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Conditions and procedure for tendering the right to use subsurface resources with the purpose of Bel-Alma brown coalfield exploration and determination of criteria of winning bidder

1. Basis and objectives of tendering process 1. The tender for the right to use subsurface resources of Bel-Alma brown coalfield, which is the coalfield of national importance, shall be conducted in accordance with these Conditions and procedure of tendering process for the right to use subsurface resources with the purpose of Bel-Alma brown coalfield exploration  

(hereinafter – the Conditions), approved by the minutes of tender commission dated December 5, 2014 No. 2, developed in accordance with requirements of the Law of the Kyrgyz Republic “On subsurface resources”, Regulations on the procedure and conditions of tendering process for the right to use subsurface resources, approved by Regulation of the Government of the Kyrgyz Republic dated December 14, 2012 No. 834, in pursuance of order of the Government of the Kyrgyz Republic dated November 20, 2014, No. 517-р.

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2. The tender for the right to use subsurface resources of Bel-Alma brown coalfield is held to determine a winner whose bid contains the most advantageous conditions for the Kyrgyz Republic during geological exploration operations at Bel-Alma brown coalfield.
The bids shall be submitted to obtain the right to use subsurface resources with the purpose of Bel-Alma brown coalfield geological exploration for the period of 5 (five) years, with subsequent prolongation in accordance with technical design if the winning bidder fulfills license provisions, with the following points in orthogonal axes axis:

Point No.

X

Y

1

13276000

4414000

2

13279000

4414000

3

13279000

4410000

4

13276000

4410000

S = 1.2 km2 or 1200.0 hectares

2. General information about Bel-Alma brown coalfield

3. Bel-Alma brown coalfield is located in Kichikalai river headwaters – right affluent of Isfairam river, in downstream of its right Bel-Alma affluents, and are confined to the walls of flat-dipping Bel-Alma synclinal fold, distinguished on south-western flank.
4. There are no population centers in the area of the coalfield and in close proximity. The closest village Kashka is located 35 km to north-east of the coalfield. The distance to Kyzyl-Kiya railway station - 70 km. Economically, the coalfield region is poorly developed. There is no motor road built to the coalfield. The area of the coalfield is administratively included into Kadamjai district of Batken oblast.
5. Geographical coordinates of Bel-Alma brown coalfield are 39048'05''- 39049'45'' north latitude and 72023'02"-72024'22" west longitude. Absolute altitudes of the coalfield are 3,400-4,100 m above sea level. The climate in the region is extremely continental with considerable temperature fluctuations (up to 250С), cold winter and quite warm summer. To the east of the coalfield, at the altitude of 2,800 m, according to data of Kichikalai meteorological post, average annual temperature is +5.50С, varying from -200С to +150С. Annual amount of precipitation is 222-255 mm. Steady snow cover at the altitudes higher than 2,500 m is formed in the end of November and remains until the end of April.
6. One coal bed confined to lower Jurassic deposits was established at Bel-Alma brown coalfield. Coal bed structure is simple and uniform, 0.1 – 1.0 m thick single lenses and interbeds of carbonaceous aleurolites are noted close to top and bottom. General dip of the bed is northeastern - 20-400, pitch angle - 200 - 700, 30-400 on average. True thickness of the bed at Bel-Alma brown coalfield by different intersections is 30 - 75 m, average - 45 m.
7. Coal quality has not been studied very well, that is the samples taken from trenches, characterize only wind-blown coal. Coal quality in these studies is as follows: ash content (Аd) varies from 4 to 40 %, with average value of 11.8 %; volatile content (Vdaf) varies from 27 to 40 %, sulfur mass fraction content (Std) – 0.28%, heat of combustion value measured in a bomb calorimeter from 6,500 kcal/kg (27.21 MJ/kg) to 7,150 kcal/kg (29.93 MJ/kg).
8. Petrographic, elemental composition and properties of coal from Bel-Alma coalfield have not been studied. Due to the absence of necessary indicators, it is impossible to identify the coal grade. Based on data of volatile content, coal from Bel-Alma coalfield can be conditionally categorized as brown coal. Forecast resources estimated by the results of works done were 80,000,000 (eighty million) tons by Р1 category (2,500 х 45 х 550 х 1.3 = 80,000,000).
Increase of resources is possible with the increase of prospecting depth.

3. Basic requirements to bidders

9. The following persons are eligible to bid:
- legal entities incorporated in Kyrgyz Republic;
- legal entities incorporated in foreign states (hereinafter – foreign legal entities);
- individuals of the Kyrgyz Republic, and also foreign individuals.
10. Persons stated in paragraph 9 hereof must meet the following requirements in order to be admitted to bed:
- have and apply state-of-the-art technologies of mineral resources fields geological prospecting;
- have own resources and/or be capable of attracting additional financing required for geological exploration works at Bel-Alma coalfield;
- provide guarantees of complying with international standards and standards of the Kyrgyz Republic in the area of industrial safety, environmental safety, conservation of mineral resources and rational use of mineral wealth in its activity.
Work experience of persons stated under paragraph 9 hereof, in the area of geological exploration works and development of coalfields is desirable.
11. Bidders shall be entitled to provide tender commission with additional information and documents related to specialists’ level of qualification, production, financial and other capabilities required for the exercise the right to use subsurface resources with the purpose of performing geological exploration works at Bel-Alma brown coalfield.

4. Basic conditions for use of subsurface resources

12. A legal entity recognized as the winning bidder and obtaining the license for geological exploration works at Bel-Alma brown coalfield, must ensure fulfilling of the following basic conditions for the use of subsurface resources:
1) pay the price of the right to use subsurface resources at the tender object in the amount stated in relevant bid but at least $820,000 (eight hundred and twenty thousand) (hereinafter – price of the right to use subsurface resources at the tender object);
2) develop a technical design for the performing of geological exploration works, receive all positive expert reports for such design stipulated by laws of the Kyrgyz Republic, and obtain all other permissive documents required to carry out geological exploration of Bel-Alma coalfield, not later than 1 (one) year following the issuance of license;
3) complete geological exploration works within 2 (two) years, including calculation of explored mineral resources, preparation of feasibility studies and their approval at the State Commission of the Kyrgyz Republic for Mineral Reserves (SCR). In the event of failure to comply with the deadline for geological exploration works completion, a licensee shall agree to pay a penalty of 1 (one) percent of the starting price stated in paragraph 18 hereof for each full month of the period non-compliance with the deadlines (50 % - to the national budget, 30 % - to Development Fund of Kadamjai District of Batken Oblast of the Kyrgyz Republic and 20 % - to the local budget of Maidanskiy aiyl aimak), save for cases when such failure was caused by force-majeure (in accordance with Law of the Kyrgyz Republic “On Subsurface resources”);
4) include into technical design for geological exploration works the work programs, measures to ensure industrial and environmental safety, protection and rational use of subsurface resources, project for mined-land reclamation and subsequent monitoring with establishing a respective fund, project of mining property liquidation, description of other actions of a licensee required for the most rational, safe and efficient use of subsurface resources, corresponding to international standards and legislation of the Kyrgyz Republic;
5) ensure investments, including by attracting finances from the part of banks and financial institutions as per the project, without including the price of the right to use subsurface resources of the tender object stated in paragraph 17 hereof, and license fees for the first 3 (three) years following the date of license issuance;
6) closely follow requirements of the technical design agreed with authorized government agencies, and legislation of the Kyrgyz Republic, including the requirements to subsurface resources rational use, environmental protection and industrial safety;
7) not later than 2 (two) months following the date of license issuance, prepare and submit to local self-government bodies for their further consideration and approval of the draft social package (hereinafter – the Agreement), which includes a program of social and economic development of the local community and territories, program of investments into the development of the local infrastructure, creation of jobs for population of the project area, maximum use of local human resources in the process of coalfield development, organization of professional training of population with the purpose of engaging it into performing of works related to coalfield development, facilitation in resolving of other issues related to the social and economic development program;
8) procure all goods (commodities and materials) which comply with the established quality standards, works and services, in the territory of the Kyrgyz Republic, required for provision of activity of a licensee, save for procurement of goods, works and services not manufactured, performed or provided in the Kyrgyz Republic. And with all other conditions being equal, procure goods, works and services predominantly produced/manufactured in the territory of Batken oblast.
13. Conditions for grating the right to use subsurface resources, including the above-stated basic conditions, shall be consolidated in the license agreement to license issued to the winning bidder. Non-compliance with the above conditions for the use of subsurface resources shall be a basis for applying liability measures stipulated by legislation of the Kyrgyz Republic.
14. By submitting his bid, a bidder shall acknowledge the above-listed basic conditions for use of subsurface resources and agree for their inclusion into the license agreement issued to the winning bidder.

5. Amount, procedure and deadline for payment of fee, guarantee deposit, price, taxes and other payments

15. Payment for the package of brief geological information.
1) Working body of the Commission shall provide each bidder with the brief geological information. To participate in tender, bidders must purchase the stated geological information for 3,580 (three thousand five hundred and eighty) KGS;
2) payment for the package of brief geological information stated in 1 item of this paragraph shall be received on a special account of the State Agency for Geology and Mineral Resources under the Government of the Kyrgyz Republic (hereinafter – Gosgeologoagentstvo) – working body of the tender commission stated in paragraph 18 hereof and shall remain in its disposal. Geological information shall be provided to a bidder immediately upon receipt of its full price.
16. Duty for participation in tender.
Bidders must pay a fee for participation in the tender in the amount of 1,000,000 (one million) KGS or equivalent in US Dollars at the rate of the National Bank of the Kyrgyz Republic on the date of payment (hereinafter – submission fee). Submission fee shall not be included into the final price for the right to use subsurface resources of the tender object and irrespectively of the results of documents consideration and/or results of tendering process, shall not be refunded. The stated money shall be received on a special account of the working body of the tender commission stated in paragraph 18 hereof and shall remain in its disposal.
17. Price of the right to use subsurface resources at the tender object.
1) Price of the right to use subsurface resources at the tender object may not be below minimum threshold which is 820,000 (eight hundred and twenty thousand) US Dollars. The price includes the amount of bonus (tax for the right to use subsurface resources) and price of the package of geological information about subsurface resources, and the bidders may propose higher price. The final amount less bonus and price of the package of geological information about subsurface resources shall be distributed in accordance with the Regulation on the procedure and conditions of tendering process for the right to use subsurface resources approved by Regulation of the Government of the Kyrgyz Republic on December 14, 2012 No. 834. Price of the right to use subsurface resources at the tender object shall be a lump-sum and non-refundable payment;
2) winning bidder must pay the price offered by him for the right to use subsurface resources of the tender object within 30 (thirty) working days following the date of publishing the decision of the tender commission on determination of winning bidder on official web-sits of the Government of the Kyrgyz Republic and Gosgeologoagentstvo.
18. Details for payments.
Payment for the package of geological information, submission fee, and the price of the right to use subsurface resources at the tender object with designation of respective purpose must be received on the following account of Gosgeologoagentstvo:
Recipient: Pervomaiskiy ROK Bishkek city
Bank: Bishkek branch of RSK-Bank OJSC
BIC 129052
s/a 1290524132820096
customer account 4402012100002662
Payment purpose: [to customer account of Gosgeologoagentstvo payment for geological information] / [to customer account of Gosgeologoagentstvo submission fee] / [to customer account of Gosgeologoagentstvo payment for the right to use subsurface resources (price of the right to use subsurface resources at the tender object)].
19. Winning bidder must pay license fees, taxes, nontax payments, and also other compulsory payments, contributions and fees in accordance with legislation of the Kyrgyz Republic.

6. Tender rounds and documents submitted by bidders

20. The tender shall be held in two rounds. At the first round, working body of the tender commission accepts, and the tender commission evaluates documents submitted by bidders for compliance with requirements set by these Conditions with the purpose of allowing or rejecting them to the second round. At the second round, working body of the tender commission accepts, and the tender commission evaluates documents submitted by bidders who were allowed to the second round of the tender, for their compliance with requirements set by these Conditions and determines the winning bidder in accordance with criteria set.
21. First round of the tender.
At the first round, bidders, within 20 (twenty) calendar days following the moment of announcement publishing in official gazette about tender, shall submit the following documents in 2 (two) copies to Gosgeologoagentstvo at the address: suite 217, 2, Erkindik blvd, Bishkek, Kyrgyz Republic:
1) bid addressed to chairperson of the tender commission, as per the approved form (Appendix 1);
2) a copy of document (and original for checking) proving the payment for the package of geological information;
3) a copy of document (and original for checking) proving payment of submission fee.
The following documents shall also be submitted in a sealed envelope:
1) for legal entities incorporated (reregistered) in the Kyrgyz Republic – notarized copies of the state registration certificate and copies of articles of association and statute with seal affixed;
2) for foreign legal entities – copies of constituent documents and registration certificates, and also apostilled or legalizes extract from the state Register or another document proving that such entity is an active legal entity by legislation of its country . Constituent documents and registration certificate, submitted by foreign legal entities in foreign language, must be submitted with notarized translation into the state or official language. Period of validity of the extract provided from the state register or any other document confirming that a legal entity is operating under legislation of its country must not exceed 6 (six) months following the date of the stated documents issuance;
3) information and documents disclosing persons who are ultimate owners and/or beneficiaries of bidders as per the established form (appendix 2);
4) documents confirming powers of officers of a legal entity or authorized representative of a legal entity;
5) written obligation stating that:
- bidder, in case he is determined to be the winning bidder, agrees to pay all fines and penalties stipulated by these Conditions;
- bidder, in case he is determined to be the winning bidder, agrees that the proposed by him price of the right to use subsurface resources at the tender object is a non-refundable payment;
- bidder agrees to compensate for damage caused to environment as the result of his activity, and also carry out activities for recovery of broken state of the environment, shall such damage resulted from environmental offence (appendix 3).
22. A bidder must submit documents in one envelope containing full name and address of the bidder, indication of participation at the first round of the tender, full list of documents submitted. The documents to be submitted must be laced, divided by spacers, all pages contained in the envelope must be numbered. Documents shall be submitted in the state or official language. In case of submitting documents in foreign languages, they should be accompanied with notarized translations into the state or official language. The tender commission shall consider documents submitted in the state or official language. Changes and supplements to documents submitted by bidders after expiration of the period for documents submission set in paragraph 21 hereof, will not be accepted. The submitted documents will not be returned and shall be kept at Gosgeologoagentstvo.
23. Opening of envelopes with documents shall be done by the tender commission on the day following the expiration of the period for documents accepting established by paragraph 21 hereof and shall be finalized by minutes where names of bidders and number of pages of documents submitted by them are stated. Within 3 (three) working days after opening of envelopes, the tender commission considers the submitted documents and makes a decision of allowing or refusing bidders to participate in the second round of the tender. Bidders, allowed and refused to participate in the second round of the tender shall be notified by the secretary of the tender commission about decisions made within 3 (three) working days.
Bidders shall be allowed to participate in the second round of the tender provided that the documents submitted by them comply with requirements set by these Conditions. Shall there any questions arise in respect of requirements to the list, appearance and form of the submitted documents, the tender commission shall be entitled to provide additional explanations finalized in minutes.
24. Decision of the tender commission about allowing or refusing to the second round shall be published on official web-sites of the Government of the Kyrgyz Republic and Gosgeologoagentstvo within periods stated in paragraph 23 hereof, and also in other official gazettes.
25. Second round of the tender.
Bidders allowed to the second round, shall no later than 10 (ten) calendar days following the moment of making a decision on admittance, submit to Gosgeologoagentstvo at the address: suite 217, 2, Erkindik blvd, Bishkek, Kyrgyz Republic the following documents in a sealed envelope:
1) program of geological exploration works at Bel-Alma brown coalfield;
2) proposals and set of measures to use up-to-date technologies of exploration of mineral resources deposits, mineral resources extraction and processing, ensuring industrial and environmental safety, subsurface resources protection and rational use;
3) proofs of availability of own resources and/or capability to attract financial resources for initial capital investments, documents, confirming the absence of taxes payable, and other similar documents;
4) proposals for social package including the program of social and economic development of local community and the region, program of investments into the development of the local infrastructure, creation of jobs for population of the project area, maximum use of local human resources in the process of coalfield development, organization of professional training of population with the purpose of engaging it into performing of works related to coalfield development, facilitation in resolving of other issues related to the program of social and economic development of Batken oblast;
5) proposal of price for the right to use subsurface resources of the tender object not less than minimum price stated in paragraph 17 hereof;
6) any additional information and documents proving work experience in geology, level of specialists’ qualifications, production, financial and other capabilities of a bidder, required to carry out geological exploration works at Bel-Alma coalfield.
26. A Bidder allowed to the second round must in one envelope submit documents containing full name and address of a bidder, designation about submission of documents in the second round of the tender, full list of submitted documents. Submitted documents must be laced, divided by spacers, all pages contained in the envelope must be numbered. Documents shall be submitted in the state or official language. In case of submitting documents in foreign languages, they should be accompanied with notarized translations into the state or official language. Changes and supplements to documents submitted by bidders after expiration of the period for documents submission set by the tender commission shall not be accepted. The submitted documents will not be returned and shall be kept at Gosgeologoagentstvo.
27. Opening of envelopes with documents shall be done by the tender commission on the day following the expiration of the period for documents accepting established by the tender commission and shall be finalized by minutes where names and addresses of bidders, number of pages of documents submitted by them and proposed price for the right to use subsurface resources at the tender object are stated. Bidders shall be entitled to present during envelopes opening.
28. Minutes of tender commission on opening of envelopes shall be published on official web-sites of the Government of the Kyrgyz Republic and Gosgeologoagentstvo on the day following the date of envelopes opening.

7. Criteria for determination of the winning bidder

29. For 5 (five) working days after publishing the minutes of the tender commission concerning the opening of envelopes, the Tender commission considers the proposals of bidders, prepares a minutes on the voting results of the second round of the tender, and based on this  minutes, makes a decision of the winning bidder. In the course of considering documents submitted by bidders, the tender commission shall have the right to invite an authorized representative of a bidder so that such representative would provide additional explanations on the submitted documents.
30. A winning bidder is determined by evaluation of submitted documents and information. Evaluation of documents is done by the tender commission based on points score system by the following criteria:

No.

Criteria

Points

1

Quality of proposed program of geological exploration works at Bel-Alma coalfield, including its compliance with requirements set by these Conditions

Up to 5 points

2

Proposals to use up-to-date technologies of exploration of mineral resources deposits, mineral resources extraction and processing, ensuring industrial and environmental safety, subsurface resources protection and rational use

Up to 10 points

3

Financial resources to carry out geological exploration works at Bel-Alma coalfield (own and attracted funds)

Up to 2 points

4

Volume (amount) of finances to be allocated to the social package stated in subparagraph 7 paragraph 12 hereof, above the amount

Up to 3 points

5

Excess of the minimum price of the right to use subsurface resources of the tender object (final points on this criterion are given after the bidders propose the highest price)

1 point for each 50, 000 (fifty thousand) US Dollars, exceeding the minimum price for the right to use tender object, but not more than 5 points

31. For each bidder, the tender commission prepares minutes of points scoring, with indication of points given to a bidder in each criterion, and the total score of a bidder.
32. Based on the analysis of the tender commission of all proposals of the bidders and scoring by the set criteria, the commission prepares minutes of the results of voting on the second round of tender and on the basis of such minutes makes a decision on winning bidder.
33. A bidder gaining the highest score is admitted the winning bidder. If scores are similar with two or more bidders, the commission chairperson initiates the procedure of open voting. The voting is done separately for each bidder. Each commission member has the right to cast his/her vote to one bidder only. A bidder gaining the most votes shall be admitted to be a winning bidder. In case when equal number of votes are casted for two or more bidders, second round of voting shall be held for such bidders based on the rules of the first round. If necessary, additional voting rounds are held until winning bidder is determined. Commission members shall not be entitled to abstain from the voting. In all rounds of voting, in equality of votes of tender commission members, vote of tender commission chairperson shall be decisive.
34. Decision of the tender commission is formalized in writing, signed by all members of the tender commission and the winning bidder and is declared at the commission meeting with invitation of bidders and representatives of mass media. Decision of the tender commission on determination of winning bidder is published in official gazettes and on official web-sites of the Government of the Kyrgyz Republic and Gosgeologoagentstvo.
35. Minutes of the tender commission shall be deemed to be valid if signed by the majority of the members of the tender commission.
36. Decision of the tender commission shall be a basis for issuance a winning bidder with a license for the right to use subsurface resources with the purpose of performing geological exploration works at Bel-Alma coalfield. License agreements to licenses must include conditions set for the tendering process.
37. Shall a foreign legal entity be a winning bidder, licenses shall be issued to a subsidiary company established and registered by the winning bidder - foreign legal entity in the territory of the Kyrgyz Republic at the location of Bel-Alma coalfield. A subsidiary company established by a foreign legal entity must be registered within one month following the date of announcing such foreign legal entity a winning bidder. The subsidiary company to be thus established must 100 (one hundred) % be owned by a foreign legal entity – winning bidder. Shall a foreign individual be a winning bidder, such individual must register as individual entrepreneur in accordance with legislation of the Kyrgyz Republic.
38. The license shall be issued to winning bidder within 5 (five) working days after his payment of the proposed price for the right to use subsurface resources of the tender object. Shall a foreign legal entity be a winning bidder, the license is issued within 5 (five) working days after (а) his payment of the proposed price for the right to use subsurface resources of the tender object and (b) presentation of an original or notarized copy of registration certificate in the territory of the Kyrgyz Republic at the location of Bel-Alma coalfield of a subsidiary company of a foreign legal entity, whichever is the later.
39. Shall a winning bidder refuse to sign the minutes of tender results or fail to pay the proposed price for the right to use subsurface resources of the tender object within the set period, such winning bidder forfeits the right for license, and a bidder with the second the highest score as compared to other bidders, or who gained the highest number of votes at the additional voting, shall be admitted to be the winning bidder unless the tender commission makes another decision.

8. Tender cancellation and invalidation, failed

40. Prior to publishing of announcement about tender in mass media and tender commission makes a decision on determination of a winning bidder the Government of the Kyrgyz Republic shall have the right to cancel the tender only in case of force-majeure. In case of cancellation of the tendering process, submission fee amounting 1,000,000 (one million) KGS must be refunded.
41. Shall there be no bids or only one bid was received, or documents submitted by all bidders do not comply with basic conditions and requirements to bidders, the tender is considered to be failed based on decision of the tender commission, such decision shall be formalized in minutes and shall be published in official gazettes and on official web-sites of the Government of the Kyrgyz Republic and Gosgeologoagentstvo.
42. A Bidder shall have the right to withdraw his bid before the tender commission makes a decision on winning bidder determination. Shall such be the case, the submission fee of 1,000,000 (one million) KGS shall not be refunded.
For enquiries, call: (+996 312) 30-03-71, 30-02-46.
This information is available on Gosgeologoagentstvo official web-site: www.geology.kg

__________________________________________________________________________________

Legalization of documents is not required:
а) for countries – participants of the Convention Abolishing the Requirement of Legalization for Foreign Public Documents dated October 5, 1961 (“Hague Convention”), save for countries – participant that objected against joining of the Kyrgyz Republic to Hague Convention, and
b) for countries – participants of the Convention on the legal assistance and legal relations in civil, family and criminal cases dated October 7, 2002 (“Chisinau Convention”).

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