Conformed Copy - L3894 - Cotton Sub-sector Improvement Project - Loan Agreement

Page 1 CONFORMED COPY LOAN NUMBER 3894 UZ Loan Agreement (Cotton Sub-Sector Improvement Project) between REPUBLIC OF UZBEKISTAN and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Dated June 14, 1995 LOAN NUMBER 3894 UZ LOAN AGREEMENT AGREEMENT, dated June 14, 1995, between REPUBLIC OF UZBEKISTAN (the Borrower) and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (the Bank). WHEREAS the Borrower, having satisfied itself as to the feasibility and priority of the Project described in Schedule 2 to this Agreement, has requested the Bank to assist in the financing of the Project; WHEREAS the Bank has received a letter dated April 27, 1995, from the Borrower describing a program of actions, objectives and policies designated to improve the efficiency of the Borrower's cotton sector and declaring the Borrower's commitment to the execution of these actions, objectives and policies; and WHEREAS the Bank has agreed, on the basis, inter alia, of the foregoing, to extend the Loan to the Borrower upon the terms and conditions set forth in this Agreement; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I Page 2 General Conditions; Definitions Section 1.01. The "General Conditions Applicable to Loan and Guarantee Agreements" of the Bank, dated January 1, 1985, with the modifications set forth below (the General Conditions) constitute an integral part of this Agreement: (a) The last sentence of Section 3.02 is deleted. (b) The second sentence of Section 5.01 is modified to read: "Except as the Bank and the Borrower shall otherwise agree, no withdrawals shall be made: (a) on account of expenditures in the territories of any country which is not a member of the Bank or for goods produced in, or services supplied from, such territories; or (b) for the purpose of any payment to persons or entities, or for any import of goods, if such payment or import, to the knowledge of the Bank, is prohibited by a decision of the United Nations Security Council taken under Chapter VII of the Charter of the United Nations." (c) In Section 6.02, sub-paragraph (k) is re-lettered as sub-paragraph (l) and a new sub-paragraph (k) is added to read: "(k) An extraordinary situation shall have arisen under which any further withdrawals under the Loan would be inconsistent with the provisions of Article III, Section 3 of the Bank's Articles of Agreement." Section 1.02. Unless the context otherwise requires, the several terms defined in the General Conditions and in the Preamble to this Agreement have the respective meanings therein set forth and the following additional terms have the following meanings: (a) "Agency Bank" means any commercial bank selected by the Borrower in accordance with, and for the purposes referred to in, Section 3.02 (a) (i) of this Agreement; (b) "CIU" means the component implementation unit referred to in Section 3.03 (b) of this Agreement; (c) "GOZKOMPROGNOZSTAT" means the State Committee on Forecasting and Statistics of the Borrower; (d) "MOA" mean the Ministry of Agriculture of the Borrower; (e) "MOF" means the Ministry of Finance of the Borrower; (f) "Oblast Seed Certification and Seed Law Units" means the units of the Seed Certification and Seed Law Agency in each oblast; (g) "On-lending Procedures, Terms and Conditions" means the procedures, eligibility criteria, terms and conditions of Private Sub-projects referred to in Section 3.02 (a) (ii) of this Agreement; (h) "PIU" means the project implementation unit referred to in Section 3.03 (a) of this Agreement; (i) "Private Enterprise" means any legal entity, established pursuant to paragraph B of Schedule 7 of this Agreement, to which the Borrower proposes to make or has made a Sub-loan pursuant to Section 3.02 (a) (ii) of this Agreement; (j) "Private Sub-project" means a specific development project under Part A.2 of the Project which is intended to be carried out by a Private Enterprise utilizing the proceeds of a Sub-loan; Page 3 (k) "Project Account" means the account referred to in Section 3.05 of this Agreement; (l) "Project Preparation Advance" means the project preparation advance granted by the Bank to the Borrower pursuant to an exchange of a letter (P230-0 UZ) dated February 9, 1994 and April 22, 1994 between the Borrower and the Bank; (m) "Public Project Entity" means SIFAT, UZNIIZR or any of the departments, institutes, agencies or affiliates which may be designated pursuant to Section 3.01 (a) of this Agreement, which the Borrower intends to engage for the carrying out of Parts A.1, B, C, D and E of the Project as referred to in Schedule 5 to this Agreement; (n) "Seed Law" means the law to be enacted pursuant to paragraph 3 (a) of Schedule 1 to this Agreement; (o) "Seed Policy" means the policy to be adopted, pursuant to paragraph 3 (a) of Schedule 1 to this Agreement, on the measures to be taken by the Borrower to promote the production of quality seeds in Uzbekistan; (p) "Seed Certification and Seed Law Agency" means the agency responsible for seed certification and implementation of the Seed Law under the administrative oversight of MOA; (q) "SIFAT" means Enterprise for Standardization and Certification of Cotton of the Borrower; (r) "Special Account" means the account referred to in Section 2.02 (b) of this Agreement. (s) "Sub-loan" means a loan made or proposed to be made by the Borrower out of the proceeds of the Loan to a Private Enterprise for a Private Sub-project; (t) "Subsidiary Loan Agreement" means any agreement between the Borrower and a Private Enterprise, entered into pursuant to Section 3.02 (a) (ii) of this Agreement, for the financing of a Private Sub-project out of the proceeds of the Loan, as the same may be amended from time to time, and such term includes all schedules to such Subsidiary Loan Agreement; (u) "UZAGROINFORM" means the Uzbekistan Information Division within MOA; and (v) "UZNIIZR" means the Uzbekistan Institute of Crop Protection. ARTICLE II The Loan Section 2.01. The Bank agrees to lend to the Borrower, on the terms and conditions set forth or referred to in the Loan Agreement, various currencies that shall have an aggregate value equivalent to the amount of sixty-six million dollars ($66,000,000), being the sum of withdrawals of the proceeds of the Loan, with each withdrawal valued by the Bank as of the date of such withdrawal. Section 2.02. (a) The amount of the Loan may be withdrawn from the Loan Account in accordance with the provisions of Schedule 1 to this Agreement for expenditures made (or, if the Bank shall so agree, to be made) in respect of the reasonable cost of works, goods and services required for the Project described in Schedule 2 to this Agreement and to be financed out of the proceeds of the Loan. (b) The Borrower may, for the purposes of the Project, Page 4 open and maintain in dollars a special deposit account in a commercial bank on terms and conditions satisfactory to the Bank, including appropriate protection against set-off, seizure or attachment. Deposits into, and payments out of, the Special Account shall be made in accordance with the provisions of Schedule 6 to this Agreement. (c) Promptly after the Effective Date, the Bank shall, on behalf of the Borrower, withdraw from the Loan Account and pay to itself the amount required to repay the principal amount of the Project Preparation Advance withdrawn and outstanding as of such date and to pay all unpaid charges thereon. The unwithdrawn balance of the authorized amount of the Project Preparation Advance shall thereupon be canceled. Section 2.03. The Closing Date shall be December 31, 2000 or such later date as the Bank shall establish. The Bank shall promptly notify the Borrower of such later date. Section 2.04. The Borrower shall pay to the Bank a commitment charge at the rate of three-fourths of one per cent (3/4 of 1%) per annum on the principal amount of the Loan not withdrawn from time to time. Section 2.05. (a) The Borrower shall pay interest on the principal amount of the Loan withdrawn and outstanding from time to time, at a rate for each Interest Period equal to the Cost of Qualified Borrowings determined in respect of the preceding Semester, plus one-half of one percent (1/2 of 1%). On each of the dates specified in Section 2.06 of this Agreement, the Borrower shall pay interest accrued on the principal amount outstanding during the preceding Interest Period, calculated at the rate applicable during such Interest Period. (b) As soon as practicable after the end of each Semester, the Bank shall notify the Borrower of the Cost of Qualified Borrowings determined in respect of such Semester. (c) For the purposes of this Section: (i) "Interest Period" means a six-month period ending on the date immediately preceding each date specified in Section 2.06 of this Agreement, beginning with the Interest Period in which this Agreement is signed. (ii) "Cost of Qualified Borrowings" means the cost, as reasonably determined by the Bank and expressed as a percentage per annum, of the outstanding borrowings of the Bank drawn down after June 30, 1982, excluding such borrowings or portions thereof as the Bank has allocated to fund: (A) the Bank's investments; and (B) loans which may be made by the Bank after July 1, 1989 bearing interest rates determined otherwise than as provided in paragraph (a) of this Section. (iii) "Semester" means the first six months or the second six months of a calendar year. (d) On such date as the Bank may specify by no less than six months' notice to the Borrower, paragraphs (a), (b) and (c) (iii) of this Section shall be amended to read as follows: "(a) The Borrower shall pay interest on the principal amount of the Loan withdrawn and outstanding from time to time, at a rate for each Quarter equal to the Cost of Qualified Borrowings determined in respect of the preceding Quarter, plus one-half of one percent (1/2 of 1%). On each of the Page 5 dates specified in Section 2.06 of this Agreement, the Borrower shall pay interest accrued on the principal amount outstanding during the preceding Interest Period, calculated at the rates applicable during such Interest Period." "(b) As soon as practicable after the end of each Quarter, the Bank shall notify the Borrower of the Cost of Qualified Borrowings determined in respect of such Quarter." "(c) (iii) `Quarter' means a three-month period commencing on January 1, April 1, July 1 or October 1 in a calendar year." Section 2.06. Interest and other charges shall be payable semiannually on June 1 and December 1 in each year. Section 2.07. The Borrower shall repay the principal amount of the Loan in accordance with the amortization schedule set forth in Schedule 3 to this Agreement. ARTICLE III Execution of the Project Section 3.01. (a) The Borrower declares its commitment to the objectives of the Project as set forth in Schedule 2 to this Agreement, and, to this end, shall carry out Parts A.1, B, C, D and E of the Project through Public Project Entities and such other Public Project Entities as may be designated by the Borrower from time to time, with due diligence and efficiency and in conformity with appropriate administrative, financial, agricultural, engineering, accounting, information technology and environmental standards and practices, and shall provide, promptly as needed, the funds, facilities, services and other resources required for the Project. (b) For the purpose of carrying out Parts A.1, B, C, D and E of the Project, the Borrower shall make available to each of the designated Public Project Entities the funds, facilities, services and other resources required for carrying out of the Project, including the corresponding portions of the proceeds of the Loan, under contractual or other arrangements satisfactory to the bank. (c) Without limitation upon the provisions of paragraph (a) of this Section, and except as the Borrower and the Bank shall otherwise agree, the Borrower shall carry out the Project in accordance with the Implementation Program set forth in Schedule 5 to this Agreement. Section 3.02. (a) For the purpose of carrying out Part A.2 of the Project, the Borrower shall: (i) select, in accordance with criteria satisfactory to the Bank, an Agency Bank capable of administering the Sub-loans; (ii) make available to each Private Enterprise, out of the proceeds of the Loan allocated from time to time to Category (3) of the table set forth in paragraph 1 of Schedule 1 to this Agreement, the amount of financing required for its respective Private Sub-project under a Subsidiary Loan Agreement to be entered into between the Borrower and the Private Enterprise, under terms and conditions satisfactory to the Bank, which shall include, without limitation, the terms and conditions set forth in Part C of Schedule 7 to this Agreement; and Page 6 (iii) cause the Private Enterprises to perform in accordance with the provisions of the respective Subsidiary Loan Agreements, all the obligations set forth therein. (b) Unless the Bank shall otherwise agree, the Borrower shall select and approve the Private Sub-projects in accordance with the procedures and eligibility criteria set forth or referred to in Schedule 7 to this Agreement. (c) The Borrower shall exercise its rights in relation to the Sub-loans in such manner as to: (i) protect the interests of the Bank and the Borrower; (ii) comply with its obligations under this Agreement; and (iii) achieve the purposes of the Project. Section 3.03. In order to facilitate the efficient carrying out of the Project, the Borrower shall establish, or cause to be established, and thereafter maintain, with staff and other resources, and under terms of reference satisfactory to the Bank: (a) a PIU within GOZKOMPROGNOZSTAT responsible for, inter alia, various administrative functions relating to the day-to- day coordination and execution of the Project; and (b) CIUs within each Public Project Entity responsible for carrying out Parts A.1, B, C, D and E of the Project. Section 3.04. The Borrower shall: (a) carry out all studies included in the Project under terms of reference acceptable to the Bank, which, when applicable, shall include specific programs or plans of action to meet the objectives of the Project; (b) promptly after the completion of each study, furnish to the Bank a copy of its findings and recommendations including such programs or plans of action; and (c) afford the Bank a reasonable opportunity to comment on findings, recommendations and programs or plans of action. Section 3.05. Without limitation to the provisions of Section 3.01 of this Agreement, the Borrower shall for purposes of the Project: (a) open and maintain in a commercial bank, in the name of the PIU, an account (the Project Account), in local currency, to be used for financing the expenditures required to be made by Public Project Entities in conjunction with the implementation of the Project, the establishment and maintenance of the necessary facilities for the carrying out of the Project, and the coordination of Project activities and shall, for this purpose, make an initial deposit in such an Account in an amount equivalent to $500,000; (b) for each fiscal year during the execution of the Project, make appropriate budgetary allocations to replenish such Project Account on a quarterly basis, and ensure availability of an amount equivalent to $500,000 at the beginning of each quarter for the financing of expenditures by Public Project Entities during the following fiscal year, in amounts satisfactory to the Bank. Section 3.06. Except as the Bank shall otherwise agree, procurement of the goods, works and consultants' services required for the Project and to be financed out of the proceeds of the Loan shall be governed by the provisions of Schedule 4 to this Agreement. Page 7 ARTICLE IV Financial and Other Covenants Section 4.01. (a) The Borrower 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 Borrower responsible for carrying out the Project or any part thereof. (b) The Borrower shall: (i) have the records and accounts referred to in paragraph (a) of this Section including those for the Special Account for each fiscal year audited, in accordance with appropriate auditing principles consistently applied, by independent auditors acceptable to the Bank; (ii) furnish to the Bank 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 Bank shall have reasonably requested; and (iii) furnish to the Bank such other information concerning said records and accounts and the audit thereof as the Bank shall from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Loan Account were made on the basis of statements of expenditure, the Borrower shall: (i) maintain or cause to be maintained, in accordance with paragraph (a) of this Section, records and accounts reflecting such expenditures; (ii) retain, until at least one year after the Bank has received the audit report for the fiscal year in which the last withdrawal from the Loan Account or payment out of the Special Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (iii) enable the Bank's representatives to examine such records; and (iv) ensure that such records and accounts are included in the annual audit referred to in paragraph (b) of this Section and that the report of such audit contains a separate opinion by said auditors as to whether the statements of expenditure submitted during such fiscal year, together with the procedures and internal controls involved in their preparation, can be relied upon to support the related withdrawals. Section 4.02. The Seed Certification and Seed Law Agency shall: (a) not later than June 30, 1998, prepare, under terms of reference satisfactory to the Bank, and furnish to the Bank a plan for the full recovery of the costs of its services through the certification of seed; and Page 8 (b) thereafter finalize the said plan taking into consideration the Bank's views thereon and ensure recovery of the costs of its services in accordance therewith not later than June 30, 1999. Section 4.03. SIFAT shall: (a) not later than June 30, 1998, prepare, under terms of reference satisfactory to the Bank, and furnish to the Bank a plan for the full recovery of the costs of its services through the grading of cotton; and (b) thereafter finalize the said plan taking into consideration the Bank's views thereon and ensure recovery of the costs of its services in accordance therewith not later than June 30, 1999. Section 4.04. UZAGROINFORM shall: (a) not later than June 30, 1997, prepare, under terms of reference satisfactory to the Bank, and furnish to the Bank a plan for the full recovery of the costs of irrigation water; and (b) thereafter finalize the said plan taking into consideration the Bank's views thereon and ensure recovery of the cost of irrigation water in accordance therewith not later than June 30, 1998. ARTICLE V Effective Date; Termination Section 5.01. The following events are specified as additional conditions to the effectiveness of the Loan Agreement within the meaning of Section 12.01 (c) of the General Conditions: (a) that the Project Account has been opened in the name of the PIU with an initial deposit in sums equivalent to five hundred thousand dollars ($500,000); (b) that the deputy directors of PIU and the managers of CIUs have been appointed under terms of reference and other conditions of employment satisfactory to the Bank and that a short list of consultants, satisfactory to the Bank, to provide technical assistance to PIU has been prepared, and letters of invitation have been issued to such short-listed consultants; and (c) that the work plans and the associated budgets for the first year of implementation of the Project have been prepared and submitted to the Bank. Section 5.02. The date ninety (90) days after the date of this Agreement is hereby specified for the purposes of Section 12.04 of the General Conditions. ARTICLE VI Representative of the Borrower; Addresses Section 6.01. The Minister of Finance of the Borrower is designated as representative of the Borrower for the purposes of Section 11.03 of the General Conditions. Section 6.02. The following addresses are specified for the purposes of Section 11.01 of the General Conditions: For the Borrower: Page 9 Ministry of Finance Mustakillik Meydani Tashkent Republic of Uzbekistan Telex: 116360 IKBOL For the Bank: International Bank for Reconstruction and Development 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: Telex: INTBAFRAD 248423 (RCA) Washington, D.C 82987 (FTCC) 64145 (WUI) or 197688 (TRT) IN WITNESS WHEREOF, the parties hereto, acting through their duly authorized representatives, have caused this Agreement to be signed in their respective names in the District of Columbia, United States of America, as of the day and year first above written. REPUBLIC OF UZBEKISTAN By /s/ Fatikh Teshabaev Authorized Representative INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By /s/ Yukon Huang Acting Regional Vice President Europe and Central Asia SCHEDULE 1 Withdrawal of the Proceeds of the Loan 1. The table below sets forth the Categories of items to be financed out of the proceeds of the Loan, the allocation of the amounts of the Loan to each Category and the percentage of expenditures for items so to be financed in each Category: Amount of the Loan Allocated % of (Expressed in Expenditures Dollar to be Category Equivalent) Financed (1) Civil works (a) under Part 500,000 80% A.1 of the Project Page 10 (b) under Parts B, 2,900,000 80% C, D and E of the Project (2) Goods 100% of foreign expenditures, (a) under Part 1,725,000 100% of local A.1 of the expenditures Project (ex-factory cost) and 80% (b) under Parts B, 17,575,000 of local C, D and E of the expenditures for Project other items procured locally (3) Goods and civil 28,400,000 100% of foreign works financed expenditures, through Sub-loans 100% of local under Part A.2 expenditures Project (ex-factory cost) and 80% of local expenditures for other items procured locally (4) Training and study tours (a) under Part 115,000 100% A.1 of the Project (b) under Parts B, 1,085,000 100% C, D and E of the Project (5) Consultants' services (a) under Part A.1 700,000 100% of the Project (b) under Parts B, 4,150,000 100% C and D of the Project (c) under Part E 1,600,000 100% of the Project (6) Incremental operating costs (a) under Part A.1 210,000 25% of expend- of the Project itures incurred through June 30, 1997; 15% of expenditures incurred between July 1, 1997 and June 30, 1998 (b) under Parts B, 1,490,000 25% of expend- C, D and E of the itures incurred Project through June 30, 1997; 15% of expenditures incurred between July 1, 1997 and June 30, 1998 (7) Refunding of 550,000 Amounts due Page 11 Project pursuant to Preparation Section 2.02 (c) Advance of this Agreement (8) Unallocated 5,000,000 ========== TOTAL 66,000,000 ========== 2. For the purposes of this Schedule: (a) the term "foreign expenditures" means expenditures in the currency of any country other than that of the Borrower for goods or services supplied from the territory of any country other than that of the Borrower; (b) the term "local expenditures" means expenditures in the currency of the Borrower or for goods or services supplied from the territory of the Borrower; and (c) the term "incremental operating costs" means operation and maintenance costs incurred as a result of the carrying out of the Project and includes, inter alia, costs with respect to: (i) maintenance and operation of equipment procured under the Project; (ii) salaries paid to the staff hired for purposes of the Project; and (iii) consumable office supplies and materials. 3. Notwithstanding the provisions of paragraph 1 above, no withdrawals shall be made in respect of: (a) expenditures under Categories (1) (a), (2) (a), (4) (a), (5) (a) and (6) (a) of the Project unless the Seed Law has been enacted and the Seed Policy has been adopted, satisfactory to the Bank; and (b) withdrawals by a Private Enterprise under any Sub-loan for expenditures made to finance any contract under Category (3) of this Schedule, unless: (i) an agreement between the Borrower and the Agency Bank to act as an agent of the Borrower for Sub-loans has been entered into satisfactory to the Bank; and (ii) the Sub-loan and the Private Sub-project, in respect of which such Sub-loan is made, have been approved in accordance with the procedures and on the terms and conditions set forth or referred to in Schedule 7 to this Agreement; 4. The Bank may require withdrawals from the Loan Account to be made on the basis of statements of expenditure for expenditures under contracts for goods, works and employment of firms not exceeding $250,000 equivalent, and contracts for employment of individuals and for training programs not exceeding $50,000 equivalent, under such terms and conditions as the Bank shall specify by notice to the Borrower. SCHEDULE 2 Description of the Project The objectives of the Project are to support the: (a) elimination of state orders, liberalization of prices, and privatization of the seed industry in the cotton sub-sector; (b) development of technology to eliminate the negative impacts of past irrigation and pest control practices on the environment and productivity; and (c) enhancement of the cotton sub-sector's foreign exchange earning capacity. The Project consists of the following parts, subject to such modifications thereof as the Borrower and the Bank may agree upon from time to time to achieve such objectives: Page 12 Part A: Seed Industry 1. Institutional Framework Strengthening the seed quality control functions of the Public Project Entities through: (i) provision and upgrading of equipment required for testing, certification and registration of seed; (ii) training and study tours to improve cotton breeding, seed certification and seed production and marketing; and (iii) technical assistance to support Public Entities and private seed companies. 2. Seed Enterprises and Seed Farms Provision of Sub-loans to Private Project Entities to carry out Private Sub-projects for the development of seed production, processing and marketing. Part B: Cotton Marketing 1. Cotton Grading System Improvement of the cotton grading system through provision and installation of High Volume Instrument (HVI) in one central and up to sixteen regional classing centers. 2. Information Processing and Dissemination Establishment of a system for the management and dissemination of the information generated through the grading system. 3. Technical Assistance Establishment of a cotton grading and marketing school and, if necessary, its affiliates, and provision of training and study tours in the areas of, inter alia: cotton grading, operation of fiber testing instruments and cotton classing. Part C: Integrated Pest Management 1. Automated Mass Rearing Technology Provision of equipment and technical assistance for: (i) the preparation of plans and specifications for mass rearing units; (ii) the production and trial operations of prototype units; and (iii) the development of new mass rearing units. 2. Mechanized Dispersal Technology Provision of equipment to improve dispersal technology to broaden biological control of cotton pests. 3. Application of Pesticides Provision of equipment for the development of improved pesticide spraying to allow the integration of biological and chemical control of pests that will mitigate the impact of pesticides on the environment. 4. Technical Assistance and Training Provision of technical assistance and training to support the development and manufacturing of technology for integrated pest management and to develop a pesticide policy and a farmers' pesticide handbook. Part D: On-Farm Irrigation Scheduling Provision of equipment and training to support the introduction of irrigation scheduling technology to demonstrate effective ways to reduce water use in cotton production while Page 13 improving land productivity and minimizing water-based damage to the environment. Part E: Project Implementation Unit and Program Design Strengthening the institutional capacity of the Public Project Entities through provision of technical assistance and training to implement their respective activities under the Project and to assist them in designing future investment programs in agriculture. * * * The Project is expected to be completed by June 30, 2000. SCHEDULE 3 Amortization Schedule Payment of Principal Date Payment Due (expressed in dollars)* December 1, 2000 1,270,000 June 1, 2001 1,315,000 December 1, 2001 1,360,000 June 1, 2002 1,410,000 December 1, 2002 1,460,000 June 1, 2003 1,510,000 December 1, 2003 1,565,000 June 1, 2004 1,620,000 December 1, 2004 1,675,000 June 1, 2005 1,735,000 December 1, 2005 1,800,000 June 1, 2006 1,860,000 December 1, 2006 1,930,000 June 1, 2007 1,995,000 December 1, 2007 2,065,000 June 1, 2008 2,140,000 December 1, 2008 2,215,000 June 1, 2009 2,295,000 December 1, 2009 2,375,000 June 1, 2010 2,460,000 December 1, 2010 2,545,000 June 1, 2011 2,640,000 December 1, 2011 2,730,000 June 1, 2012 2,830,000 December 1, 2012 2,930,000 June 1, 2013 3,030,000 December 1, 2013 3,140,000 June 1, 2014 3,250,000 December 1, 2014 3,365,000 June 1, 2015 3,485,000 _____________________________ * The figures in this column represent dollar equivalents determined as of the respective dates of withdrawal. See General Conditions, Sections 3.04 and 4.03. Premiums on Prepayment Pursuant to Section 3.04 (b) of the General Conditions, the premium payable on the principal amount of any maturity of the Loan to be prepaid shall be the percentage specified for the applicable time of prepayment below: Time of Prepayment Premium The interest rate (expressed as a percentage per annum) Page 14 applicable to the Loan on the day of prepayment multiplied by: Not more than three years 0.15 before maturity More than three years but 0.30 not more than six years before maturity More than six years but 0.55 not more than 11 years before maturity More than 11 years but not 0.80 more than 16 years before maturity More than 16 years but not 0.90 more than 18 years before maturity More than 18 years before 1.00 maturity SCHEDULE 4 Procurement and Consultants' Services Section I. Procurement of Goods and Works Part A: General Goods shall be procured in accordance with the provisions of Section I of the "Guidelines for Procurement under IBRD Loans and IDA Credits" published by the Bank in January 1995 (the Guidelines) and the following provisions of this Section, as applicable. Part B: International Competitive Bidding 1. Except as otherwise provided in Part C of this Section, goods shall be procured under contracts awarded in accordance with the provisions of Section II of the Guidelines and paragraph 5 of Appendix 1 thereto. 2. The following provisions shall apply to goods to be procured under contracts awarded in accordance with the provisions of paragraph 1 of this Part B. (a) Grouping of contracts To the extent practicable, contracts shall be grouped in bid packages estimated to cost $300,000 equivalent or more each. (b) Preference for domestically manufactured goods The provisions of paragraphs 2.54 and 2.55 of the Guidelines and Appendix 2 thereto shall apply to goods manufactured in the territory of the Borrower. Part C: Other Procurement Procedures 1. Goods estimated to cost less than $300,000 equivalent per contract and $6,600,000 equivalent in the aggregate, may be procured under contracts awarded on the basis of international shopping procedures in accordance with the provisions of paragraphs 3.5 and 3.6 of the Guidelines. 2. Goods estimated to cost $50,000 equivalent or less per contract and $1,800,000 equivalent in the aggregate, may be Page 15 procured under contracts awarded on the basis of national shopping procedures in accordance with the provisions of paragraphs 3.5 and 3.6 of the Guidelines. 3. Goods which are of a proprietary nature and costing $1,000,000 equivalent in the aggregate, may, with the Bank's prior agreement, be procured in accordance with the provisions of paragraph 3.7 of the Guidelines. 4. Contracts for civil works: (a) to cost the equivalent of $250,000 or more per contract shall be procured on the basis of competitive bidding procedures, advertised locally, by using the Bank's standard documentation for small works, as may be amended to take into account exclusive use of local currency, local language and local procedures for settlement of disputes; and (b) to cost the equivalent of less than $250,000 per contract and $2,100,000 equivalent in the aggregate, may be procured on the basis of comparison and evaluation of at least three bids from qualified contractors, in accordance with procedures acceptable to the Bank. Part D: Review by the Bank of Procurement Decisions 1. Procurement Planning Prior to the issuance of any invitations to prequalify for bidding or to bid for contracts, the proposed procurement plan for the Project shall be furnished to the Bank for its review and approval, in accordance with the provisions of paragraph 1 of Appendix 1 to the Guidelines. Procurement of all goods and works shall be undertaken in accordance with such procurement plan as shall have been approved by the Bank, and with the provisions of said paragraph 1. 2. Prior Review With respect to: (a) each contract for goods procured under Part B.1 and Part C.3; and (b) the first two contracts for works procured under Part C.4 hereof, as well as each contract for works estimated to cost the equivalent of $600,000 or more, the procedures set forth in paragraphs 2 and 3 of Appendix 1 to the Guidelines shall apply. 3. Post Review With respect to each contract not governed by paragraph 2 of this Part D, the procedures set forth in paragraph 4 of Appendix 1 to the Guidelines shall apply. Section II. Employment of Consultants 1. Consultants' services shall be procured under contracts awarded in accordance with the provisions 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, such contracts shall be based on the standard form of contract for consultants' services issued by the Bank, with such modifications thereto as shall have been agreed by the Bank. Where no relevant standard contract documents have been issued by the Bank, other standard forms acceptable to the Bank shall be used. 2. Notwithstanding the provisions of paragraph 1 of this Section, the provisions of the Consultant Guidelines requiring prior Bank 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 individual consultants estimated to cost less Page 16 than $50,000 equivalent each. However, said exceptions to prior Bank 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 Bank; (d) amendments to contracts for the employment of consulting firms raising the contract value to $100,000 or above; or (e) amendments to contracts for the employment of individual consultants raising the contract value to $50,000 equivalent or above. SCHEDULE 5 Implementation Program The provisions of this Schedule shall apply for the purposes of Section 3.01 (c) of this Agreement. A. Overall Coordination and Management of the Project 1. GOZKOMPROGNOZSTAT, through the PIU, shall be responsible for coordinating and monitoring the overall implementation of the Project. 2. Within GOZKOMPROGNOZSTAT, the PIU shall be responsible for day-to-day work related to monitoring Project implementation, and assisting CIUs with budgeting, procurement, disbursement, auditing, reporting, monitoring and evaluation. The PIU shall also be responsible for appraisal and administration of Sub- loans through the Agency Bank. 3. The CIUs within the Public Project Entities shall be responsible for coordinating and managing the implementation of the relevant activities described under the corresponding Parts of the Project. B. Part A of the Project 1. Part A.1 of the Project shall be implemented through the Seed Certification and Seed Law Agency and Seed Certification and Seed Law Units. 2. Part A.2 of the Project shall be implemented by PrivateEnterprises and coordinated through the PIU. PIU shall, inter alia: (i) appraise business plans for each of the proposed Private Sub-projects; (ii) coordinate with the Agency Bank with respect to accounting, reporting, and repayments of Sub-loans; and (iii) organize training and technical assistance to Private Enterprises. C. Part B of the Project SIFAT, through its CIU, shall be responsible for the implementation of Part B of the Project. D. Part C of the Project UZNIIZR, through its CIU, shall be responsible for the implementation of Part C of the Project. E. Part D of the Project UZAGROINFORM, through its CIU, shall be responsible for the implementation of Part D of the Project. SCHEDULE 6 Special Account 1. For the purposes of this Schedule: (a) the term "eligible Categories" means Categories (1) Page 17 through (6) set forth in the table in paragraph 1 of Schedule 1 to this Agreement; (b) the term "eligible expenditures" means expenditures in respect of the reasonable cost of goods and services required for the Project and to be financed out of the proceeds of the Loan allocated from time to time to the eligible Categories in accordance with the provisions of Schedule 1 to this Agreement; and (c) the term "Authorized Allocation" means an amount equivalent to $1,000,000 to be withdrawn from the Loan Account and deposited in the Special Account pursuant to paragraph 3 (a) of this Schedule, provided, however, that unless the Bank shall otherwise agree, the Authorized Allocation shall be limited to an amount equivalent to $500,000 until the aggregate amount of withdrawals shall be equal to or exceed the equivalent of $5,000,000. 2. Payments out of the Special Account shall be made exclusively for eligible expenditures in accordance with the provisions of this Schedule. 3. After the Bank has received evidence satisfactory to it that the Special Account has been duly opened, withdrawals of the Authorized Allocation and subsequent withdrawals to replenish the Special Account shall be made as follows: (a) For withdrawals of the Authorized Allocation, the Borrower shall furnish to the Bank a request or requests for a deposit or deposits which do not exceed the aggregate amount of the Authorized Allocation. On the basis of such request or requests, the Bank shall, on behalf of the Borrower, withdraw from the Loan Account and deposit in the Special Account such amount or amounts as the Borrower shall have requested. (b) (i) For replenishment of the Special Account, the Borrower shall furnish to the Bank requests for deposits into the Special Account at such intervals as the Bank shall specify. (ii) Prior to or at the time of each such request, the Borrower shall furnish to the Bank the documents and other evidence required pursuant to paragraph 4 of this Schedule for the payment or payments in respect of which replenishment is requested. On the basis of each such request, the Bank shall, on behalf of the Borrower, withdraw from the Loan Account and deposit into the Special Account such amount as the Borrower shall have requested and as shall have been shown by said documents and other evidence to have been paid out of the Special Account for eligible expenditures. All such deposits shall be withdrawn by the Bank from the Loan Account under the respective eligible Categories, and in the respective equivalent amounts, as shall have been justified by said documents and other evidence. 4. For each payment made by the Borrower out of the Special Account, the Borrower shall, at such time as the Bank shall reasonably request, furnish to the Bank such documents and other evidence showing that such payment was made exclusively for eligible expenditures. 5. Notwithstanding the provisions of paragraph 3 of this Schedule, the Bank shall not be required to make further deposits into the Special Account: (a) if, at any time, the Bank shall have determined that all further withdrawals should be made by the Borrower directly from the Loan Account in accordance with the provisions of Page 18 Article V of the General Conditions and paragraph (a) of Section 2.02 of this Agreement; (b) if the Borrower shall have failed to furnish to the Bank, within the period of time specified in Section 4.01 (b) (ii) of this Agreement, any of the audit reports required to be furnished to the Bank pursuant to said Section in respect of the audit of the records and accounts for the Special Account; (c) if, at any time, the Bank shall have notified the Borrower of its intention to suspend in whole or in part the right of the Borrower to make withdrawals from the Loan Account pursuant to the provisions of Section 6.02 of the General Conditions; or (d) once the total unwithdrawn amount of the Loan allocated to the eligible Categories, minus the amount of all outstanding special commitments entered into by the Bank pursuant to Section 5.02 of the General Conditions with respect to the Project, shall equal the equivalent of twice the amount of the Authorized Allocation. Thereafter, withdrawal from the Loan Account of the remaining unwithdrawn amount of the Loan allocated to the eligible Categories shall follow such procedures as the Bank shall specify by notice to the Borrower. Such further withdrawals shall be made only after and to the extent that the Bank shall have been satisfied that all such amounts remaining on deposit in the Special Account as of the date of such notice will be utilized in making payments for eligible expenditures. 6. (a) If the Bank shall have determined at any time that any payment out of the Special Account: (i) was made for an expenditure or in an amount not eligible pursuant to paragraph 2 of this Schedule; or (ii) was not justified by the evidence furnished to the Bank, the Borrower shall, promptly upon notice from the Bank: (A) provide such additional evidence as the Bank may request; or (B) deposit into the Special Account (or, if the Bank shall so request, refund to the Bank) an amount equal to the amount of such payment or the portion thereof not so eligible or justified. Unless the Bank shall otherwise agree, no further deposit by the Bank into the Special Account shall be made until the Borrower has provided such evidence or made such deposit or refund, as the case may be. (b) If the Bank shall have determined at any time that any amount outstanding in the Special Account will not be required to cover further payments for eligible expenditures, the Borrower shall, promptly upon notice from the Bank, refund to the Bank such outstanding amount. (c) The Borrower may, upon notice to the Bank, refund to the Bank all or any portion of the funds on deposit in the Special Account. (d) Refunds to the Bank made pursuant to paragraphs 6 (a), (b) and (c) of this Schedule shall be credited to the Loan Account for subsequent withdrawal or for cancellation in accordance with the relevant provisions of this Agreement, including the General Conditions. SCHEDULE 7 On-Lending Procedures, Eligibility Criteria and Terms and Conditions of Private Sub-projects A. Procedures 1. A Private Enterprise seeking a Sub-loan shall prepare a business plan for a proposed Private Sub-project in accordance with guidelines satisfactory to the Bank. Page 19 2. The PIU shall appraise the proposed Private Sub-project and shall ensure that each qualifying Private Sub-project for which a Sub-loan is proposed to be made is submitted in advance to the Bank for approval, such approval to be based on a review and appraisal of the proposed Private Sub-project in such manner and of such scope as the Bank shall reasonably request. 3. Following the approval of the Sub-loan by the PIU and the Bank, the Borrower, through GOZKOMPROGNOZSTAT, shall enter into a Subsidiary Loan Agreement with the Private Enterprise giving the Borrower legal rights adequate to protect the interests of the Bank and the Borrower, and containing, inter alia, the terms and conditions enumerated in Part C of this Schedule 7. B. Eligibility Criteria Sub-loans shall be made only to Private Enterprises, wholly privately-owned, duly established, registered and operating under the laws of the Borrower, which as the Borrower shall have determined, and the Bank shall have agreed: 1. is funding working capital needs through credit or contribution of capital by the founders thereof; 2. has a staffing plan satisfactory to the Bank for employment of management and essential staff; 3. has adopted a Charter satisfactory to the Bank; and 4. has a business and work plan satisfactory to the Bank. C. Terms and Conditions 1. Each Subsidiary Loan Agreement shall require the Private Enterprise to, inter alia: (i) carry out and operate the Private Sub-project with due diligence and efficiency and in accordance with sound technical, economic, financial, agricultural, environmental, and managerial standards; (ii) maintain separate adequate accounting and financial records, including a separate bank account related to the Sub- loan; (iii) procure the goods and services to be financed out of the proceeds of the Loan in accordance with the provisions of paragraph D of this Schedule and use such goods and services exclusively in carrying out of the Private Sub-project; (iv) enable the Borrower, by itself or jointly with representatives of the Bank, if the Bank shall so request, to inspect such goods and the sites, works, plants and construction included in the Private Sub-project, the operation thereof, and any relevant records and documents; (v) take out and maintain with responsible insurers such insurance, against such risks and in such amounts, as shall be consistent with sound business practice, including insurance covering hazards incident to the acquisition, transportation, delivery of goods financed out of the proceeds of the Loan to the place of use or installation and, if appropriate, installation and testing, any indemnity thereunder to be made payable in a currency freely usable by the Private Enterprise to replace or repair such goods; (vi) prepare and promptly furnish to the Borrower, for forwarding to the Bank, if so requested by the Bank, all such information as the Borrower or the Bank shall reasonably request relating to the administration, operations and financial condition of the Private Enterprise and to the Page 20 benefits to be derived from the Private Sub-project; (vii) have its records, accounts and financial statements for each fiscal year audited, in accordance with appropriate auditing principles consistently applied, by independent auditors acceptable to the Bank; and (viii) employ qualified managers and/or enter into satisfactory business arrangements to ensure successful implementation of the Private Sub-project; 2. Each Sub-loan shall: (i) be expressed in Dollars and be repayable (principal and interest) in Dollars, except for Sub-loans made to Private Enterprises, operating exclusively in the local market, which can be repaid in Sum at the exchange rate determined by the Central Bank of the Borrower on the date the repayment is due; (ii) carry an interest rate equal to the 10-year US Treasury Bond plus a margin of three percent (3%) to cover administrative costs (including any commission payable to the Agency Bank) and risks; (iii) be issued for a maximum maturity period of ten years including a maximum grace period of three years; and (iv) be subject to a right of suspension upon failure by such Private Enterprise to perform its obligations under the Subsidiary Loan Agreement. D. Procurement 1. Except as provided in sub-paragraphs 2 and 3 below, goods estimated to cost the equivalent of $3,000,000 or more per contract shall be procured in accordance with Part B of Schedule 4 to this Agreement. 2. Items or groups of items for goods estimated to cost the equivalent of less than $3,000,000 per contract may be procured under contracts awarded on the basis of international shopping procedures acceptable to the Bank. 3. Items or groups of items for goods estimated to cost less than $50,000 per contract may be procured in accordance with Part C.2 of Schedule 4 to this Agreement. 4. Civil works shall be procured following the procedures in Part C.4 (a) and (b) of Schedule 4 to this Agreement.