On the approval of the regulation on the procedure for preparing and implementing investment projects within the framework of Pure Development Mechanism of the Kyoto Protocol (9-son)

10.01.2007

Resolution of the Cabinet of Ministers of the Republic of Uzbekistan

In accordance with the Resolution of the President of the Republic of Uzbekistan dated December 6, 2006 No. RP-525 “On measures for the implementation of investment projects under the Pure Development Mechanism of the Kyoto Protocol”, the Cabinet of Ministers decides:

1. To approve the Regulation on the procedure for the preparation and implementation of investment projects under the Pure Development Mechanism of the Kyoto Protocol in accordance with the appendix.

2. The State Committee for Nature Protection, ministries and departments, together with the Ministry of Justice of the Republic of Uzbekistan, within one month to bring their departmental regulatory acts in accordance with this resolution.

3. The control over the implementation of this resolution shall be assigned to the Deputy Prime Minister of the Republic of Uzbekistan R.S. Azimov.

Prime Minister of the Republic of Uzbekistan SH. MIRZIYOYEV

Tashkent city,

January 10, 2007,

No. 9

APPENDIX to the resolution of the Cabinet of Ministers dated January 10, 2007 No. 9

Regulation

on the procedure for the preparation and implementation of investment projects under the Pure Development Mechanism of the Kyoto Protocol

I. General provisions

1. These Regulation determines the procedure for the preparation and implementation of investment projects under the Kyoto Protocol's Pure Development Mechanism, implemented by legal entities in the Republic of Uzbekistan, regardless of their form of ownership, with the involvement of foreign investors providing for the implementation of certified emission reductions in the world market.

2. The following concepts are used in this Regulation:

Kyoto Protocol — a document adopted by the United Nations Framework Convention on Climate Change on July 11, 1997, ratified by the Republic of Uzbekistan on October 12, 1999 and entered into force on February 16, 2005, which defines mechanisms to limit greenhouse gas emissions;

The Pure Development Mechanism of the Kyoto Protocol (hereinafter referred to as the PDM) is a mechanism whereby countries that are not included in Appendix 1 of the Kyoto Protocol can implement projects on their territory to reduce greenhouse gas emissions and implement the resulting emissions reduction projects for governments or companies included in Annex 1 of the Kyoto Protocol, or any other organizations interested in purchasing certified emission reductions;

Pure Development Mechanism procedures (hereinafter referred to as the PDM procedures) — the procedures, criteria and requirements established by the relevant documents of the United Nations Framework Convention on Climate Change for the implementation of PDM projects;

The National Body for the Pure Development Mechanism of the Kyoto Protocol (hereinafter referred to as the National Body for the PDM) is the Ministry of Economy of the Republic of Uzbekistan;

The Executive Council of the United Nations Framework Convention on Climate Change on the Pure Development Mechanism (hereinafter — the Executive Council of the UNFCCC) is a body under the United Nations Framework Convention on Climate Change that records PDM projects and certifies emission reductions;

The authorized operational body is an accredited independent organization registered under the FCCC Executive Council, authorized to certify compliance of proposed projects with the PDM procedures, to submit projects for registration to the FCCC Executive Council, to certify the actual presence of emission reductions during the implementation of the project and to apply for certification of reduced emissions to the FCCC Executive Council;

Carbon funds — international and private organizations authorized to offer services in the preparation and implementation of PDM projects, as well as in the implementation of certified emission reductions;

greenhouse gas — one of the group of gases controlled by the Kyoto Protocol — CO2, CH4, N2O, HFC5, PFC5 and SF6;

certified emission reduction (hereinafter referred to as CER) is a quantitative reduction in emissions, measured in units of one metric ton of carbon dioxide equivalent, obtained as a result of the PDM investment project and certified by the Executive Board of the UNFCCC;

project technical documentation (hereinafter — PTD) — a document developed in accordance with the conditions and criteria of the PDM, as well as these Regulations, establishing technical, organizational, environmental and financial and economic decisions on the implementation of the PDM investment project.

3. Consideration and approval of proposals for the implementation of PDM projects is carried out in two stages.

II. Procedure for preparing and approving a project application

4. At the first stage, the proponent of the project makes a written statement to the National Body for the PDM with an appendix to it of general information on the proposed investment project for the PDM (hereinafter — the project application).

5. The project application is coordinated with the State Committee of the Republic of Uzbekistan on Ecology and Environmental Protection and should include, but not limited to, the information specified in Appendix No. 1 to this Regulation.

If necessary, the National Body for the PDM may request additional information and project documentation for inclusion in the project application.

6. The National Body for the PDM creates a working group from among its employees.

The working group, within two weeks from the moment of submission of the project application, is considering the possibility of implementing the project under the PDM in accordance with the National Sustainable Development Criteria in accordance with Appendix No. 2 to this Regulation.

7. In the case of a positive consideration of the possibility of implementing the project under the PDM, the working group submits a project application to the National Body for the PDM together with a conclusion on the project implementation mechanism and the main requirements for the tender documentation for choosing an investor for the project.

8. The National Body for the PDM considers proposals on the basis of the submitted documents and makes a decision on the possibility of implementing the project, or on the need to finalize the project.

If a decision is made on the possibility of implementing the project, the National Body for the PDM, if necessary, simultaneously approves the composition of the competitive commission for the selection of the investor, the timing of the tender and the requirements for the competitive documentation for the selection of the investor for the project.

9. In the event of a positive decision of the National Body for the PDM on the implementation of the project, the working group will officially notify the project initiator within three days indicating the proposed mechanism for the implementation of the project and the main requirements for the tender documentation for the selection of the investor for the project.

10. When choosing a project implementation mechanism through Carbon Funds or International Financial Institutions (IFIs), preparation of PDDs, the selection of investors, authorized operational bodies and buyers of CERs are carried out in accordance with the procedures established by the respective Carbon Funds or IFIs. Regardless, the PDM projects must be approved and approved in accordance with paragraphs 13 — 18 of these Regulations, with the exception of the conditions for competitive selection of an investor.

11. When the National Body for the PDM indicates the need for competitive selection, the project initiator is a competition for the selection of an investor for the project in accordance with the terms and requirements established by the Interdepartmental Council.

12. There are no restrictions on the number of bidders for the choice of investors.

III. The procedure for the preparation and approval of design documentation

13. At the second stage, the proponent makes a written statement to the National Body for the PDM with the appendix to it:

a comparative table of initial and final, achieved during the negotiations, proposals of bidders indicating the proposal chosen by the initiator of the project. Responsibility for the accuracy of the data specified in the comparative table lies with the project initiator;

design and technical documentation developed in accordance with the PDM procedures in Russian and English;

monthly project implementation schedule;

a positive conclusion of the Center for Hydrometeorological Service for the project;

positive environmental opinion of the State Committee of the Republic of Uzbekistan on ecology and environmental protection on the project.

If necessary, the National Body for the PDM may request additional information and documentation from the project initiator and the bidders.

14. Within two weeks from the moment the initiator submits the documents referred to in paragraph 13 of these Regulations, the working group reviews the submitted PTD for compliance with the PDM criteria and procedures and submits the relevant opinion to the National Body for the PDM for consideration.

15. The main evaluation criteria by the National Body for the PDM project are:

general economic feasibility and effectiveness of the project;

compliance of the project with environmental requirements;

compliance of the level of technological equipment with modern quality standards.

16. The National Body for the PDM within two weeks considers proposals on the basis of the submitted documents and makes a decision on the feasibility of the project.

17. In the event that the PDM project is complementary to the investment project proposed for implementation, the preparation and examination of the main investment project is carried out in accordance with applicable law applicable to such projects.

Before approving the preliminary feasibility study or signing a memorandum of understanding between the Republic of Uzbekistan and the IFIs on the main investment project, it is necessary to obtain a positive decision of the National Body for the PDM on the implementation of the PDM project component at the project application stage.

Prior to the approval of the final feasibility study for the main project, it is necessary to obtain a positive decision of the National Body for the PDM on the implementation of the PDM project component at the PDD stage.

The government decision on the implementation of the main investment project is made after the approval of the PDM project in the Executive Board of the UNFCCC. Moreover, in exceptional cases, in agreement with the relevant Secretariat of the Cabinet of Ministers, a government decision is allowed to implement the main investment project after the approval of the PTD for the PDM project by the Authorized Operating Body.

IV. PDM project approval procedure

18. In case of a positive decision of the National Body for the PDM on the implementation of the project, the working group will officially notify the project initiator and send a letter of approval for the project to the FCCC Executive Board.

19. After receiving a letter of approval from the National Body for the PDM, the PDM project proponent is responsible for selecting the appropriate Authorized Operational Authority to validate and subsequently register the project with the FCCC Executive Board in accordance with the PDM procedures.

20. With a positive examination and approval of the PDD by the Authorized Operational Authority, the project initiator submits to the relevant Cabinet of Ministers Secretariat a draft government decision on the implementation of the PDM project.

21. The PDM project proponent is also responsible for the implementation of measures to monitor emission reductions, verify and certify emission reductions in accordance with the requirements of the PDM. The project proponent provides the National Body for the PDM with information on the progress of the project on a quarterly basis.

APPENDIX No. 1 to the Regulation on the procedure for the preparation and implementation of investment projects under the Pure Development Mechanism of the Kyoto Protocol

Information contained in the project application for the proposed investment project for the Pure Development Mechanism

1. The purpose of the project, industry and type of activity.

2. Detailed information about the project participants with an indication of their form of ownership.

3. The location of the facility.

4. Information on existing activities.

5. Detailed description of the project.

6. Annual historical and estimated baseline emissions (without implementing the PDM project) of greenhouse gas emissions.

7. Information on technologies and equipment planned for use.

8. Information on the estimated total cost of the project, equipment and the need for additional investments.

9. Preliminary project schedule.

10. The expected reduction in greenhouse gas emissions.

11. Preliminary calculations of the economic efficiency of the project, environmental and social effects of the project.

12. Proposed sources and project implementation mechanism.

13. Compliance of the project with the National criteria for sustainable development.

APPENDIX No. 2 to the Regulation on the procedure for the preparation and implementation of investment projects under the Pure Development Mechanism of the Kyoto Protocol

National Sustainability Criteria applicable to Pure Development Mechanism Investment Projects

Economic:

reduction in energy and raw materials consumption per unit of finished product;

increasing the efficiency of production or use of natural resources through the introduction of modern technologies;

promoting the development of the private sector of the market in the Republic of Uzbekistan.

Ecological:

contributing to the conservation and prevention of environmental degradation;

minimization of expenses of natural raw materials and production wastes;

introduction of technologies aimed at the reuse of raw materials and / or the use of renewable natural resources;

reduction of negative impact on the environment.

Social:

promoting employment growth and increasing real incomes of the population;

improving the health of the personnel involved in the implementation of the project, and the population living in the district of the project;

raising public awareness on the rational use of natural resources.

The proposed investment project does not have to satisfy all the National criteria for sustainable development, but should not have a negative impact on the sustainable development of the country, according to the above criteria.