Соглашение между Российской Федерацией и Европейским банком реконструкции и развития о займе для финансирования проекта строительства Мутновской ГеоЭС в Камчатской области (operation NUMBER 598) [англ.]

(Вместе с <Описанием проекта>, <Категориями и освоением кредита>, <Специальным счетом>, <Основными условиями кредитного договора>)

(Заключено в г. Москве 08.01.1998)

Operation Number 598

LOAN AGREEMENT

BETWEEN THE RUSSIAN FEDERATION AND EUROPEAN BANK FOR RECONSTRUCTION AND DEVELOPMENT (MUTNOVSKY INDEPENDENT POWER PLANT)

(Moscow, 8.I.1998)

Agreement dated 8 January 1998 between the Russian Federation (the «Borrower») and the European Bank for Reconstruction and Development (the «Bank»)

Preamble

Whereas the Bank has been established to provide financing for specific projects to foster the transition towards open market-oriented economies and to promote private and entrepreneurial initiative in the Central and Eastern European countries committed to and applying the principles of multiparty democracy, pluralism and market economics;

Whereas the Borrower intends to implement the project described in Schedule 1 to the Loan Agreement (the «Project»), which is designed to assist the Borrower in development of renewable sources of energy, introduction of commercial operation in the regional power utility, and development of the first commercially managed independent power producer in the Region of Kamchatka;

Whereas by an agreement of the even date herewith between Geoterm, a joint stock company organised and existing under the Laws of the Russian Federation (the «Project Company») and the Bank (the «Project Agreement») the Project will be carried out by the Project Company with the Borrower's assistance and, as part of such assistance, the Borrower will make available to the Project Company the proceeds of a loan as provided in the Loan Agreement;

Whereas by an agreement of the even date herewith between the Kamchatka Oblast (the «Oblast») and the Bank (the «Project Support Agreement»), the Oblast has agreed to provide funds to the Project Company up to the amount defined in the Project Financing Agreement, required for successful completion of the Project;

Whereas the Bank has agreed to make available technical assistance funds on a grant basis to assist in implementing Parts A, B, C and D of the Project;

Whereas the Bank has agreed on the basis, inter alia, of the foregoing, to extend a loan to the Borrower in the amount of ninety nine million nine hundred thousand Dollars (USD 99,900,000) (the «Loan») upon the terms and conditions set forth in the Loan Agreement and in the Project Agreement;

Now, therefore, the parties hereby agree as follows:

Section 1.01. Incorporation of Standard Terms and Conditions

All the provisions of the Standard Terms and Conditions dated September 1994 are hereby incorporated into and made applicable to the Loan Agreement with the same force and effect as if they were fully set forth herein.

Section 1.02. Definitions

Wherever used in the Loan Agreement or the Schedules hereto, except where stated otherwise, the terms defined in the Preamble have the respective meanings ascribed therein, the terms defined in the Standard Terms and Conditions have the respective meanings ascribed therein, and the following terms have the following meanings:

"Borrower's Authorised    means the Minister of Finance or the Deputy
Representative"           Ministers of Finance of the Borrower as specified

                      in Section 2.04 of the Loan Agreement;

"Budget Dependent         means the customers of Kamchatskenergo financed
Customers"                out of the federal budget of the Borrower and out

                      of the budget of the Region;

«Dollars» or «USD» means the lawful currency of the United States of America;

"Environmental Action     means an environmental plan to be prepared by the
Plan"                     Project Company in form and substance

                      satisfactory to the Bank which will include
                      mitigation measures to reduce environmental,
                      health and safety risks related to the Project
                      and will set detailed monitoring procedures;

«FY» means the Borrower's fiscal year commencing 1 January of each year;

"Interest Conversion      means a period, commencing on an Interest Payment
Period"                   Date and ending on an Interest Payment Date,

                      selected by the Borrower as such in accordance
                      with Section 2.02(g) (iii) of this Agreement;

"International            means International Accounting Standards
Accounting Standards"     promulgated from time to time by the

                      International Accounting Standards Committee,
                      consistently applied;

"International            means the International Standards on Auditing
Standards on Auditing"    promulgated from time to time by the Federation

                      of International Accountants, consistently
                      applied;

«Kamchatskenergo» means the Energy and Electrification Open Joint Stock Company Kamchatskenergo established and operating in the territory of the Region;

"MW"                      means megawatt of electrical power;

"PIU"                     means the Project Implementation Unit established

                      and operating as part of the Project Company in
                      accordance with Section 2.04 of the Project
                      Agreement;

«Oblast» means the administration of the Region and any successor thereto, and the term «administration» used herein means the executive authority of the Region as such authority is referred to in the Constitution of the Russian Federation in force at any time during the Project;

«Part» means part of the Project as set forth in Schedule 1 to the Loan Agreement;

"Power Purchase           means a long term agreement between the Project
Agreement"                Company and Kamchatskenergo, in form and

                      substance acceptable to the Bank, whereby
                      Kamchatskenergo agrees to purchase electricity
                      from the Project Company according to a fixed
                      level of tariffs with a capacity charge to cover
                      all fixed and financing costs and an energy
                      charge;

"Project Assistance       means an agreement between Kamchatskenergo and
Agreement"                the Project Company, in form and substance

                      acceptable to the Bank, whereby Kamchatskenergo
                      undertakes to take the actions set forth therein
                      to assist the implementation of the Project;

"Project Financing        means the agreement between RAO EES,
Agreement"                Kamchatskernergo, the Oblast and the Project

                      Company to provide or cause to be provided (i)
                      the portion of the costs of the Project
                      attributable to the Project Company; and (ii)
                      financing necessary for the successful completion
                      of the Project;

«RAO EES» means a Joint Stock Company «Unified Energy System», a state owned power company organised and existing under the laws of the Russian Federation and which is one of the shareholders of the Project Company;

"Region"                  means the Region of Kamchatka;

"Rubles"                  means the lawful currency of the Russian

                      Federation;

«Special Account» means the Special Account referred to in Section

                      2.03 and Schedule 3 to the Loan Agreement;

«Statutes» means the charter of the Project Company registered on 23 June 1997 under registration #432 with the Registration Commission of the Municipal Administration of Petropavlovsk — Kamchatksy;

"Subsidiary Loan          means the agreement to be entered into between
Agreement"                the Borrower, the Oblast and the Project Company

                      pursuant to Section 3.01(a) of the Loan
                      Agreement, as the same may be amended from time
                      to time;

«Sub-Loan Currency» means Rubles, or any other currency acceptable to the Bank; and

«Telerate Page 3750» means the display page of London interbank offered rates (commonly known as «LIBOR») of major banks for deposits in the Loan Currency, designated as page 3750 on the Telerate Service (or such other page as may replace the Telerate Page 3750) for the purpose of displaying such LIBOR rates for deposits in the Loan Currency.

Section 1.03. Headings

The headings of Articles and Sections, as well as the Table of Contents, are inserted for convenience of reference only and shall not be used to interpret the Loan Agreement.

Section 2.01. Loan Amount and Loan Currency

The Bank agrees to lend to the Borrower, on the terms and conditions set forth or referred to in the Loan Agreement, an amount of ninety-nine million nine hundred thousand Dollars (USD 99,900,000).

Section 2.02. Other Financial Terms of the Loan

(a) Minimum Drawdown Amount

(see Standard Terms and Conditions, Section 3.01(b))

The Minimum Drawdown Amount shall be two hundred fifty thousand Dollars (USD 250,000).

(b) Minimum Prepayment Amount

(see Standard Terms and Conditions, Section 3.07(d))

The Minimum Prepayment Amount shall be one million Dollars (USD 1,000,000).

(c) Minimum Cancellation Amount

(see Standard Terms and Conditions, Section 3.08(a))

The Minimum Cancellation Amount shall be three million Dollars (USD 3,000,000).

(d) Interest Payment Dates and Loan Repayment Dates

The Interest Payment Dates, as well as the Loan Repayment Dates, shall be 19 February and 19 August. The Borrower shall repay the Loan in accordance with the amortisation schedule set forth below:

(e) Last Availability Date

(see Standard Terms and Conditions, Section 3.01(a))

The Last Availability Date shall be 31 December 2001. If the Available Amount, or any part thereof, is subject to a Fixed Interest Rate, any postponement of the last Availability Date may incur Unwinding Costs which shall be immediately payable by the Borrower or the Bank, as the case may be.

(f) Commitment Charge

(see Standard Terms and Conditions, Section 3.05(a))

The rate of the commitment charge shall be one half of one percent (0.5%) per annum.

(g) Interest Rate

(i) Until the first day of the Interest Conversion Period and commencing on the last day of the Interest Conversion Period, the Loan shall be subject to a Variable Interest Rate. For the purposes of Section 3.04(b) of the Standard Terms and Conditions, the Relevant Market Interest Rate shall be the offered rate that appears on Telerate Page 3750 as of 11:00 a.m., London time, on the relevant Interest Determination Date for the period which is closest to the duration of the relevant Interest Period (or, if two periods are equally close to the duration of the relevant Interest Period, the average of the two periods); provided that:

(A) if, for any reason, the Relevant Market Interest Rate cannot be determined at such time by reference to Telerate Page 3750, the Relevant Market Interest Rate shall be the rate which the Bank determines to be the arithmetic mean (rounded upward, if necessary, to nearest 1/16%) of the offered rates for deposits in the Loan Currency in an amount comparable to the portion of the Loan scheduled to be outstanding during the relevant Interest Period for a period equal to such Interest Period which are advised to the Bank by three major banks active in the London interbank market selected by the Bank; and

(B) if the Bank determines that deposits in the Loan Currency are not being offered in the London interbank market in such amounts or for such period, the Relevant Market Interest Rate shall be the cost to the Bank of funding the portion of the Loan scheduled to be outstanding during the relevant Interest Period from whatever sources it selects.

(ii) During the Interest Conversion Period, the Loan shall be subject to a Fixed Interest Rate. For purposes of Section 3.04(a) of the Standard Terms and Conditions, the Relevant Market Interest Rate shall be the forward fixed interest rate for the Loan Currency which is available to the Bank in the interest rate swap market on the Interest Fixing Date for the Interest Conversion Period, taking into account the principal repayment and interest payment schedules for the Loan. The Bank shall determine the Fixed Interest Rate on the Interest Fixing Date and promptly give notice thereof to the Borrower.

(iii) The Borrower shall select the Interest Fixing Date and the Interest Conversion Period by notice to the Bank not less than five Business Days prior to the proposed Interest Fixing Date.

(h) Unwinding Costs

In the event of cancellation by the Bank pursuant to Section 7.02 of the Standard Terms and Conditions, any Unwinding Costs incurred by the Bank in connection with such cancellation, as assessed by the Bank and notified to the Borrower, shall be immediately payable by the Borrower or the Bank as the case may be.

Section 2.03. Drawdowns and Special Account

(a) The Available Amount may be drawn down from time to time in accordance with the provisions of Schedule 2 to the Loan Agreement and the Attachment thereto for expenditures made (or if the Bank shall so agree, to be made) in respect of (i) the reasonable cost of goods, works and services required for the Project and to be financed out of the proceeds of the Loan, and (ii) the front-end commission.

(b) The Borrower authorises the Bank to draw down an amount of one percent (1%) of the Loan equal to the front-end commission and pay to itself the front-end commission on behalf of the Borrower.

(c) The Borrower shall for the purposes of the Project open and maintain a special deposit account in a commercial bank acceptable to the Bank denominated in Dollars on terms and conditions satisfactory to the Bank, including appropriate protection against set-off, seizure, or attachment. Where the Borrower wishes to make drawdowns for deposit into, and direct payments out of, the Special Account (instead of drawdowns pursuant to subparagraph (a) above), such drawdowns shall be made in accordance with the provisions of Schedule 3 to the Loan Agreement.

Section 2.04. Authorised Representative for Purposes of Drawdowns

The names of the persons designated as the Borrower's Authorised Representative for the purpose of taking any action required or permitted to be taken under the provisions of Section 2.03(a) of the Loan Agreement and Sections 3.01 and 3.02 of the Standard Terms and Conditions shall be provided to the Bank.

Section 3.01. Other Affirmative Project Covenants

In addition to the general undertakings set forth in Articles IV and V of the Standard Terms and Conditions, the Borrower shall, unless the Bank shall otherwise agree:

(a) onlend the proceeds of the Loan to the Project Company under the Subsidiary Loan Agreement, on the terms and conditions set forth in Schedule 4 to the Loan Agreement and which terms and conditions shall have been approved by the Bank and which shall include the following principal conditions:

(i) a grace period and maturity, commitment charge and front-end fee to be the same as in the Loan Agreement;

(ii) the subsidiary loan margin to be one and one half per cent (1.5%); and

(iii) a negative pledge clause that will protect the interests of the Bank and the Borrower;

(b) exercise its rights under the Subsidiary Loan Agreement in such manner as to protect the interests of the Borrower and the Bank, to comply with the provisions of the Loan Agreement, and to accomplish the purposes of the Project and, except as the Bank shall otherwise agree, the Borrower shall not assign, amend, abrogate or waive the Subsidiary Loan Agreement or any provision thereof;

(c) cause the Project Company to perform all its obligations in accordance with the provisions of the Project Agreement set forth therein, and not take or permit to be taken any action which would prevent or interfere with such performance, and in particular, supervise, without limitation, the obligations relating to:

(i) procurement of goods, works and services for the Project, as referred to in Section 2.03 of the Project Agreement;

(ii) establishment and operation of the PI, as referred to in Section 2.04 of the Project Agreement;

(iii) environmental matters, as referred to in Section 2.05 of the Project Agreement;

(iv) employment and use of consultants to assist in the implementation of the Project, as referred to in Section 2.06 of the Project Agreement;

(v) preparation and submission of reports on matters relating to the Project and to the Borrower's operations, as referred to in Section 2.07 of the Project Agreement;

(vi) maintenance of procedures, records and accounts, preparation of financial statements, auditing of the same and submission of them as audited to the Bank, and furnishing the Bank with any other relevant information relating to the Project or the Project Company's operations, as referred to in Section 3.01 of the Project Agreement, including:

(1) from FY 2000, records, accounts and financial statements for each FY prepared in accordance with International Accounting Standards consistently applied, and audited in accordance with International Standards on Auditing by independent auditors acceptable to the Bank;

(2) as soon as available but in any case not later than six (6) months after the end of each FY, the report of such audit by said auditors acceptable to the Bank; and

(vii) compliance with all covenants regarding financial and operational aspects of the Project and the Project Company, as referred to in Sections 3.02, 3.03, 3.04, 3.05 and 3.06 of the Project Agreement;

(d) undertake all efforts necessary to enable the Budget Dependent Customers to pay fully and timely their electricity and heat bills and to provide funding in order to enable them to meet their payment duties to Kamchatskenergo;

(e) cause the Project Company and Kamchatskenergo to enter into and comply with Power Purchase Agreement on terms and conditions acceptable to the Bank; and

(f) cause the Project Company and Kamchatskenergo to enter into an comply with Project Assistance Agreement on terms and conditions acceptable to the Bank.

Section 4.01. Suspension

The following are specified as additional events for suspension of the right of the Borrower to make drawdowns under the Loan, for the purposes of Section 7.01(a)(xiii) of the Standard Terms and Conditions:

(a) either

(i) the legislative and regulatory framework applicable to energy sector in the territory of the member shall have been amended, suspended, abrogated, repealed, or waived, in such a way as to affect materially and adversely the operations or the ability of the Project Company to carry out the Project or to perform any of its obligations under the Project Agreement; or

(ii) the legislative and regulatory framework applicable to the Project Company shall have been amended, suspended, abrogated, repealed, or waived or any other measures shall have been taken by the Borrower in such a way as to affect materially and adversely the operations or the ability of the Project Company to carry out the Project or to perform any of its obligations under the Project Agreement; or

(iii) the Statutes of the Project Company shall have been amended, suspended, abrogated, repealed, or waived in such a way as to affect materially and adversely the operations or its ability to carry out the Project or to perform any of its obligations under the Project Agreement; or

(b) the Project Company shall have failed to perform any of its obligations under the Subsidiary Loan Agreement, the Project Assistance Agreement or the Power Purchase Agreement; or

(c) the Oblast shall have failed to perform any of its obligations under the Project Support Agreement; or

(d) Kamchatskenergo shall have failed to perform any of its obligations under the Project Assistance Agreement or the Power Purchase Agreement; or

(e) the Oblast, RAO EES, Kamchatskenergo or the Project Company shall have failed to perform any of their respective obligations under the Project Financing Agreement.

Section 4.02. Acceleration of Maturity

The following are specified as additional events for acceleration of maturity for the purposes of Section 7.06(f) of the Standard Terms and Conditions:

(a) any event specified in Section 4.01 shall have occurred and shall have continued for fifteen (15) days from the date of such event; or

(b) the Borrower, the Oblast or any other authority having jurisdiction shall have taken any action for the dissolution or disestablishment of the Project Company or for the suspension of its operations.

Section 4.03. Cancellation

If at any time the Bank determines that a payment from, or any use of, the Special Account has been made inconsistently with the requirements of Schedule 3 and establishes the amount of the Loan as to which such misuse applies, the Bank may, by notice to the Borrower, terminate the right of the Borrower to make drawdowns under the Loan with respect to such amount. Upon the giving of such notice, such amount of the Loan shall be cancelled.

Section 5.01. Conditions Precedent to Effectiveness

The following are specified as additional conditions to the effectiveness of the Loan Agreement for the purposes of Section 9.02(c) of the Standard Terms and Conditions:

(a) the Subsidiary Loan Agreement, in form and substance satisfactory to the Bank, has been executed and delivered on behalf of the Borrower, the Oblast and the Project Company and will be legally binding upon both parties and enforceable in accordance with its terms, subject only to the effectiveness of the Loan Agreement;

(b) the Project Support Agreement has been duly authorised, executed and delivered and will be legally binding upon the Oblast and enforceable in accordance with its terms, subject only to the effectiveness of the Loan Agreement;

(c) the Project Assistance Agreement in the form and substance satisfactory to the Bank has been duly authorised, executed and delivered and will be legally binding on Kamchatskenergo, and enforceable in accordance with its terms, subject only to the effectiveness of the Loan Agreement;

(d) the Power Purchase Agreement in the form and substance satisfactory to the Bank has been duly authorised, executed and delivered and will be legally binding upon the Project Company and Kamchatskenergo, and enforceable in accordance with its terms, subject only to the effectiveness of the Loan Agreement;

(e) the Project Financing Agreement in the form and substance satisfactory to the Bank has been duly authorised, executed and delivered and will be legally binding upon the Oblast, RAO EES, Kamchatskenergo and the Project Company, and enforceable in accordance with its terms, subject only to the effectiveness of the Loan Agreement;

(f) Legal Opinions in form and substance satisfactory to the Bank have been issued by the Minister of Justice or the Deputy Minister of Justice of the Borrower, and the chief legal officers of the Project Company and the Oblast; and

(g) the Environmental Action Plan in form and substance satisfactory to the Bank has been prepared and submitted by the Project Company to the Bank.

Section 5.02. Legal Opinion

(a) For the purposes of Section 9.03(a) of the Standard Terms and Conditions, the opinion or opinions of counsel shall be given on behalf of the Borrower by the Minister of Justice or the Deputy Minister of Justice of the Borrower, and the following are specified as additional matters to be included in the opinion or opinions to be furnished to the Bank:

(i) that the Subsidiary Loan Agreement has been duly authorised or ratified by, and delivered on behalf of, the Borrower and will be legally binding upon the Borrower and enforceable in accordance with its terms, subject only to the effectiveness of the Loan Agreement; and

(ii) that the Project Support Agreement has been duly authorised or ratified by, and delivered on behalf of, the Oblast and will be legally binding upon the Oblast and enforceable in accordance with its terms, subject only to the effectiveness of the Loan Agreement;

(b) The Borrower within its authority, shall take measures to provide the Bank with the legal opinions set forth in this Section 5.02(b):

(i) for the purposes of Section 9.03(c) of the Standard Terms and Conditions, the opinion or opinions of counsel shall be given on behalf of the Project Company by the chief legal officer of the Project Company, and the following are specified as additional matters to be included in the opinion or opinions to be furnished to the Bank:

(A) that the Subsidiary Loan Agreement has been duly authorised or ratified by, and delivered on behalf of, the Project Company and will be legally binding upon the Project Company and enforceable in accordance with its terms, subject only to the effectiveness of the Loan Agreement; and

(B) that the Power Purchase Agreement has been duly authorised or ratified by, and delivered on behalf of the Project Company and will be legally binding upon the Project Company and enforceable in accordance with its terms, subject only to the effectiveness of the Loan Agreement;

(ii) The opinion or opinions of the Head of the Legal Department of the Oblast shall be given on behalf of the Oblast namely that the Project Support Agreement and the Project Financing Agreement have been duly authorised or ratified by and delivered on behalf of the Oblast and enforceable in accordance with their respective terms, subject only to the effectiveness of the Loan Agreement.

Section 5.03. Termination for Failure to Become Effective

A date 90 days after the date of this Loan Agreement is specified for the effectiveness of the Loan Agreement for purposes of Section 9.04 of the Standard Terms and Conditions.

Section 6.01. Notices

The following addresses are specified for the purposes of Section 10.01 of the Standard Terms and Conditions:

For the Borrower:

The Minister of Finance or the Deputy Minister of Finance of the Borrower

Ul. Ilyinka, 9

Moscow, 103097

Russian Federation

Ministry of Finance

Telephone: (7095) 928 5169

Telefax: (7095) 925 8058

For the Bank:

European Bank for Reconstruction and Development

Attention: Operation Administration Unit

One Exchange Square

London EC2A 2EH

England

Telephone: (44-171)338 6000

Telefax: (44-171)338 6100

Telex: 881 2161

In witness whereof the parties hereto, acting through their duly authorised representatives, have caused the Loan Agreement to be signed in four copies and delivered at Moscow, Russian Federation as of the day and year first above written.

DESCRIPTION OF THE PROJECT

1. The purpose of the Project is to assist the Borrower in development of renewable sources of energy, introduction of commercial operation in the regional power utility, and development of the first commercially managed independent power producer in the Region.

2. The Project consists of the following Parts, subject to such modifications thereof as the Bank and the Borrower may agree upon from time to time:

Part A: Plant Construction

A-1 40 MW geothermal power plant together with fluid collection and disposal system and the auxiliary equipment.

A-2 Yard and office equipment.

Part B: Well Repairing and Drilling

Repair of the existing production and re-injection wells, drilling of the additional production and re-injection wells and purchase and installation of the sets for well testing complete with auxilliary equipment.

Part C: Project Implementation Services to the Project Company

C-1 Supplementary engineering, geological and technical studies.

C-2 Project management, procurement, design and engeneering supervision services to the Project Company for Parts A and В of the Project.

Part D: Independent Project Monitoring

Monitoring of the Project implementation by an independent engineer.

3. The Project is expected to be completed by 28 February 2001.

CATEGORIES AND DRAWDOWNS

1. The table attached hereto 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.

2. Notwithstanding the provisions of paragraph 1 above, no drawdown shall be made in respect of:

(a) payments made for expenditures prior to the date of the Loan Agreement, except that drawdowns in an aggregate amount not exceeding six million two hundred forty two thousand Dollars (USD 6,242,000) may be made in respect of the categories (1), (3) and (4) on account of payments made for expenditures before the date of the Loan Agreement but after 21 October 1996;

(b) subject to the provisions of paragraph (c) below, expenditures under category (1) until the following conditions have been met:

(i) the construction of the road between the city of Petropavlovsk and the Mutnovsky geothermal field is completed; and

(ii) the power transmission line between the power distribution grid of the city of Petropavlovsk and the 12MW and 40MW geothermal power plants located at Mutnovsky are commissioned;

(c) subject to the provisions of paragraph (b) above, expenditures under category (1) against the invoices received, until the portion of the amount of the invoice equal to five per cent (5%) of the amount of such invoice has been paid by the Project Company and the Bank has received evidence in form and substance satisfactory to it that such payment has been made.

Attachment to Schedule 2

SPECIAL ACCOUNT

1. For the purposes of this Schedule the following terms shall have the following meaning:

"eligible category" means categories (2) set forth in the table in the Attachment to Schedule 2 to the Loan Agreement;

"eligible expenditures" means expenditures in respect of the reasonable cost of goods, works 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 category in accordance with the provisions of Schedule 2 to the Loan Agreement;

"Special Account           means an amount equalling one million Dollars
Maximum Balance"           (USD 1,000,000); and

"Special Account           means an amount equalling fifty thousand Dollars
Minimum Drawdown           (USD 50,000).

Amount»

2. Payments out of the Special Account shall be made prior to the Last Availability Date and 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 in accordance with terms and conditions acceptable to the Bank, including appropriate protection against set-off, seizure, or attachment, the Borrower may draw down from the Available Amount and deposit into the Special Account an initial amount that shall not exceed the Special Account Maximum Balance nor be less than the Special Account Minimum Drawdown Amount.

4. Thereafter, the Borrower may draw down additional amounts from the Available Amount and deposit such amounts into the Special Account, subject to the limitations specified in paragraph 6 below and satisfaction of the following conditions for each requested drawdown:

(a) The Borrower shall have submitted to the Bank account statements and documents, and any other evidence requested by the Bank, to demonstrate that amounts disbursed from the Special Account have been properly applied.

(b) After giving effect to the requested drawdown from the Available Amount and deposit of the amount of such drawdown into the Special Account, the balance of the Special Account shall not exceed the Special Account Maximum Balance.

(с) Except as the Bank may from time to time agree, the amount of the requested drawdown from the Available Amount for deposit into the Special Account shall not be less than the Special Account Minimum Drawdown Amount.

5. Without prejudice to the requirement of paragraph 4(a) above, the Borrower shall furnish, at any time the Bank shall reasonably request, a report on the balance and other details of the Special Account, including account statements and such other documents and other evidence as the Bank may request to show that payments made from the Special Account have been made in accordance with the requirements set forth in this Schedule.

6. Notwithstanding the provisions of paragraph 4 of this Schedule, the Borrower shall not draw down funds from the Available Amount for deposit into the Special Account, unless the Bank agrees otherwise,

(a) if, at any time, the Bank shall have determined that all further drawdowns from the Available Amount should be made in accordance with the provisions of Section 2.03(a) of this Agreement; or

(b) once the Available Amount allocated to the eligible Categories shall equal twice the amount of the Special Account Maximum Balance.

Thereafter, drawdowns from the Available Amount allocated to the eligible categories shall follow such procedures as the Bank shall specify by notice to the Borrower. Such further drawdowns 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 utilised in making payments for eligible expenditures.

7. (a) If the Bank shall have determined at any time that any payment out of, or any use 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;

(b) then the Bank may require the Borrower to;

(i) provide such additional evidence as the Bank may request; or

(ii) deposit into the Special Account (or, if the Bank shall so request, repay to the Bank) an amount equal to the amount of such payment or the portion thereof not so eligible or justified.

In the event the Bank makes such a determination under (a)(i) or (ii) above, no further drawdowns shall be made from the Available Amount for deposit into the Special Account (unless the Bank agrees otherwise) until such time as the Borrower has (x) deposited into the Special Account or repaid to the Bank an amount equal to the amount of such payment (or portion thereof) determined not to be eligible or justified, or (y) provided additional evidence, which satisfies the Bank, that the amounts previously disbursed from the Special Account were applied properly.

8.(a) 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, then the Borrower shall, promptly upon notice from the Bank prepay to the Bank such outstanding amount. Likewise, if the Bank shall direct the Borrower to repay to the Bank an amount pursuant to paragraph 7(b)(ii), then the Borrower shall promptly upon notice from the Bank prepay to the Bank such outstanding amount. For these purposes, the requirement that prepayments of the Loan must occur on Interest Payment Dates is waived, subject to paragraph 8(c) below.

(b) The Borrower, upon prior notice to the Bank given in accordance with Section 3.07(a) of the Standard Terms and Conditions may prepay on any Interest Payment Date all or any portion of the funds deposited into the Special Account.

(c) Any prepayments of the amounts identified in subparagraphs (a) and (b) above shall be made in accordance with Section 3.07 of the Standard Terms and Conditions; provided, however, that such prepayments shall not be subject to the Minimum Prepayment Amount specified in Section 2.02(b) of the Loan Agreement; and provided further that any prepayments that are made on a date other than an Interest Payment Date shall be subject to payment by the Borrower of any Unwinding Costs assessed by the Bank and notified to the Borrower. Furthermore, prepayments of the amounts identified in subparagraphs (a) and (b) above shall be applied by the Bank as provided in Section 3.07(d)(ii) of the Standard Terms and Conditions.

PRINCIPAL TERMS AND CONDITIONS OF THE SUBSIDIARY LOAN AGREEMENT

The following are the principal terms and conditions of the Subsidiary Loan Agreement, which shall apply for the purposes of Section 3.01(a) of this Agreement.

Borrower:              means the Project Company.

Lender:                means the Russian Federation, represented by the

                   Ministry of Finance.

Subsidiary             means the amount in the Sub-Loan Currency
Loan Amount:           equivalent to the Loan Amount.

Subsidiary Loan        equal to the Interest Rate plus Margin and plus an
interest rate:         additional Subsidiary Loan margin of one point five

                   percent (1.5%) per annum.

Commitment fee and Same as in the Loan Agreement. front-end fee:

Repayment terms: (i) Same as in the Loan Agreement. (ii) In the case when the Borrower does not repay any amount of the Subsidiary Loan on the Repayment Date, the Borrower shall pay default interest (equal to the Default Interest under the Loan Agreement) on the overdue amount until the amount outstanding is fully paid. (iii) The Borrower shall repay the Subsidiary Loan on agreed Repayment Dates in semi-annual instalments commencing on [to be determined] and ending on [to be determined] inclusive. Repayment period shall not exceed repayment period under the Loan. (iv) Each repayment shall be in the same currency, in which the Subsidiary Loan was borrowed, otherwise any currency exchange risks shall be borne by the Borrower. (v) The Borrower may pre-pay the Subsidairy Loan subject to prior agreement with the Lender in which event the Lender shall prepay the Bank. (vi) All the Borrower's payment obligations according to the Subsidiary Loan Agreement are unconditional and irrevocable. All of the Borrower's payments, interest payments and other amounts shall be paid on the Repayment Dates. The Borrower shall pay a commitment fee, front-end commission and such other fees and charges as are envisaged under the Loan Agreement.

Disbursements: In cases where the Bank disburses the amount under the Loan Agreement into a Special Account, the amount of the Subsidiary Loan will be disbursed to the Borrower following the disbursement claim. The disbursement claim will contain all the documents and supporting documentation which the Lender may reasonably request.

Suspension and         Same as in the Loan Agreement and the Project
Cancellation:          Agreement.

Cancellation or        Same as in the Loan Agreement.

acceleration:

Negative Pledge: The Borrower shall comply with a negative pledge clause, protecting the interests of the Lender and the Bank.