documents and evaluation, delivery and installation of equipment, (ii) education and planning, (iii) school management, (iv) teacher training and retraining, (v) development and improvement and (vi) in education in the future. The contractual terms of the consultants are determined by agreement between the Borrower and the Bank.

2. The selection, hiring and services of consultants are subject to the provisions of this Annex and the provisions of the "Guidelines for the Use of Consultants By the Asian Development Bank and its Borrowers" for April 1979, supplemented from time to time by the information provided to the Borrower, as well as other procedures for hiring local consultants to the satisfaction of the Bank.

4. (a) The services of competent local consultants should also be used for a part of the services described in paragraph 1 of this Annex. (b) Such local consultants should be selected and hired in accordance with procedures acceptable to the Bank. Unless otherwise agreed with the Bank, the selection and hiring of such consultants is subject to prior approval by the Bank regarding their competence and experience to complete the assignment. After the negotiations are completed, but before the signing

Under the contract, the Bank is provided with (i) a negotiated contract for approval, and (ii) an evaluation of the proposals. Immediately after signing the contract, the Bank is provided with three copies of the signed contract. If any significant addition to the contract is proposed after its initialing, the proposed amendments are provided to the bank for prior approval. * * *

This Law establishes the rules for registering the pledge of movable property in order to realize and protect the rights of individuals and legal entities who have legitimate rights to this property.

The Law of the Republic of Kazakhstan dated June 30, 1998 No. 254.

President

Republic of Kazakhstan

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