OFFICIAL LOAN NUMBER 8291-RU Loan Agreement (Second National Hydromet Modernization Project) between RUSSIAN FEDERATION and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Dated 1 1QY A, .2014 LOAN NUMBER 8291-RU LOAN AGREEMENT Agreement dated ( ctrj, VIL - 2014, between the RUSSIAN FEDERATION ("Borrower') and the INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT ("Bank"). The Borrower and the Bank hereby agree as follows: ARTICLE I - GENERAL CONDITIONS; DEFINITIONS 1.01. The General Conditions (as defined in the Appendix to this Agreement) constitute an integral part of this Agreement. 1.02. Unless the context requires otherwise, the capitalized terms used in this Agreement have the meanings ascribed to them in the General Conditions or in the Appendix to this Agreement. ARTICLE II- LOAN 2.01. The Bank agrees to lend to the Borrower, on the terms and conditions set forth or referred to in this Agreement, the amount of sixty million United States Dollars (US$60,000,000), as such amount may be converted from time to time through a Currency Conversion in accordance with the provisions of Section 2.07 of this Agreement ("Loan"), to assist in financing the project described in Schedule 1 to this Agreement ("Project"). 2.02. The Borrower may withdraw the proceeds of the Loan in accordance with Section IV of Schedule 2 to this Agreement. 2.03. The Front-end Fee payable by the Borrower shall be equal to one quarter of one percent (0.25%) of the Loan amount. The Borrower shall pay the Front-end Fee not later than sixty (60) days after the Effective Date. 2.04. The interest payable by the Borrower for each Interest Period shall be at a rate equal to LIBOR (or such other Reference Rate iradordance with paragraph 82 of the Appendix of the General Conditions and Section 3.02(c) of the General Conditions) for the Loan Currency plus the Variable Spread; provided, that upon a Conversion of all or any portion of the principal amount of the Loan, the interest payable by the Borrower during the Conversion Period on such amount shall be determined in accordance with the relevant provisions of Article IV of the General Conditions. Notwithstanding the foregoing, if any amount of the Withdrawn Loan Balance remains unpaid when due and such non-payment continues for a period of thirty (30) days, then the interest payable by the -2- Borrower shall instead be calculated as provided in Section 3.02(e) of the General Conditions. 2.05. The Payment Dates are April 15 and October 15 in each year. 2.06. The principal amount of the Loan shall be repaid in accordance with the amortization schedule set forth in Schedule 3 to this Agreement. 2.07. (a) The Borrower may at any time request any of the following Conversions of the terms of the Loan in order to facilitate prudent debt management: (i) a change of the Loan Currency of all or any portion of the principal amount of the Loan, withdrawn or unwithdrawn, to an Approved Currency; (ii) a change of the interest rate basis applicable to: (A) all or any portion of the principal amount of the Loan withdrawn and outstanding from a Variable Rate to a Fixed Rate, or vice versa; or (B) all or any portion of the principal amount of the Loan withdrawn and outstanding from a Variable Rate based on a Reference Rate and the Variable Spread to a Variable Rate based on a Fixed Reference Rate and the Variable Spread, or vice versa; or (C) all of the principal amount of the Loan withdrawn and outstanding from a Variable Rate based on a Variable Spread to a Variable Rate based on a Fixed Spread; and (iii) the setting of limits on the Variable Rate or the Reference Rate applicable to all or any portion of the principal amount of the Loan withdrawn and outstanding by the establishment of an Interest Rate Cap or Interest Rate Collar on the Variable Rate or the Reference Rate. (b) Any conversion requested pursuant to paragraph (a) of this Section that is accepted by the Bank shall be considered a "Conversion", as defined in the General Conditions, and shall be effected in accordance with the provisions of Article IV of the General Conditions and of the Conversion Guidelines. ARTICLE III - PROJECT 3.01. The Borrower declares its commitment to.the objectives of the Project. To this end, the Borrower shall carry out the Project through Roshydromet with the assistance of BEA, in accordance with the provisions of Article V of the General Conditions. 3.02. Without limitation upon the provisions of Section 3.01 of this Agreement, and except as the Borrower and the Bank shall otherwise agree, the Borrower shall ensure that the Project is carried out in accordance with the provisions of Schedule 2 to this Agreement. -3- ARTICLE IV- REMEDIES OF THE BANK 4.01. The Additional Events of Suspension consist of the following: (a) BEA shall have failed to perform any of its obligations under the Agency Agreement (b) The Agency Agreement, or any provision thereof, shall have been amended, suspended, abrogated, repealed or waived in such a way as to materially and adversely affect the ability of any of the parties of the Agency Agreement to carry out the Project. 4.02. The Additional Events of Acceleration consist of the following, namely: any event specified in paragraphs (a) or (b) of Section 4.01 of this Agreement occurs and is continuing for a period of sixty (60) days after notice of the event has been given by the Bank to the Borrower. ARTICLE V - EFFECTIVENESS; TERMINATION 5.01. The Additional Conditions of Effectiveness consist of the following: (a) The Project Management Committee has adopted the Project Operations Manual, satisfactory to the Bank. (b) The Agency Agreement has been entered into between the Ministry of Finance (as representative of the Borrower), Roshydromet and BEA in accordance with the provisions of paragraph 2 of Section LA of Schedule 2 to this Agreement. 5.02. The Additional Legal Matter consists of the following, namely that the Agency Agreement has been duly authorized by the Ministry of Finance (as representative of the Borrower), Roshydromet and BEA and is legally binding upon the Ministry of Finance (as representative of the Borrower), Roshydromet and BEA in accordance with its terms. 5.03. The Effectiveness Deadline is the date one hundred twenty (120) days after the date of this Agreement or such later date as may be established by the Bank pursuant to Section 9.04 of the General Conditions. ARTICLE VI - REPRESENTATIVE; ADDRESSES 6.01. The Borrower's Representative is the Minister of Finance or authorized Deputy Minister of Finance. -4- 6.02. The Borrower's Address is: Ministry of Finance of the Russian Federation Ilyinka Street 9 109097 Moscow Russian Federation Telex: Facsimile: 112008 (7-495) 925-0889 6.03. The Bank's Address is: International Bank for Reconstruction and Development 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: Telex: Facsimile: INTBAFRAD 248423(MCI) or 1-202-477-6391 Washington, D.C. 64145(MCI) -5- AGREED at Moscow, Russian Federation, as of the day and year first above written. RUSSIAN FEDERATION By: Authorized Representative Name: A ) I exaveY Fr 1OV Title: -HeJ -4 Fe- A U rvce. r Hyolromeeorolo 1 cwd Emvironhiw4d moniltorlk c4-th TwaKFdwE INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By:.1 A iedRepresentative Name ich6l RLkowS; Title: Co10 D' reA-ov- -6- SCHEDULE 1 Project Description The objective of the Project is to assist the Borrower to further enhance its national capacity to deliver reliable and timely weather, hydrological and climate information to the Russian public and economic sector and to enhance its capacity to integrate into the global system of meteorological services. The Project consists of the following parts: Part A. Strengthening Information Communication Technology (ICT) infrastructure and systems delivering weather, climate and hydrological data and information Strengthening of Roshydromet's ICT infrastructure and technical capabilities, inter alia, by carrying out the following: I. Improve RosHydroment's technical capacity for operational hydrometeorological forecasting and research on climate and climate change, inter alia, through provision of a supercomputer with capacity over 500TFlops, associated engineering and operational support to Roshydromet's main computing center and training to Roshydromet staff. 2. Develop regional data storage and archive systems for improved operational user access to Roshydromet's information resources, inter alia, through investments in modernization of servers and communication infrastructure, databases, and scanning and data input equipment in selected Roshydromet organizations. 3. Improve Roshydromet's integrated information and telecommunication system to facilitate prompt access of Roshydromet's internal and external users to Roshydromet's data and information products, inter alia, through modernization of communication of the sub-system of selected Roshydromet organizations and upgrading of the data collection and dissemination sub-system which integrates data from state observation networks into a unified Roshydromet information system. Part B. Modernization of observation networks Modernization of equipment and technologies of key elements of Roshydromet's observation networks and integrated modernization of the hydrological network in the Volga River Basin, inter alia, by carrying out the following: 1. Improve meteorological, agrometeorological and marine hydrometeorological observation networks and increase reliability of operations and a number of automatically measured parameters through the following: (a) replacement of obsolete equipment, and addition of new equipment, in -7- weather stations located in selected priority regions or in selected priority stations and supply mobile and stationary calibration laboratories for basic meteorological networks; (b) investments in modernization of the agrometeorological network, including installing automatic instruments to measure the parameters of water and heat balance at key soil and agro-climatic sites and supplying mobile agrometeorological laboratories in selected pilot areas; and (c) modernization of the marine hydrometeorological network, including installation of automated equipment at marine coastal stations. 2. Improve the upper air observation network through: (a) installation of modem upper air complexes (including in remote locations); (b) replacement of obsolete and polluting hydrogen generation technology with modem automatic gas generators in upper air stations; and (c) strengthening of remote sensing instruments and techniques by introducing temperature and wind profilers. 3. Upgrade the regional operational forecasting units to strengthen the satellite data reception capability of selected Roshydromet organizations through, inter alia, installation of satellite data receiving systems. 4. Modernize the hydrological network and improvement of reliability of hydrological forecasts and flooding and techniques for seasonal water flow by: (a) installation of automatic instruments and modem communication and engineering equipment at hydrological stations; (b) supplying mobile hydrological laboratories and calibration laboratories; and (c) upgrading of the whole system of hydrological data collection, storage, and processing and provision of information products, including data on water cadastre. Part C. Institutional and regulatory strengthening, improvement of service delivery to clients and better preparedness for emergencies Improvement of Roshydromet's service delivery performance in line with international experience, inter alia, by carrying out the following: I. Strengthen the institutional capacity of Roshydromet by: (a) improving its performance including, updating a set of regulatory and technical documents and standard operational procedures; (b) strengthening its sustainability, including development of new approaches to life-cycle management of equipment and material assets; and (c) upgrading of regional training and distance learning centers, training of staff and carrying out of selected study tours. -8- 2. Improve Roshydromet's service delivery by reducing the gap between user needs and delivery of services to users, including carrying out sociological surveys and mass media relations activities, and preparation of professional advertisements of Roshydromet activities. 3. Improve the emergency preparedness system related to dangerous hydrometeorological events and public safety by: (a) provision of support for improved interaction among federal and territorial bodies responsible for public safety; (b) development and operationalization of information products related to emergencies; and (c) investments in stationary and mobile hydrometeorological situational centers and their deployment in the regions to increase region's preparedness for emergencies and for coordinated mitigation measures. 4. Strengthen Roshydromet's scientific and research potential on a range of operational themes aligned with modernization priorities including, provision of on-the- job-training of scientists and specialists from Roshydromet institutes and operational units and applied research internships in leading national meteorological services and international research centers. Part D. Project Management Provision of consultants' services (including services of a systems integrator and services for translation of Project documents and audit of Project costs), provision of equipment to be used by BEA and financing of Operating Costs, all in relation to management of Project implementation. -9- SCHEDULE 2 Project Execution Section L Implementation Arrangements A. Institutional Arrangements 1I At all times during the implementation of the Project, the Borrower, through Roshydromet, shall maintain and cause to be maintained: (a) The Project Management Committee, responsible for overall coordination, strategies and day to day management of Project implementation and comprising the Chairman of Committee (the Head of RHM), two Deputy Chairmen, the Chairman of Project Expert Committee, two (2) representatives from the Ministry of Finance, two (2) representatives from the Ministry of Economic Development, one (1) representative from the Ministry of Natural Resources and Environment and one (1) representative from BEA. (b) BEA, responsible for provision of day-to-day Project implementation support to Roshydromet and with the organization structure and functional responsibilities set out in the Project Operations Manual. 2. The Borrower, through its Ministry of Finance, shall: (a) together with Roshydromet, enter into an Agency Agreement with BEA, on terms and conditions satisfactory to the Bank, for provision of day-to-day support for the implementation of the Project, which terms and conditions shall include compliance with the Anti-Corruption Guidelines and the Project Operations Manual; and (b) at all times throughout the duration of the Project, perform its obligations under the Agency Agreement and cause all parties to the Agency Agreement to perform their respective obligations thereunder. 3. The Borrower shall: (a) cause BEA, for purposes of guiding Project implementation, to develop a Project Operations Manual satisfactory to the Bank setting out, inter alia: (i) policies and procedures relating to Project implementation; (ii) financial management policies, requirements and detailed procedures consistent with the provisions of Section II.B of this Schedule 2; -10- (iii) guidelines and procedures for procurement consistent with the provisions of Section III of this Schedule 2; and (b) cause Roshydromet and BEA, to carry out the Project in a timely manner and in accordance with the provisions of the Project Operations Manual; and (c) not amend or waive, or permit to be amended or waived said manual or any provisions thereof, except with the prior written approval of the Bank. 4. With respect to Part D of the Project, the Borrower, through Roshydromet, shall have in place within ninety (90) days from the Effective Date, a systems integrator with: (a) experience in advanced technological modernization of hydrometeorogical observation systems and information, communication and computing technologies; and (b) terms of reference acceptable to the Bank, which systems integrator will assist the Borrower in integration, operability and implementation of all elements of the modernized systems of Roshydromet. B. Counterpart Funding Requirements for the Project Without limitation upon any of its obligations under this Agreement, the Borrower shall ensure that sufficient annual allocations be made in the Borrower's budget for the Borrower's counterpart contribution to the costs of the Project. C. Anti-Corruption The Borrower shall ensure that the Project is carried out in accordance with the provisions of the Anti-Corruption Guidelines. Section II. Project Monitoring Reporting and Evaluation A. Project Reports 1. The Borrower shall, through BEA, monitor and evaluate the progress of the Project and prepare Project Reports in accordance with the provisions of Section 5.08 of the General Conditions and on the basis of indicators acceptable to the Bank. Each Project Report shall cover the period of one calendar quarter, and shall be furnished to the Bank not later than forty-five (45) days after the end of the period covered by such report. B. Financial Management, Financial Reports and Audits 1. The Borrower shall maintain or cause to be maintained a financial management system in accordance with the provisions of Section 5.09 of the General Conditions. 2. Without limitation on the provisions of Part A of this Section, the Borrower shall, through BEA, prepare and furnish to the Bank not later than forty-five (45) days after the end of each calendar quarter, interim unaudited financial reports for the Project covering the quarter, in form and substance satisfactory to the Bank. 3. The Borrower, through BEA, shall have its Financial Statements audited in accordance with the provisions of Section 5.09(b) of the General Conditions. Each audit of the Financial Statements shall cover the period of one (1) fiscal year of the Borrower, provided that the first and last audit periods may, with the agreement of the Bank, cover a period of up to eighteen (18) months. The audited Financial Statements for each such period shall be furnished to the Bank not later than six (6) months after the end of such period. Section III. Procurement A. General 1. Goods and Non-consulting Services. All goods and non-consulting services required for the Project and to be financed out of the proceeds of the Loan shall be procured in accordance with the requirements set forth or referred to in Section I of the Procurement Guidelines, and with the provisions of this Section. 2. Consultants' Services. All consultants' services required for the Project and to be financed out of the proceeds of the Loan shall be procured in accordance with the requirements set forth or referred to in Sections I and IV of the Consultant Guidelines and with the provisions of this Section. 3. Definitions. The capitalized terms used below in this Section to describe particular procurement methods or methods of review by the Bank of particular contracts refer to the corresponding method described in Sections II and III of the Procurement Guidelines, or Sections II, III, IV and V of the Consultant Guidelines, as the case may be. B. Particular Methods of Procurement of Goods and Non-consulting Services 1. International Competitive Bidding. Except as otherwise provided in paragraph 2 below, goods and non-consulting services shall be procured under contracts awarded on the basis of International Competitive Bidding. - 12- 2. Other Methods of Procurement of Goods and Non-consulting Services. The following table specifies the methods of procurement, other than International Competitive Bidding, which may be used for goods and non-consulting services for those contracts specified in the Procurement Plan: Procurement Method (a) Shopping (b) Direct Contracting C. Particular Methods of Procurement of Consultants' Services 1 . Quality- and Cost-based Selection. Except as otherwise provided in paragraph 2 below, consultants' services shall be procured under contracts awarded on the basis of Quality and Cost-based Selection. 2. Other Methods of Procurement of Consultants' Services. The following table specifies the methods of procurement, other than Quality and Cost-based Selection, which may be used for consultants' services for those contracts which are specified in the Procurement Plan. Procurement Method (a) Quality-based Selection (b) Selection under a Fixed Budget (c) Least Cost Selection (d) Selection based on Consultant's Qualification (e) Single-source Selection (f) Individual Consultant D. Review by the Bank of Procurement Decisions The Procurement Plan shall set forth those contracts which shall be subject to the Bank's Prior Review. All other contracts shall be subject to Post Review by the Bank. E. Procurement of Training Training shall be procured in accordance with agreed procedures set out in the Project Operations Manual. - 13- Section IV. Withdrawal of Loan Proceeds A. General 1. The Borrower may withdraw the proceeds of the Loan in accordance with the provisions of Article II of the General Conditions, this Section, and such additional instructions as the Bank shall specify by notice to the Borrower (including the "World Bank Disbursement Guidelines for Projects" dated May 2006, as revised from time to time by the Bank and as made applicable to this Agreement pursuant to such instructions), to finance Eligible Expenditures as set forth in the table in paragraph 2 below. 2. The following table specifies the categories of Eligible Expenditures that may be financed out of the proceeds of the Loan ("Category"), the allocation of the amounts of the Loan to each Category, and the percentage of expenditures to be financed for Eligible Expenditures in each Category. Amount of the Loan Percentage of Allocated Expenditures to be Category (expressed in USD) financed (inclusive of Taxes) (1) Goods, non-consulting services, consultants' 57,894,720 43% services, and Training (2) Operating Costs 2,105,280 43% TOTAL AMOUNT B. Withdrawal Conditions; Withdrawal Period 1. Notwithstanding the provisions of Part A of this Section, no withdrawal shall be made: (a) from the Loan Account until the Bank has received payment in full of the Front-end Fee; or (b) for payments made prior to the date of this Agreement. 2. The Closing Date is December 31, 2018. -14- SCHEDULE 3 Amortization Schedule The following table sets forth the Principal Payment Dates of the Loan and the percentage of the total principal amount of the Loan payable on each Principal Payment Date ("Installment Share"). If the proceeds of the Loan have been fully withdrawn as of the first Principal Payment Date, the principal amount of the Loan repayable by the Borrower on each Principal Payment Date shall be determined by the Bank by multiplying: (a) Withdrawn Loan Balance as of the first Principal Payment Date; by (b) the Installment Share for each Principal Payment Date, such repayable amount to be adjusted, as necessary, to deduct any amounts referred to in paragraph 4 of this Schedule, to which a Currency Conversion applies. Installment Share Principal Payment Date (Expressed as a Percentage) On each April 15 and October 15 beginning October 15, 2018 3.85% through October 15, 2030 On April 15, 2031 3.75% 2. If the proceeds of the Loan have not been fully withdrawn as of the first Principal Payment Date, the principal amount of the Loan repayable by the Borrower on each Principal Payment Date shall be determined as follows: (a) To the extent that any proceeds of the Loan have been withdrawn as of the first Principal Payment Date, the Borrower shall repay the Withdrawn Loan Balance as of such date in accordance with paragraph I of this Schedule. (b) Any amount withdrawn after the first Principal Payment Date shall be repaid on each Principal Payment Date falling after the date of such withdrawal in amounts determined by the Bank by multiplying the amount of each such withdrawal by a fraction, the numerator of which is the original Installment Share specified in the table in paragraph I of this Schedule for said Principal Payment Date ("Original Installment Share") and the denominator of which is the sum of all remaining Original Installment Shares for Principal Payment Dates falling on or after such date, such amounts repayable to be adjusted, as necessary, to deduct any - 15- amounts referred to in paragraph 4 of this Schedule, to which a Currency Conversion applies. 3. (a) Amounts of the Loan withdrawn within two calendar months prior to any Principal Payment Date shall, for the purposes solely of calculating the principal amounts payable on any Principal Payment Date, be treated as withdrawn and outstanding on the second Principal Payment Date following the date of withdrawal and shall be repayable on each Principal Payment Date commencing with the second Principal Payment Date following the date of withdrawal. (b) Notwithstanding the provisions of sub-paragraph (a) of this paragraph, if at any time the Bank adopts a due date billing system under which invoices are issued on or after the respective Principal Payment Date, the provisions of such sub-paragraph shall no longer apply to any withdrawals made after the adoption of such billing system. 4. Notwithstanding the provisions of paragraphs I and 2 of this Schedule, upon a Currency Conversion of all or any portion of the Withdrawn Loan Balance to an Approved Currency, the amount so converted in the Approved Currency that is repayable on any Principal Payment Date occurring during the Conversion Period, shall be determined by the Bank by multiplying such amount in its currency of denomination immediately prior to the Conversion by either: (i) the exchange rate that reflects the amounts of principal in the Approved Currency payable by the Bank under the Currency Hedge Transaction relating to the Conversion; or (ii) if the Bank so determines in accordance with the Conversion Guidelines, the exchange rate component of the Screen Rate. 5. If the Withdrawn Loan Balance is denominated in more than one Loan Currency, the provisions of this Schedule shall apply separately to the amount denominated in each Loan Currency, so as to produce a separate amortization schedule for each such amount. -16- APPENDIX Definitions 1. "Agency Agreement" means the agreement to be entered into between MOF (as representative of the Borrower), Roshydromet and BEA pursuant to paragraph 2 of Section LA of Schedule 2 to this Agreement and referred to in Section 5.01(b) of this Agreement. 2. "Anti-Corruption Guidelines" means the "Guidelines on Preventing and Combating Fraud and Corruption in Projects Financed by IBRD Loans and IDA Credits and Grants", dated October 15, 2006 and revised in January 2011. 3. "BEA" means the Bureau of Economic Analysis, an autonomous non- commercial legal entity: established in the form of a foundation pursuant to the law of the Borrower on non-commercial entities; operating in accordance with its founders' agreement and Statutes registered with the Ministry of Justice of the Borrower on August 9, 1996 (Ministry of Justice Certificate of Registration No. UR-31); and authorized to implement the Project pursuant to the Agency Agreement. 4. "Category" means a category set forth in the table in Section IV of Schedule 2 to this Agreement. 5. "Consultant Guidelines" means the "Guidelines: Selection and Employment of Consultants under IBRD Loans and IDA Credits and Grants by World Bank Borrowers" dated January 2011. 6. "General Conditions" means the "International Bank for Reconstruction and Development General Conditions for Loans" dated March 12, 2012. 7. "Ministry of Finance" and the acronym "MOF" mean the Ministry of Finance of the Russian Federation or any successor thereto. 8. "Operating Costs" means reasonable incremental costs incurred by BEA in relation to Project implementation, including: staff salaries, social charges, training, office rent and utilities, transportation, maintenance and minor refurbishing of office and equipment, materials and supplies, communication costs, support for information systems, bank charges, and cost of travel, accommodation, and per diem of BEA staff directly associated with implementation of Project activities; 9. "Project Management Committee" means the committee responsible for overall coordination, strategies and day to day management of Project implementation and established pursuant to an Order issued by Roshydromet and referred to in paragraph 1(a) of Section LA of Schedule 2 to this Agreement. - 17- 10. "Project Operations Manual" means the manual to be prepared pursuant to paragraph 3 of Section I.A of Schedule 2 to this Agreement and to be adopted by the Project Management Committee pursuant to Section 5.01(a) of this Agreement, as such manual may be amended from time to time with the approval of the Bank. 11. "Procurement Guidelines" means the "Guidelines: Procurement of Goods, Works and Non-consulting Services under IBRD Loans and IDA Credits and Grants by World Bank Borrowers" dated January 2011. 12. "Procurement Plan" means the Borrower's procurement plan for the Project, dated March 2013, and referred to in paragraph 1.18 of the Procurement Guidelines and paragraph 1.25 of the Consultant Guidelines, as the same shall be updated from time to time in accordance with the provisions of said paragraphs. 13. "Roshydromet" and "RHM" mean the Borrower's Federal Service for Hydrometeorology and Environmental Monitoring or any successor thereto. 14. "Training" means expenditures for Project-related study tours, training courses, seminars, workshops and other training activities (which are not included under goods, non-consulting and consultants' services), including costs of travel, accommodation and subsistence costs for the representatives of Roshydromet and other relevant bodies on the federal and/or regional levels involved in the implementation of the Project.