Requirements to external evaluation of projects

Requirements to external evaluation of projects

Project technological complexity, scale, and investing areas are extending according to growth of the Bank’s investment activities, which requires to use independent professional expert experience when performing evaluation of projects.

Therefore, by a resolution of the Board of Directors of Development Bank of Kazakhstan JSC dated May 14, 2008, the Bank has introduced new principles of customer service. These principles set forth that when a request for funding is submitted, the customers must attach conclusions issued by external independent experts in respect of:

- evaluation of the Requester’s performance bond to the Bank,

- legal evaluation of projects (if Requester/Borrower/Co-borrower/Guarantor/Pledger are non-residents of the Republic of Kazakhstan, or if the project/pledged asset is located outside the Republic of Kazakhstan).

- evaluation of technical completeness of projects and procurement,

- evaluation of commercial (marketing) completeness of project,

External evaluation of a project is performed by specialized companies to be accredited by the Bank, and included in the relevant list of companies, except for external legal evaluator, which must be chosen under the procedure set forth with the Bank’s internal document subject to specifics of the issue to be evaluated by an external evaluator.

How to be accredited?

To be considered and accredited as an External Evaluator, a specialized company must submit a written request provided that it complies with the Bank’s qualification requirements to specialized organizations.

The specialized companies engaged in evaluation of technical completeness and procurement, and those engaged in evaluation of commercial (marketing) completeness of project are divided into two categories:

1) companies engaged in external evaluation of investment projects valued at up to USD 50 million to be funded by the Bank;

2) companies engaged in external evaluation of investment projects with unlimited value to be funded by the Bank.

The Bank has approved the following qualification requirements to specialized organizations engaged in:

- external evaluation of technical completeness and procurement of investment projects with unlimited value

- external evaluation of technical completeness and procurement of investment projects valued at up to USD 50 million

- external evaluation of commercial (marketing) completeness of investment projects with unlimited value

- external evaluation of commercial (marketing) completeness of investment projects valued at up to USD 50 million

Who and how chooses external evaluator?

A Requester/Borrower independently chooses an external evaluator from the relevant list of companies accredited by the Bank in respect of every issue, except for external legal evaluator, which must be chosen under the procedure set forth with the Bank’s internal documents subject to specifics of the issue to be evaluated by an external evaluator .

It should be noted that in order to evaluate technical and marketing completeness of investment projects valued at USD 50 million or more, the evaluator must be chosen from a List of Companies engaged in evaluation (of technical or marketing completeness) of projects with unlimited value.

What companies have been accredited by the Bank as External Evaluators?

Lists of specialized companies accredited by the Bank are as follows:

- external evaluators of technical completeness and procurement of investment projects with unlimited value

- external evaluators of technical completeness and procurement of investment projects valued at up to USD 50 million

- external evaluators of commercial (marketing) completeness of investment projects with unlimited value

- external evaluators of commercial (marketing) completeness of investment projects valued at up to USD 50 million

Requirements to external evaluation

When preparing a report based on materials to be provided by the Requestor/Borrower, an external evaluator must be guided with the Bank’s requirements, while keeping independence and completeness of external evaluation.

1) Requirements to evaluation of technical completeness and procurement of project

2) Requirements to evaluation of commercial (marketing) completeness of project

An External Evaluator’s report on project must contain clear and unambiguous conclusions, and recommended solutions, and must as fully as possible reveal all project risks and degree of completeness of measures to be taken by the Requester/Borrower to manage any possible project risks.

An external evaluation report is an integral part of a credit request. Therefore, in order to register a credit request with the Bank, it is necessary to prepare an external evaluation report in strict compliance with the Bank’s requirements.

How Bank, Requester/Borrower and External Evaluator interact with each other

External evaluation is performed according to a contract to be entered into between a Requester/Borrower and an Evaluator.

When preparing a project evaluation service contract, the Requester/ Borrower and the External Evaluator must take into account the following recommendations approved with the Bank’s Management Board:

Recommendations for a contract to be entered into between the Requester/Borrower and External Evaluator [1]

At any stage of preparation, the Requester/Borrower and the External Evaluator may request the Bank to explain the Bank’s requirements to performance of external evaluation.

If an external evaluation report does not meet the Bank’s requirements, a specialized company may be removed from a list of accredited External Evaluators.

At all stages of implementation of a project, the Requester/Borrower must ensure that an External Evaluator implements any remarks in respect of an external evaluation report within the term determined by the Bank.

As payment under the project evaluation service contract, it is recommended that the Requester/Borrower pay 30 to 40 % of total value of a contract only after remarks in respect of external evaluation report are implemented, and after the Bank approves the External Evaluator’s report.[2]

If any considerable amendments are made to a project, the Bank may request the Requester/Borrower to perform an additional evaluation, or to repeat it.

Contact information of persons responsible for interaction with External Evaluators

	Full name	Position	Phone	E-mail
1.	Nurken Mukhametkarimovich Dosmukhambetov	Director of Legal Department	79-26-65	NurkenD@kdb.kz
2.	Maskhat Askarovich Akatayev	Head of Performance Bond Evaluation Administration	79-26-02	MaksatA@kdb.kz
3.	Aleksey Vassilyevich Beloglazov	Head of Technical Analysis and Procurement Administration of Department of Project Analysis and Monitoring	79-26-81	AV@kdb.kz
4.	Sabit Negmetovich Sukhanov	Deputy Director of Department of Project Analysis and Monitoring, and Head of Market Analysis Administration	79-26-80	SabitS@kdb.kz

· 1- Except for evaluation of performance bond

· 2- Except for evaluation of performance bond