Page 1 CONFORMED COPY TF GRANT NUMBER 025239 Japanese Grant Agreement (Aral Sea Community Rehabilitation Project) between REPUBLIC OF KAZAKSTAN and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT as Administrator of Grant Funds provided by JAPAN Dated April 10, 1996 TF GRANT NUMBER 025239 JAPANESE GRANT AGREEMENT AGREEMENT, dated April 10, 1996, between REPUBLIC OF KAZAKSTAN (the Recipient) and the INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (the Bank) acting as Administrator (the Administrator) of grant funds provided by JAPAN (Japan). WHEREAS (A) pursuant to a letter agreement dated July 30, 1990 between Japan and the Bank and International Development Association (the Association), Japan has requested the Bank and the Association, and the Bank and the Association have agreed, to administer grant funds to be made available by Japan for the financing of certain programs and projects supported by the Bank and the Association, as the case may be, in accordance with the provisions of such letter agreement; WHEREAS (B) Japan has agreed to make available to the Recipient a grant out of said grant funds (the Grant) to finance the cost of carrying out the technical assistance described in Schedule 2 to this Agreement (the Technical Assistance) on the terms and conditions hereinafter set forth; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I General Conditions; Definitions Page 2 Section 1.01. (a) The following provisions of the General Conditions Applicable to Loan and Guarantee Agreements of the Bank, dated January 1, 1985, with the modifications set forth in paragraph (b) of this Section (the General Conditions) constitute an integral part of this Agreement: (i) Article I; (ii) Sections 2.01 (1), (2), (3), (4), (6), (8), (9), (10), (11), (18) and (20), 2.02 and 2.03; (iii) Section 3.01; (iv) Section 4.01 and the first sentence of Section 4.09; (v) Article V; (vi) Sections 6.01, 6.02 (a), (c), (d), (e), (f), (i) and (k), 6.03, 6.04 and 6.06; (vii) Section 8.01 (b); (viii)Sections 9.01 (a) and (c), 9.04, 9.05, 9.06, 9.07, 9.08 and 9.09; (ix) Sections 10.01, 10.03 and 10.04; and (x) Article XI. (b) The General Conditions shall be modified as follows: (i) the term "Bank," wherever used in the General Conditions, other than in Sections 2.01 (8) and 6.02 (f) thereof and the last use of such term in Section 5.01 thereof, means the International Bank for Reconstruction and Development acting as Administrator of the Grant pursuant to the letter agreement between Japan and the Bank and the Association referred to in Recital (A) of this Agreement, except that in Section 6.02, the term "Bank" shall also include the International Bank for Reconstruction and Development acting in its own capacity; (ii) the term "Borrower," wherever used in the General Conditions, means the Recipient; (iii) the term "Loan Agreement," wherever used in the General Conditions, means this Agreement; (iv) the term "Loan," wherever used in the General Conditions, means the Grant; (v) the term "Loan Account," wherever used in the General Conditions, means the Grant Account, an account opened by the Administrator on its books in the name of the Recipient to which the amount of the Grant is credited; (vi) the term "Project," wherever used in the General Conditions, means the technical assistance described in Schedule 2 to this Agreement; and (vii) Section 4.01 shall be modified to read: "Withdrawals from the Grant Account shall be made in yen; provided, however, that if the expenditures to be financed out of the Grant have been paid or are payable in another currency, the Administrator shall, at the request of the Recipient, purchase such currency with the proceeds of such withdrawal." Section 1.02. Wherever used in this Agreement, unless the context otherwise requires, the several terms defined in the General Conditions and in the Recitals to this Agreement have the respective meanings therein set forth, and the following additional term has the following meaning: "Yen" and "Y" mean the currency of Japan. ARTICLE II Page 3 The Grant Section 2.01. The Administrator agrees to make available to the Recipient, on the terms and conditions set forth or referred to in this Agreement, the Grant in an amount of eighty million six hundred thousand Yen (¥80,600,000). Section 2.02. The amount of the Grant may be withdrawn from the Grant Account in accordance with the provisions of Schedule 1 to this Agreement, as such Schedule may be amended from time to time by agreement between the Recipient and the Administrator, for expenditures made (or, if the Administrator shall so agree, to be made) in respect of the reasonable cost of carrying out the Project and to be financed out of the Grant. Section 2.03. The Closing Date shall be December 31, 1997 or such later date as the Administrator shall establish. The Administrator shall promptly notify the Recipient of such later date. ARTICLE III Execution of the Project Section 3.01. The Recipient shall carry out the Project with due diligence and efficiency and in conformity with appropriate administrative and financial practices, and shall provide, promptly as needed, the funds, facilities, services and other resources required for the Project. Section 3.02. Except as the Administrator shall otherwise agree, procurement of the consultants' services required for the Project and to be financed out of the Grant shall be governed by the provisions of Schedule 3 to this Agreement. Section 3.03. (a) The Recipient shall maintain or cause to be maintained records and accounts adequate to reflect in accordance with sound accounting practices the operations, resources and expenditures in respect of the Project of the departments or agencies of the Recipient responsible for carrying out the Project or any part thereof. (b) The Recipient shall: (i) have the records and accounts referred to in paragraph (a) of this Section for each fiscal year audited, in accordance with appropriate auditing principles consistently applied, by independent auditors acceptable to the Administrator; (ii) furnish to the Administrator as soon as available, but in any case not later than six months after the end of each such year, the report of such audit by said auditors, of such scope and in such detail as the Administrator shall have reasonably requested; and (iii) furnish to the Administrator such other information concerning said records and accounts and the audit thereof as the Administrator shall from time to time reasonably request. Section 3.04. Without limitation upon the applicable provisions of Article IX of the General Conditions, the Recipient shall: (a) prepare, on the basis of guidelines acceptable to the Administrator, and furnish to the Administrator not later than six (6) months after the Closing Date or such later date as may be agreed for this purpose between the Recipient and the Administrator, a plan to ensure the continued achievement of the objectives of the Project; (b) afford the Administrator a reasonable opportunity to exchange views with the Recipient on said plan; and (c) thereafter, carry out said plan with due diligence and efficiency and in accordance with appropriate practices, taking into account the Administrator's comments thereon. ARTICLE IV Effectiveness; Termination Page 4 Section 4.01. This Agreement shall become effective upon its execution by the parties hereto. Section 4.02. This Agreement shall continue in effect until the Grant has been fully disbursed and the parties to this Agreement have fulfilled all their obligations hereunder. ARTICLE V Representation Section 5.01. The Minister of Finance of the Recipient is designated as representative of the Recipient for the purposes of Section 11.03 of the General Conditions. Section 5.02. The following addresses are specified for the purposes of Section 11.01 of the General Conditions: For the Recipient: Ministry of Finance 97 Ablai-Khan Av. Almaty, 480091 Republic of Kazakstan Telex: 251 245 FILIN For the Administrator: International Bank for Reconstruction and Development 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: Telex: INTBAFRAD 197688 (TRT), Washington, D.C. 248423 (RCA), 64145 (WUI) or 82987 (FTCC) IN WITNESS WHEREOF, the parties hereto, acting through their duly authorized representatives, have caused this Agreement to be signed in their respective names as of the day and year first above written. REPUBLIC OF KAZAKSTAN By /s/ Bulat D. Elemanov Authorized Representative INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT as Administrator of the Grant By /s/ Yukon Huang Authorized Representative SCHEDULE 1 Page 5 Withdrawal of the Grant 1. The table below sets forth the Categories of items to be financed out of the Grant, the allocation of the amount of the Grant to each Category and the percentage of expenditures for items so to be financed in each Category: Amount of the Grant Allocated % of (Expressed in Expenditures Category Yen Equivalent) to be Financed (1) Consultants’ 80,600,000 100% services (including equipment, travel and subsistence allowance) TOTAL 80,600,000 2. Notwithstanding the provisions of paragraph 1 above, no withdrawals shall be made in respect of payments made for expenditures prior to the date of this Agreement. SCHEDULE 2 Description of Technical Assistance The objective of the technical assistance is to assist the Recipient to prepare an Aral Sea Community Rehabilitation Project aimed at improving the water related health situation in the Recipient’s Kzyl-Orda Region through: (i) the provision of safe water for drinking and household use; (ii) the provision of appropriate sanitation or wastewater facilities; and (iii) raising the population’s awareness to the role water, sanitation and hygiene plays in improving health, thereby promoting proper use of facilities and ensuring long-term sustainability. The technical assistance consists of the following activities, subject to such modifications thereof as the Recipient and the Administrator may agree upon from time to time: (a) establishment of community participation and involvement of local authorities in the design and implementation of water supply, sanitation, hygiene and health education in communities selected through criteria approved by the Administrator; (b) improvement of sanitation conditions through introduction of new latrine designs and the designs for low cost sanitation systems in individual households, public and communal facilities on a pilot basis; (c) preparation of feasibility studies for wastewater and sanitation to determine cost-effective physical interventions and institutional arrangements necessary to build the capacity and sustain the operation of water supply, sanitation and sewerage facilities in the Kzyl-Orda Region, including purchase of limited technical equipment as required to prepare said studies and field investigations; (d) preparation of final designs and contract documents for sanitation and sewerage facilities in accordance with accepted international practice; (e) (i) establishment and supervision of a hygiene/health education campaign accompanied by the provision of improved basic infrastructure and a program for service improvement; and (ii) increase data access and understanding through automatization of health data handling, processing and dissemination. (iii) explore the relationship between health, hygiene, sanitation and health and non-piped supplies of drinking water. (f) establishment of project implementation units to assist in the preparation of the above noted feasibility study and provide training to the staff of these units in donor procurement and disbursement procedures. Page 6 SCHEDULE 3 Consultants' Services Employment of Consultants 1. In order to assist the Recipient in carrying out the Technical Assistance, the Recipient shall employ consultants whose qualifications, experience and terms and conditions of employment shall be satisfactory to the Administrator. Such consultants shall be selected in accordance with principles and procedures satisfactory to the Administrator on the basis of the "Guidelines for the Use of Consultants by World Bank Borrowers and by the World Bank as Executing Agency" published by the Bank in August 1981 (the Consultant Guidelines). For complex time-based assignments, the Recipient shall employ such consultants under contracts using the standard form of contract for consultants' services issued by the Bank, with such modifications as shall have been agreed by the Administrator. Where no relevant standard contract documents have been issued by the Bank, the Recipient shall use other standard forms agreed with the Administrator. 2. Notwithstanding the provisions of paragraph 1 of this Section, the provisions of the Consultant Guidelines requiring prior Administrator review or approval of budgets, short lists, selection procedures, letters of invitation, proposals, evaluation reports and contracts, shall not apply to (a) contracts for the employment of consulting firms estimated to cost less than $100,000 equivalent each or (b) contracts for the employment of individuals estimated to cost less than $50,000 equivalent each. However, said exceptions to prior Administrator review shall not apply to (a) the terms of reference for such contracts, (b) single-source selection of consulting firms, (c) assignments of a critical nature, as reasonably determined by the Administrator, (d) amendments to contracts for the employment of consulting firms raising the contract value to $100,000 equivalent or above, or (e) amendments to contracts for the employment of individual consultants raising the contract value to $50,000 equivalent or above.