On ratification of the Loan Agreement (Special Operations) (Water Resources Management and Land Restoration Project) between the Republic of Kazakhstan and the Asian Development Bank dated March 25, 1998

Home / RLA / On ratification of the Loan Agreement (Special Operations) (Water Resources Management and Land Restoration Project) between the Republic of Kazakhstan and the Asian Development Bank dated March 25, 1998

On ratification of the Loan Agreement (Special Operations) (Water Resources Management and Land Restoration Project) between the Republic of Kazakhstan and the Asian Development Bank dated March 25, 1998

Law of the Republic of Kazakhstan dated July 2, 1998 No. 265

To ratify the Loan Agreement (Special Operations) (Water Resources Management and Land Restoration Project) between the Republic of Kazakhstan and the Asian Development Bank dated March 25, 1998. President of the Republic of Kazakhstan Loan Agreement (Special Operations) (Water Resources Management and Land Restoration Project) between the Republic of Kazakhstan and the Asian Development Bank

Loan Agreement dated 03/25/98 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 million dollars ($30,000,000) from its ordinary capital resources for the project (hereinafter referred to as the "Loan for Ordinary Operations"); (C) The Government of the Borrower It has also applied to the Bank for technical assistance on institutional development and water management policy reforms, and for this purpose the Bank has agreed to provide a grant in the amount equivalent to six hundred thousand dollars ($600,000).(further Technical assistance); and (D) The Bank has agreed to provide the Borrower with a loan from the resources of its Special Fund under the conditions set forth below; the parties hereby agree as follows:

Article I Loan Regulations; Definitions Section 1.01. All the provisions included in the Bank's Regulations on Special Loan Operations dated December 7, 1982, hereby apply to this Loan Agreement to the same extent as if they were fully set out in this document, subject, however, to the following amendment (the said Provisions on Special Loan Operations, thus modified, hereinafter referred to as the Loan Provisions): Section 4.05 is omitted. Section 1.02. Several terms defined in the Loan Terms, 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) "WSSA" means the ASEA dranch canal command; (b) "Regulation on the Repayment of Funds" means Borrower's Resolution No. 1237 of October 7, 1996 and any clarifications issued thereto; (c) "IWRM" means the Water Resources Management Committee at

The Ministry of Agriculture or any of its successors; (d) "DS" means the Department of Construction under the Ministry of Economy and Trade or any of its successors; (e) "DUVS" means the Department of Water Systems Management under the Ministry of Agriculture or any of its successors; (f) "MSH" means the Ministry of Agriculture of the Borrower or any of its successors(g) "OIE" means the Ministry of Ecology and Bioresources of the Borrower or any of its successors; (h) "MET" means the Ministry of Economy and Trade of the Borrower or any of its successors; (i) "NBK" means the National Bank of Kazakhstan, the central bank of the Borrower, or any of its successors; (j) "Oblast" means the administrative unit of the Borrower, or any of its successors; (k) "IT" means operation and maintenance;

(l) "RIU" means the Project Implementation Unit, as defined in Paragraph 1 of Annex 6 of the Loan Agreement; (m) "PMO" means the project management office; (n) "Project Site" means the area in the Makhtaaral district of South Kazakhstan region, with an area of approximately 32,500 hectares, where technical facilities are located (o) "Project Executive Agency" means, for the purposes and within the meaning of the Loan Provisions, the Ministry of Agriculture, which is responsible for the implementation of the project; (p) "Project facilities" means the technical facilities and works to be provided, as well as the equipment to be supplied within the framework of the project; (q) "RSE" means the Project Working Group, as defined in paragraph 2 of Annex 6 of this Loan Agreement; (r) "area" means the local administrative unit in the region or any of its successors; (s) "RCC" means the regional coordination committee described in paragraph 4 of Annex 6 of this Loan Agreement; (t) "resolution on payment for water" means the resolution and rules on the procedures for calculating, collecting and charging for water resources by economic sectors in the Republic of Kazakhstan, prepared by a committee established for such purposes and headed by the Chairman of the IWRM. (u) "WUAs" Association of Water Users.

Article II Loan Section 2.01. The Bank agrees to provide the Borrower from the Bank's Special Fund with an amount in various currencies equivalent to seven million two hundred twenty-seven thousand Special Drawing Rights (SDR 7,227,000). Section 2.02. The Borrower makes a service payment to the Bank in the amount of one percent (1%) and a 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 June 15 and December 15 of each year. Section 2.04. (a) Subject to the provisions of paragraphs (b) and (c) below, the Borrower shall repay the principal amount of the loan withdrawn from the loan account in accordance with the amortization schedule set out in Appendix 2 to this Loan Agreement. (b) If the Bank decides, after appropriate consideration by the Board of Directors, that (i) The Borrower's gross national product per capita (GNP per capita) exceeds USD 690 at the constant exchange rate of 1985. during 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 by one hundred (100) percent each amount due thereafter 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 loan amount withdrawn and remaining 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 in accordance with the above an increase in the amounts due for payment. (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 where 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 June 30, 2003. or another date that 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 carry out the Project with due diligence and efficiency, and in accordance with reasonable administrative, financial, environmental, and agricultural practices. (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 required, 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. (a) During the course of the Project, the Borrower will ensure the hiring of competent and qualified consultants and contractors acceptable to the Borrower and the Bank, for a period and on terms satisfactory to the Borrower and the Bank. (b) The Borrower will ensure that the Project is completed in accordance with plans, design standards, specifications, work schedules, and construction methods acceptable to the Borrower and the Bank. The Borrower will provide or ensure that such plans, design standards, specifications and work schedules, as well as any significant modifications made to them, with such details, as requested by the Bank, are provided to the Bank immediately after their preparation. 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 to insure the Project 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 the Project and financed from borrowed funds against the risks associated with their acquisition, transportation and delivery to the place of use, or installation, and any amount in a currency freely available for such insurance is paid. used to replace or repair such products. 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 Borrower's agencies 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 nine (9) months after the end of each relevant fiscal year, certified copies of such audited accounts and financial statements and auditors' reports on the results of the audit (including the auditors' opinion on the use of borrowed funds and compliance with the terms of this agreement). Loan Agreements), all in English; and (iv) provide the Bank with other information regarding such accounts, financial statements and their audit as may be requested from time to time by the Bank. (c) The Borrower will allow the Bank, upon request, to discuss the Borrower's financial statements on the Project and all financial matters related to the Project with the Borrower's auditors and will appoint and require the participation of any representative of such auditors in the discussions requested by the Bank, provided that such discussions take place in the presence of a person authorized by the Borrower, unless the Borrower specifies otherwise. 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 regarding (i) the Loan and the disbursement of borrowed funds and their servicing; (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 Project execution and on the operation and management of Project funds. 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, engineering, environmental, agricultural practices, taking into account maintenance and operational practices. 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, if any withholding is imposed on any assets of the Borrower for debts as a guarantee of any external debt, such a right would obviously adequately guarantee payment the principal amount, service fee, 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 retention-of-title right at the time of purchase, solely as a guarantee of payment of the purchase price of such property, or (ii) any retention-of-title right arising from the normal course of banking transactions and guarantees of debt, the repayment date of which comes 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) Loan Regulations: The Borrower has failed to fulfill any of its obligations under the Loan Agreement (Normal Transactions). Section 5.02. The following is defined as an additional case of early termination for the purposes of section 8.07.(d) of the Loan Regulations: 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) Loan Provisions: The Loan Agreement (Normal Transactions) must be duly executed and formally 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 Ministry 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 Fax: (632) 636-2444 (632) 636-2402

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 main objective of the Project is to support the privatization of agricultural farms at the Project site by facilitating the transfer of irrigation systems rehabilitated under the Project to water user associations. 2. The project consists of the following two parts: Part A: Institutional support, monitoring and evaluation (i) assistance in the organization and organization of WUAs; (ii) providing WUAs with institutional support, including training in operation, management, maintenance, and pest control; (iii) supporting the organization of a laboratory for monitoring water quality, water levels, and soil chemistry, including training in the use of necessary laboratory equipment and information collection, as well as analysis techniques for effective environmental monitoring. Part B: Improvement of irrigation and drainage (i) provision of vertical drainage equipment, including collector drainage systems; (ii) rehabilitation and reconstruction of drainage wells and other

economic and inter-farm drainage technology; (iii) introduction of computer-based water management systems; (iv) various improvements in farm water and land management, including irrigation modeling and soil level correction. 3. The project provides consulting services. The Project is scheduled to be completed on December 31, 2002. Appendix 2 Depreciation schedule (Water Resources Management and Land Restoration Project) Payment term Payment of the principal amount (*expressed in Special Terms Borrowing Rights) June 15, 2008 SDR 90,300 December 15, 2008 90,300 June 15, 2009 90,300 December 15, 2009 90,300 June 15, 2010 90,300 December 15, 2010 90,300 June 15, 2011 90,300 December 15, 2011 90,300 June 15, 2012 90,300 December 15, 2012 90,300 June 15, 2013 90,300 December 15, 2013 90,300 June 15, 2014 90,300 December 15, 2014 90,300 June 15, 2015 90,300 December 15, 2015 90,300 June 15, 2016 90,300 December 15, 2016 90,300 June 15, 2017 90,300 December 15, 2017 90,300 June 15, 2018 180,700 December 15, 2018 180,700 June 15, 2019 180,700 December 15, 2019 180,700 June 15, 2020 180,700 December 15, 2020 180,700 June 15, 2021 180,700 December 15, 2021 180,700 June 15, 2022 180,700 15 December 2022 180,700 June 15, 2023 180,700 December 15, 2023 180,700 June 15, 2024 180,700 December 15, 2024 180,700 June 15, 2025 180,700 December 15, 2025 180,700 June 15, 2026 180,700 December 15, 2026 180,700 June 15, 2027 180,700 December 15 , 2027 180,700 June 15 , 2028 180,700 December 15, 2028 180,700 June 15, 2029 180,700 December 15, 2029 180,700 June 15, 2030 180,700 December 15, 2030 180,700 June 15 2031 180,700 December 15, 2031 180,700 June 15, 2032 180,700 _______ Total: 7,227,000

*The numbers in this column represent the SDR equivalents determined on the respective withdrawal dates. Payment on the relevant date is made in accordance with the Loan Regulations (Special Operations).

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 for 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, and the reference to "Subcategory" or "Subcategories" in this Appendix refers to the Subcategory or Subcategories of the Category).

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

3. Except as specifically specified by the Bank, the items of the Categories and Subcategories listed in the Table will be financed from the loan funds based on the interest shown in the Table.

4. Notwithstanding 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 funds 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 is financed (excluding any taxes); and (b) if the products purchased from a local supplier were fully imported, then 100% of the currency component of the contract price is financed. Local expenses

5. (a) Loan funds in the amount of four million three hundred thirty six thousand SDR (4,336,000) may be withdrawn from the loan account in foreign currency for the purpose of financing local expenditures. (b) Unless specifically provided for in this paragraph or 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 7 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 to pay for loan servicing 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 interest deductible for such expenses so that further withdrawals in that category can continue until all expenses in that Category are covered; (b) if the loan amount previously allocated to any Category is higher than all agreed expenses in this Category, the Bank may, by notifying the Borrower, redistribute such an excess amount to any other Category. Special Operations Loan Account

8. (a) Except in cases where there is another agreement between the Bank and the Borrower, the Borrower must open, immediately after the effective date, a loan account (special operations) in the amount of USD 500,000. A 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 "Disbursement Guidelines" (June 1996), as well as detailed implementation agreements reached between the Bank and the Borrower. The initial amount to be deposited into the loan account (special operations) should not exceed the equivalent of US$ 500,000. (b) The Bank's expense statements (SOE) may be used to pay off eligible expenses and eliminate advance payments received into the loan account (special operations), in accordance with the Management of the Bank repayment of the loan and detailed agreements reached between the Borrower and the Bank. Individual payments that can be repaid or eliminated as part of 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 Agreement. Terms of withdrawal of funds from the loan account 9. Notwithstanding the other provisions of this Loan Agreement: (a) No withdrawals from the loan account are made for activities in the BSA until the Borrower enters into a written agreement(s) with the beneficiaries of the Project representing the majority of the lands in such a BSA, in form and substance satisfying the Bank, according to which the Beneficiaries The Project's participants agree (i) to the activities of the WSSA for the Project; (ii) to pay the specified percentage of the investment value of such activities for the Project in accordance with the Provision on the Return of Funds; (iii) establish a WUAs to carry out the inter-farm irrigation and drainage systems required, including drainage wells; and

(b) No withdrawals from the loan account will be made for Part B of the Project until the Borrower issues a Water Payment Order, which must be in full force and effect, and the Borrower submits or ensures that the Bank receives an opinion or opinions satisfactory to the Bank, an adviser acceptable to the Bank, confirming that such an Order has full legal force. (Supplement to Appendix 3) Table --------------------------------------------------------------------------- Allocation and withdrawal of loan funds from the account (Water Resources Management and Land Restoration Project) --------------------------------------------------------------------------- Category ! The percentage of the bank ! financing --------------------------------------------------------------------------- № ! The article !The distributed amount !A percentage!The base for removal ! ! (SDR) ! !funds from the loan account ! !Category !Subcategory! ! --------------------------------------------------------------------------- 1 Civil works ($696,000) --------------------------------------------------------------------------- 1 Level 5 control ------- percentage of total groundwater consumption 598,000 0% foreign. and 5% local and salinity consumption. --------------------------------------------------------------------------- 1 Office building and 75 IN other equipment ------- percentage of total expenses 98,000 0% foreign and 75% local --------------------------------------------------------------------------- 2 Transport and Equipment 387,000 --------------------------------------------------------------------------- 2 Transportation A 217,000 100 Percent of foreign expenses --------------------------------------------------------------------------- 2 Laboratory and Field equipment 107,000 100 Percent of foreign expenses --------------------------------------------------------------------------- 2 Computers and 100 percent of foreign office equipment ------- expenses 63,000 70 percent of local expenses --------------------------------------------------------------------------- 3 Rising prices 100 percent of foreign ------ expenses ARE 210,000 80 percent of local expenses --------------------------------------------------------------------------- 4 Training and 100 percent foreign ------ Scholarship expenses 346,000 70 percent of local expenses -------------------------------------------------------------------------- 5 Project administration and support 1,159,000 80 percent of local expenses -------------------------------------------------------------------------- 6 Consulting 100 percent of foreign ------ expenses services 2,307,000 60 percentage of local expenses -------------------------------------------------------------------------- 7 Payment FOR services 361,000 100 percent of the amounts due -------------------------------------------------------------------------- 8 Undistributed 1,761,000 -------------------------------------------------------------------------- Total 7,227,000 ---------------------------------------------------------------------------

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 loan funds. In this Appendix and its Supplement, the term "goods" includes equipment and materials; the term "services" 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 and revised in January 1994, which were provided 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 or any particular class of suppliers or contractors, unless otherwise provided in this Annex.

4. (a) Each engineering and construction contract with an estimated value of more than the equivalent of US$ 1,000,000 and each contract for the supply of equipment or materials with an estimated value of more than the equivalent of US$ 500,000 is awarded based on international competitive bidding, as described in Chapter II of the Procurement Manual. Participants in competitive bidding for engineering and construction works must undergo a preliminary selection process before bidding. (b) For contracts awarded through international competitive bidding, the Bank is provided with a General Delivery Notice as soon as possible and in any case no later than 90 days before the publication of either the first invitation to prequalify or the first invitation to tender for the Project, the General Procurement Notice (which the Bank will publish it 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 and works 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 pre-selection and 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. 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.

6. (a) Except as specified in subparagraph (b) of this paragraph, each contract for the supply of equipment or materials with an estimated value of the equivalent of US$ 500,000 or less may be awarded on the basis of international shopping, as described in Chapter III of the Procurement Manual. (b) Minor items costing less than the equivalent of USD 50,000 may be purchased directly from local suppliers.

7. (a) Except as provided in subparagraph (b) of this paragraph, each engineering contract with an estimated value of less than the equivalent of US$ 1,000,000 may be awarded through local competitive bidding in accordance with procedures acceptable to the Bank. The prequalification, selection and hiring of contractors are subject to the approval of the Bank. After the award, three copies of each such contract are sent to the Bank. (b) Minor engineering work for less than the equivalent of $50,000. The US$ can be awarded directly to local contractors or can be conducted on a force-invoice basis.

(Supplement to Appendix 4)

Preference for domestically produced goods

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. The added value of 20% refers to the total price of ex-factory goods, not just one item on the list. (a) In order to apply the preference for domestically produced goods, all eligible bids are first classified into the following three categories: Category I: bids for goods manufactured in the Borrower's country that meet the minimum value added requirement; Category II: bids for other products manufactured in the Borrower's country; Category III: Competitive bids offering imported goods. (b) The bid with the lowest book value 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 book value are then 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. Only for the purpose of further comparison, the lowest price in Category III is adjusted upward by adding either: (i) the amount of customs duties and other import taxes that the importer, who is not exempt from payment, must pay for the import of goods offered in Category III; or (ii) 15% of the competitive price. bids for such goods if the customs duties and import taxes referred to in paragraph (i) above exceed 15% of the bid price. If, after such a comparison, a 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. (a) Bidders seeking preference must provide the necessary information to establish the right to preference, including the minimum added value. (b) The bidding documents should contain a clear description of the preference provided, the information necessary to establish the preference right of the bidder, and the procedures to be followed when comparing the prices offered, i.e. everything as described above.

Addendum to Appendix 4

Local preferences for turnkey contracts

and supply and installation contracts

3. In turnkey contracts with a single responsibility (including development and construction), as well as in supply and installation contracts for large and complex packages, when purchases are made through international competitive bidding, where individual items are grouped into one contract package and prices with prices for goods are indicated or permanent work under the contract is evaluated. Prior to bidding equal to or exceeding 60% of the total value of such works, preference limits for locally produced goods are applied in accordance with the following provisions. (a) Preference limits do not apply entirely to the entire package, but only to locally produced goods. (b) Prices for goods offered from outside the Borrower's territory must be indicated on CIF terms, and local goods in free-factory or free-warehouse prices (excluding sales tax or similar tax). (c) All other components of the price, such as development, installation, supervision, must be specified separately. (d) When comparing offers (which are not classified into Categories I, II or III, as in the case of local preference for goods), only the price of each offer for goods offered from outside the Borrower's territory increases, taking into account duties and other taxes paid by the importer not exempt from them, or by 15%, depending on (e) If the fee is different for each item in the package, the appropriate tariff will be applied for each item. (f) No preference limits apply to related services or work included in the package. (g) Bidders will not be allowed or required to change the ratio of local and imported goods after the opening of bidding.

4. (a) The participants applying for preferences must submit

the certificate required to establish the validity of preferences for their competitive offer. (b) In the tender documents, it is necessary to clearly indicate the limits of preferences, what information is needed to establish the validity of preferences, as well as what are the procedures for comparing proposals, as indicated above.

Appendix 5

Consultants

1. The services of consultants are used in the implementation of the project, in particular: (a) Institutional support and training; (b) monitoring and evaluation; (c) engineering and management. 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 on the Use of Consultants by the Asian Development Bank and its Borrowers" dated April 1979, as amended from time to time, which were provided to the Borrower, as well as other procedures for the recruitment of local consultants to the satisfaction of the Bank.

3. Consultants will be selected and hired by the Ministry of Agriculture in accordance with the following procedures: (a) An invitation to make suggestions. The invitation to submit proposals and all related documents are approved by the Bank prior to their publication. For this purpose, three copies of the draft invitation to submit proposals, the list of invited consultants, the proposed criteria for evaluating proposals and other related documents are submitted to the Bank. A period of at least 60 days is provided for making proposals. A copy of the final invitation, together with all related documents, is provided to the Bank for information immediately after the issue. (b) Draft contract. The draft contract with the consultants must be submitted to the Bank for approval long enough before the start of the evaluation of proposals. (c) Suggestions for selection. After evaluating the proposals received and before starting negotiations with the consultants selected for the negotiations, the approval of the choice made by the Bank must be obtained. For this purpose, three copies of (i) the evaluation of proposals (together with one set of each proposal not previously provided to the Bank); (ii) the justification of the choice; and (iii) the appropriate certification of the acceptability of the proposed contract, as required by the Bank, are provided to the Bank immediately after evaluating the proposals. (d) Execution of the contract. After the negotiations are completed, but before the contract is signed, the Bank is provided with an agreed contract for approval. 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 execution, the proposed changes are provided to the bank for prior approval.

Appendix 6

Project execution and other issues

I. Implementation measures Project Implementation Group 1. The Ministry of Agriculture will carry out Project implementation activities through the Russian Agricultural Institute, established by the Borrower at the Ministry of Agriculture in September 1995 in order to implement all projects with foreign participation implemented by the Ministry of Agriculture. Project management and field offices

2. Immediately after the effective date, the Ministry of Agriculture will establish a Project Management Office (PMO) at the RIU, which will be responsible for the daily operations of the Project, which will be headed by a manager A project with modifications and experience satisfactory to the Bank; (b) an office An on-site Project (OPM) in Zhetysai in the South Kazakhstan region. The PMO, with the support of the OPM in the field, will be responsible for all Project activities, including: (i) field survey and research supervision, (ii) preparation of the final design and execution of all drainage works and improvements to water management systems for inter-farm and household facilities; (iii) restoration of saline lands; (iv) strengthening the equipment of the staff of the Hydrological Land Reclamation Expedition (GME) of the Makhtaaral district and providing new laboratory equipment for GME in Zhetysai; (v) coordinating the training of farmers, managers, agricultural workers and staff of relevant agencies in key areas related to the Project; (vi) facilitating the establishment of WUAs; (vii) managing internal processes; (viii) creating a system of systematic social, economic, public health, medical, environmental monitoring and evaluation system for the Project. OMP will interact with other interested agencies on the implementation of the Project as follows: (i) OIE regarding environmental standards and monitoring; (ii) IWRM in relation to the establishment of WUAs and the improvement of inter-farm channels and drainage systems; (iii) DS in relation to the construction standards applicable within the framework of the Project; (iv) IWRM in relation to the measures for the technical facilities of the Project; (v) The State Electricity Company in relation to the provision of electricity and payment of the required commission for the launch field wells. Interministerial Coordination Committee

3. Within three months of the effective date, the Borrower will establish an Interministerial Coordination Committee (IMCC) to ensure overall coordination of the Project at the national level. The MMCC should be headed by the Minister of Agriculture, and it includes, as representatives, the Deputy Ministers of Economy, Finance, the IEBR, the Deputy Chairman of the IWRM, as well as the Director of the DS and the RIU. Regional Coordination Committee 4. Within three months of the effective date, the Borrower must establish a Regional Coordination Committee (RCC) to coordinate at the regional and Project levels between the IWRM, regional departments, district administrations and local institutions. The RCC should ensure the effective participation of the beneficiaries of the Project. The RSC should be headed by a deputy. Akim of the South Kazakhstan region, include representatives of Akim of Makhtaaral district, selected representatives of WUAs, as well as selected representatives of key commercial sectors that provide farm loans, substantial agricultural contributions and market agricultural products. Project development, development reports and other documents

5. The Borrower will assist in the timely approval of the Project Development and environmental assessment reports, which will be prepared in accordance with Guidelines acceptable to the Bank.

6. The Borrower will arrange for the interested development institutions to collect development reports, drawings, maps and other documentation related to the implementation of the Project and ensure that such documents are available quickly, as needed for the PMO and RSE. Beneficiary participation

7. The Borrower guarantees that all beneficiaries of the Project have equal rights to participate in the Project and are adequately represented in the training program and other Project activities. II. Other budget allocation issues

8. Without limiting the general provisions of Section 4.02. of this Loan Agreement and Section 4.02. of the Loan Agreement (Normal Operations), the Borrower guarantees that during the implementation of the Project: (i) the Project will be given priority and will be taken into account in budgeting for annual appropriations, and (ii) budgetary resources allocated annually in accordance with (i) will be provided in a timely manner for the implementation of the project.

9. Upon completion of the Project, the Borrower will provide adequate annual funds to pay staff salaries, materials and other expenses incurred in connection with the operation and maintenance of the established laboratory for water and soil analysis, and the development of computer models necessary for the Project. AVP creation, operation and maintenance

10. To promote uniformity in the establishment of the WUAs, the Borrower: (i) within three months of the effective date, will distribute explanatory manuals on the establishment of the WUAs and its registration, as well as prepare a sample charter; and (ii) appoint an interministerial working group to review relevant laws, decrees and resolutions on the establishment and registration of WUAs and, in consultation with the consultants involved in the Technical assistance task, prepare draft amendments or amendments, depending on the provision, no later than 18 months after entry into force, or, if necessary, prepare the draft of a new law regulating the activities of the WUAs.

11. The Borrower guarantees that (i) the DWS facilitates the establishment of WUAs within the Project Area by transferring to them the control and operation of inter-farm irrigation and drainage systems newly created and restored within the framework of the Project, after developing their capabilities and experience, as well as by reducing the fees that beneficiaries must pay for THIS The DUVS project for such technical means; and (ii) to the extent that WUAs will be able to purchase or maintain control and operation of such inter-farm irrigation and drainage systems, and the Ministry of Internal Affairs will provide all necessary equipment for the maintenance of such equipment for the duration of the Project and after its completion. Refund of funds

12. Within one month of the effective date, the Ministry of Finance will: (i) confirm that all the principles set out in the Resolution on the Refund of Funds will be applicable to the beneficiaries of the Project, with the exception of the proportions of the refund; (ii) determine the specific timing of such refund, including the applicable interest rate and repayment amount, required annually from the beneficiaries of the Project.

13. The Borrower guarantees that: (i) no taxes or duties are levied on contracts for equipment, materials, civil engineering, consulting services, and other goods and services procured under the Project; and (ii) the contribution of the local government to the reimbursement of Project funds is made through general income tax appropriations without accruals any special taxes from the beneficiaries of the Project for

such goals. Released waters for the Aral Sea 14. The Borrower guarantees that no increase in water availability resulting from the introduction of new and restored irrigation and drainage systems within the Project will be used to develop any new irrigated areas, except for the reclamation of previously saline irrigated lands within the Project Area, but the released flow will be directed to the Aral Sea basin. Capacities

15. The Borrower guarantees the availability of adequate facilities for the rehabilitation of drainage wells or the installation of new ones according to the Project. Technical assistance

16. The Borrower guarantees that all necessary measures will be taken in a timely manner to implement the recommendations made by the consultants involved in Technical Assistance and agreed upon between the Borrower and the Bank. Integrated pest management.

17. The Borrower guarantees effective coordination between the IEBR and the Russian Federation regarding environmental monitoring and integrated management of pest control equipment provided within the framework of the Project, and will facilitate the implementation of such equipment in the Project Area.

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.

President

Republic of Kazakhstan

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