MEMORANDUM OF UNDERSTANDING FOR

THE DEVELOPMENT OF

THE CASA 1000 POWER TRANSMISSION  PROJECT

and

THE FURTHER DEVELOPMENT OF A CENTRAL ASIA-SOUTH ASIA REGIONAL ELECTRICITY  MARKET (CASAREM) 

BISHKEK, KYRGYZ REPUBLIC

September 20, 2011

This Memorandum of Understand ing for the development of CASA-1000 Power Tranmission Project and the further development of a Central Asia-South Asia Regional Electricity Market ("MoU") is entered into by the followi ng Govemments:

The Islamic Republic of Afghanistan ("Afghanistan"); The Kyrgyz Republic ("Kyrgyz Republic");

The Islamic Republic of Pakistan ("Pakistan");

The Republic of Tajikistan ("The Repu blic of Tajikistan").

in this MoU, the four Governments, when referred to jointl y, shall be known as the Parties.

Preamble

WHEREAS the Parties, along with multilateral financial institutions, bilateral agencies, and private investors, have met - Islamabad (2006), Dushanbe (2006), Kabul (2007), Islamabad (2008) -- to discuss the development of CASAREM and, in particular, the CASA I 000 Project; and

WHEREAS the Parties in Dushanbe signed a Memorand um of Understanding for the Development of Central Asia South Asia Regional Electricity Market on October 28, 2006 ("Dushan be MoU"); and

WHEREAS the Parties in Kabul signed a Memorandum of Understanding for the Development of Central Asia South Asia Regional Electricity Market on November I 6, 2007 ("Kabul MoU"); and

WHEREAS the Parties i n Kabu l establ ished an Inter-Governmental Council ("IGC") and Secretariat pursuant to the Kabul MoU; and

WHEREAS the Parties in Jslamabad signed an Inter-Govern mental Agreement for the development of CASA- I 000 Power Transmission Project and the fu rther development of a Central Asia-South Asia Regional Electricity Market on August 4, 2008 ("IGA"); and

WHEREAS the Parties intend that the CASA I 000 Project ("Project") be implemented and that the further development of CASAREM be facilitated:

NOW, THEREFORE, the Parties agree as follows:

1.1                           Reaffirmation  of Prior Agreements and Agreed Principles

1.2          The Parties reaffırm the terms, cond itions, and  mutual  com mitments  in  the  JGA, as agreed on August 4, 2008 i n Islamabad; The JGA is attached to this MoU as an Appendi x  for reference;

1.3          The Parties reaffirm  and restate here that:

1.3.1     the CASA 1 000 Project will be developed on the basis that it must be economicall y viable  and  sustainable  for ali Parties;

1.3.2     the Projeci will include exports of electricity  from  the  Kyrgyz  Repu bl ic and Republic of Tajikistan to Islamic Republic of Afghanistan and Jslamic Republic of Pakistan.

2.1    Assessment of the Technical and  Economic  Via bility  of the Project

2.2                       SNC Laval i n was engaged by the Parties, with the support of the World Ban k, to reassess the technical  and  econom ic viabi l ity of the Project;

2.3                         The Final  Report  was received  and  reviewed  by the Parties;

2.4                      SNC's for Central Asia - South Asia Transmission and Trade (CASA-1 000) project feasi bi l ity study u pdate, dated February 201 1 , confırmed the techn ical and economic viabi l ity of the Project;

2.5                       The Project Components, broad ly described, will incude:

2.5.1      A  500 kV AC  !i ne between  the Kyrgyz and Tajik grids;

2.5.2      A 500 kV DC !ine between the Republic of  Tajikistan  and  Pakistan  via  Kabu l, Afghanistan;

2.5.3      3 substations: 1300 MW AC/DC in the Repu bl ic of Tajikistan; 300 MW DC/AC  in Afghanistan;  1300 MW  DC/AC  i n Pakistan;

2.5.4      AC  network  reinforcements  necessary  to accommodate  the  power flows.

3.0          Environ men tal and Social Impact Assessment ("ESIA") of the Project

3.1. The Parties  recogni ze  that  Phase  üne  of  the  ESIA  Consu ltation  has  been undertaken  u nder the  auspices of the  World Bank; 

3.2          The  Parties  agree that  each  governınent  wi ll  now  lead  a coınınunity  cons' ltation process usi ng materials  prepared  by or for the  World Ban k.

4.1                           Agreed  Next Steps

4.2          The Parties agree that the SNC Final Report is suffıcient for the purposes  of  taking the next steps to further the iınpleınentation of the Projeci;

4.3          The agreed  next  steps will  incl ude, but  ınay not be  l imited to, the following:

4.3.1      Each Country wi l l establ ish a teaın, i nclud ing the Worki ng Group, that is ded icated to iınpleınent the CASA Project;  a meınber  of that team  wi ll be the  focal  poi nt  person  for  the  purposes  of  comm unication  with  other part ies, i nclud i ng I GC and Secretariat ınem bers, I Fis and donors, advisors, and others.

4.3.2      Each Country as per its own rules and proced ures will hire advisors ("Country Advisors"), as each ınay deterınine is necessary, to, inler a/ia, undertake the following:

4.3.2.1 develop a strategy for the negotiation of the Project contractual agreeınents and assist  i n the negotiation  of  these   agreeınents;

4.3.2.2 assist in  addressi ng  any  technical  and/or  economic  questions regard ing the Projeci;

4.3.2.3 develop a strategy and, ·as may be necessary, help to implement the Country's  obl igations under  the IGA.;

4.3.2.4 coord i nate,  as  may  be  necessary,  with  the  IGC  advisors (section 4.2.3 below) and, at the d iscretion of the Countries, with !Fls, donors, and others.

4.3.3      The IGC wi l l ident ify and retai n advisors for the IGC as a whole ("IGC Advisors").   The responsi bi l ity of the  IGC Advisors will  be, inler alia, to:

4.3.3.1 assist the IGC to determi ne private  sector  interest  in  the  Project and provide advice regarding how that interest  might be  enhanced;

4.3.3.2  interface with the Country Advisors and the Working Groups to faci litate the development of the Project;

4.3.3.3  assist i n developi ng and implementing a  competitive  biddi ng process  for the selection  of a private  sector party;

4.3.3.4 assist i n closing the transaction  with the selected private  party.

4.4          The Parties, ind ividually and joi ntly, will request that the I F!s and donors to finance the Projeci preparation  and i mplementation;

4.5          The decisions pertai ni ng to the IGC Secretariat wi ll be i ncl uded i n the Min utes of the IGC Meeti ng i n Bishkek on September 20, 201 1.

5.1         Other Understandings Modifıcation or Termination of MoU

5.2    The provisions of this MoU  shall not contravene the national  laws of the  Parties.

5.3    in the event that any Party  bel ieves  that  this  MOU  needs  to  be  amended  or  mod ified,  the  Parties  agree  to  meet  and  discuss the  proposed  amendments/mod ifications. Such amendments/mod ifications shall be formalized through  Protocols, which  shall constitute i ntegral  parts of this MoU.

5.4   The MoU  may be terminated:

ı.       if any Party decides not to proceed further;

ii.  if  and  when  a  subsequent  agreement   is  negotiated   among  the Parties to replace this MoU.

111. lf  any  of  the  Parties  decides  to  withdraw  from  this  MOU  such Party shall submit correspondi ng notifıcation in  writing  to  the  other Parties. For the Party having made  such  a  decision,  this  MOU shall d isconti nue in three months from the date  of  submission  of such a notifıcation.

This MOU is made in the Russian and Engl ish languages, with fou r (4) original copies,  one for each of the Parties. l n case of any d iscrepancy i n the texts or contlict in interpretation, the Engl ish text shall preva jl.

This MOU  shall  become effective on the day of signing.

in Witness whereof, this MoU is signed at Bishkek, Kyrgyz Republic', 20 September 201 1.

ON BEHALF OF GOVERNMENT OF ISLAMI

ON BEHALF OF GOVERNMENT OF KYRGYZ REPUBLIC

Full Name:         Full Name:

ON BEHALF OF GOVERNMENT OF ISLAMIC REPUBLIC OF PAKiSTAN

ON BEHALF OF GOVERNMENT OF THE REPUBLIC OF TAJIKISTAN