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31 October 2008

[Federal Register: October 31, 2008 (Volume 73, Number 212)]
[Page 64987-64990]
From the Federal Register Online via GPO Access []



[MCC FR 09-01]

Notice of First Amendment to Compact With the Government of 

AGENCY: Millennium Challenge Corporation.

ACTION: Notice.


SUMMARY: In accordance with Section 609(i)(2) of the Millennium 
Challenge Act of 2003, as amended (Pub. L. 108-199, Division D), the 
Millennium Challenge Corporation is publishing a summary, justification 
and the proposed text of the First Amendment to Millennium Challenge 
Compact between the United States of America, acting through the 
Millennium Challenge Corporation, and the Government of Georgia. 
Representatives of the United States Government and the Government of 
Georgia plan to execute this draft text in 2008.

    Dated: October 28, 2008.
Henry C. Pitney,
Deputy General Counsel, Millennium Challenge Corporation.

Summary of First Amendment to Millennium Challenge Compact With the 
Government of Georgia

    The Board of Directors of the Millennium Challenge Corporation 
(``MCC'') has approved an amendment (the ``Amendment'') to the existing 
approximately US$295.3 million, five-year Millennium Challenge Compact 
between the United States of America, acting through MCC, and the 
Government of Georgia (the ``Compact'').


    The Compact was signed September 12, 2005 and entered into force on 
April 7, 2006. Compact projects focused on

[[Page 64988]]

rehabilitating infrastructure for transportation, energy, and municipal 
water services and investing in small and medium enterprises outside of 
Tbilisi. Currently, all Compact activities are in implementation. The 
Millennium Challenge Georgia Fund (``MCG'') has disbursed over US$70 
million and committed over US$200 million through signed contracts.

Scope of the Amendment

    MCC proposes to make up to US$100 million in additional funding 
available under the Compact. The proposed additional funding is 
necessary to complete works contemplated by the original Compact in the 
Roads, Regional Infrastructure Development and Energy Activities. Due 
to cost overruns and a declining dollar, MCC cannot fully fund these 
projects as originally contemplated by the Compact.

Reasons for the Amendment

    The Compact Amendment will allow for the completion of the Road 
Rehabilitation Activity as set forth in the Compact. The Amendment will 
also permit the expansion of the Regional Infrastructure Development 
(``RID'') Activity and the Energy Activity in ways consistent with the 
original Compact. Additionally, furthering MCC's investment in Georgia 
can boost investor confidence and contribute to economic stability. 
Such effects, together with the direct impacts of the original Compact, 
promote Georgia's economic growth and assist the millions of Georgians 
who live in poverty.

A. Road Rehabilitation Activity

    Approximately US$60 million of the additional funding would be used 
to build three sections of road that, although originally contemplated 
by the Compact, could not be constructed because of cost overruns and a 
shortage of funds. Those sections will fully connect the Samtskhe-
Javakheti region to Turkey and Central Georgia and will upgrade a road 
to the principal tourist attraction in the region.

B. Regional Infrastructure Development Activity

    The RID is an investment facility authorized to fund improvements 
to municipal infrastructure. Approximately US$26 million will be made 
available to the RID to make up for funds that were previously 
reallocated to the Road Rehabilitation Activity and adjust for the 
decline of the dollar. Approximately US$18.5 million will be used to 
complete the Borjomi and Kobuleti water systems by building waste water 
networks. A municipal water system is made up of several components: A 
water supply, a potable water network, a waste water treatment plant 
and a waste water network. MCC had already committed to rehabilitate 
the water supplies and potable water networks. The European Bank for 
Reconstruction and Development and other donors have agreed to finance 
the waste water treatment plants. The additional funding will permit 
MCC to finish these water projects in their entirety. Approximately 
US$5 million will be used to further complete rehabilitation of the 
Kutaisi potable water system. MCC has already committed to rehabilitate 
the pumps, the pipeline transmitting water to Kutaisi and the water 
distribution network in a portion of the city. The additional funds 
will permit rehabilitation of the distribution network in more of the 
city. The remaining funds will be used to fund feasibility studies and 
designs for future funding by donors.

C. Energy Activity

    The Compact provided US$5 million to ``support the Ministry of 
Energy to further develop and implement its energy sector strategy, 
including * * * providing technical and feasibility studies.'' An 
initial feasibility study has already begun focusing on underground gas 
storage--a critical element to Georgia's energy security and strategy 
to reduce seasonal fluctuations in gas prices. The additional US$13 
million permits MCC to finish a full economic, geological and 
environmental study, technical design and public/private financing plan 
for the gas storage facility and associated infrastructure.

First Amendment to Millennium Challenge Compact Between the United 
States of America Acting Through the Millennium Challenge Corporation 
and the Government of Georgia; First Amendment to Millennium Challenge 

    This First Amendment To Millennium Challenge Compact (this 
``Amendment''), dated as of [--------], 2008 is made by and between the 
United States of America, acting through the Millennium Challenge 
Corporation, a United States government corporation (``MCC''), and the 
Government of Georgia (the ``Government'') (each referred to herein 
individually as a ``Party'' and collectively, as the ``Parties''). All 
capitalized terms used in this Amendment that are not otherwise defined 
herein have the meanings given to such terms in the Compact (as defined 


    Whereas, the Parties entered into that certain Millennium Challenge 
Compact by and between the United States of America, acting through 
MCC, and the Government, on September 12, 2005 (the ``Compact''), 
pursuant to which MCC granted to the Government, subject to the terms 
and conditions of the Compact, an amount not to exceed Two Hundred 
Ninety-Five Million Three Hundred Thousand United States Dollars 
(US$295,300,000) for a program to reduce poverty through economic 
growth in Georgia;
    Whereas, MCC now desires to grant additional funding to the 
Government in an amount not to exceed One Hundred Million United States 
Dollars (US$100,000,000) to cover shortfalls in the original budget for 
the Projects and allow completion of the Projects as originally 
contemplated by the Compact (the ``Additional Funding''); and
    Whereas, the Parties desire to amend certain parts of the Compact 
as more fully described herein to memorialize the Additional Funding;
    Now, Therefore, in consideration of the foregoing and the mutual 
covenants and agreements set forth herein and in the Compact, the 
Parties hereby agree as follows:


1. Amendment to Section 2.1(a)

    Section 2.1(a) (MCC's Contribution) of the Compact is amended and 
restated to read as follows:
    ``(a) MCC's Contribution. MCC hereby grants to the Government, 
subject to the terms and conditions of this Compact, an amount not to 
exceed Three Hundred Ninety-Five Million, Three Hundred Thousand United 
States Dollars (US$395,300,000) (``MCC Funding'') during the Compact 
Term to enable the Government to implement the Program and achieve the 

2. Amendment to Section 5.1

    Section 5.1 (Communications) of the Compact is amended by (i) 
deleting the text that reads ``E-mail:'' from the 
notice information for Millennium Challenge Georgia Fund (``MCG'') and 
(ii) replacing the notice information for MCC with the following:
    ``To MCC: Millennium Challenge Corporation, Attention: Vice 
President, Compact Implementation, (with a copy to the Vice President 
and General Counsel), 875 15th Street, NW., Washington, DC 20005, 
United States of America, Telephone: +1 (202) 521-3600, Facsimile: +1 
(202) 521-3700, E-mail: (Vice

[[Page 64989]]

President, Compact Implementation); (Vice 
President and General Counsel)''.

3. Amendment to Section 5.2

    Section 5.2 (Representatives) of the Compact is amended by deleting 
the phrase ``Vice President for Country Programs'' from the first 
sentence thereof and replacing it with ``Vice President, Compact 

4. Amendment to Section 5.11

    Section 5.11 (Signatures) of the Compact is amended by deleting the 
phrase ``or an amendment to this Compact pursuant to Section 5.3'' from 
the first sentence thereof.

5. Amendment to Exhibit A

    Exhibit A (Definitions) of the Compact is amended by amending and 
restating the definitions of ``Compact,'' ``MCA'' and ``Principal 
Representative'' appearing therein to read as follows:
    ``Compact means the Millennium Challenge Compact made between the 
United States of America, acting through the Millennium Challenge 
Corporation and the Government of Georgia, as amended or otherwise 
modified from time to time.''
    ``MCA means the Millennium Challenge Account.''
    ``Principal Representative shall have has the meaning set forth in 
Section 5.2.''

6. Amendment to Schedule 1 to Annex I

    Schedule 1 to Annex I (Regional Infrastructure Rehabilitation 
Project) of the Compact is amended by amending and restating Section 
2(a)(i) thereof to read as follows:
    ``(i) Sub-Activities. MCC Funding will be used to rehabilitate or 
construct, as applicable, the road sections set out below (the 
``Project Road''), as well as (1) rehabilitate and improve existing 
bridges along the Project Road alignment, (2) improve existing drainage 
facilities along the road alignment, (3) provide road safety features, 
and (4) provide local access and ancillary structures:
    (A) Teleti-Koda-Tsalka;
    (B) Tsalka-Ninotsminda;
    (C) Ninotsminda--the Armenian border;
    (D) Akhalkalaki--the Turkish border; and
    (E) Khertvisi to Vardzia.''

7. Amendment to Exhibit A to Annex II

    Exhibit A to Annex II (Multi-Year Financial Plan) of the Compact is 
amended by inserting a new table at the end thereof to read as set 
forth in Attachment I to this Amendment, which table sets forth the 
allocation of the Additional Funding and supplements the information 
contained in Exhibit A to Annex II.

General Provisions

8. Further Assurances

    Each Party hereby covenants and agrees, without necessity of any 
further consideration, to execute and deliver any and all such further 
documents and take any and all such other action as may be reasonably 
necessary or appropriate to carry out the intent and purpose of this 

9. Effect of This Amendment

    From and after the Amendment Effective Date (as defined below), the 
Compact and this Amendment shall be read together and construed as one 
document, and each reference in the Compact to the ``Compact,'' 
``hereunder,'' ``hereof'' or words of like import referring to the 
Compact, and each reference to the ``Compact,'' ``thereunder,'' 
``thereof'' or words of like import in any Supplemental Agreement or in 
any other document or instrument delivered pursuant to the Compact or 
any Supplemental Agreement, shall mean and be construed as a reference 
to the Compact, as amended by this Amendment.

10. Limitations

    Except as expressly amended by this Amendment, all of the 
provisions of the Compact remain unchanged and in full force and 

11. Amendment Effective Date

    This Amendment shall enter into force on the date of the last 
letter in an exchange of letters between the Principal Representatives 
of each Party confirming that each Party has completed its domestic 
requirements for entry into force of this Amendment (including as set 
forth in Paragraph 12) and that all conditions set forth in Paragraph 
13 have been satisfied by the Government and MCC (the ``Amendment 
Effective Date'').

12. Domestic Requirements

    Promptly after the conclusion of this Amendment, the Government 
shall proceed in a timely manner to seek domestic ratification of this 
Amendment as necessary or required by the laws of Georgia, or similar 
domestic requirement, in order that: (a) This Amendment shall be 
considered an international agreement under Georgian law, (b) each of 
the provisions of this Amendment is valid, binding and in full force 
and effect under the laws of Georgia and (c) the Compact, as amended 
hereby, continues to be an international agreement and valid, binding 
and in full force and effect under the laws of Georgia. Notwithstanding 
anything to the contrary in this Amendment, this Paragraph 12 shall 
provisionally apply prior to the Amendment Effective Date.

13. Condition Precedent to Amendment Effective Date

    As conditions precedent to this Amendment entering into force, the 
Government shall deliver:
    (a) A certificate signed and dated by the Principal Representative 
of the Government, or such other duly authorized representative of the 
Government acceptable to MCC, that:
    (i) Certifies that the Government has completed all of its domestic 
requirements for this Amendment to be fully enforceable under Georgian 
law; and
    (ii) Attaches thereto, and certifies that such attachments are, 
true, correct and complete, copies of all decrees, legislation, 
regulations or other governmental documents relating to its domestic 
requirements for this Amendment to enter into force and the 
satisfaction of Paragraph 12, which MCC may post on its Web site or 
otherwise make publicly available.
    (b) A written statement as to the incumbency and specimen signature 
of the Principal Representative executing this Amendment, such written 
statement to be signed by a duly authorized official of the Government 
other than the Principal Representative.

14. English Language

    This Amendment is prepared and executed in English and, in the 
event of any ambiguity or conflict between this official English 
version and any translation into any language made for the convenience 
of the Parties, this official English version shall prevail.

15. Governing Law

    The Parties acknowledge and agree that this Amendment is an 
international agreement entered into for the purpose of amending the 
Compact and as such will be interpreted in a manner consistent with the 
Compact and will be governed by the principles of international law.

16. Counterparts

    This Amendment may be executed in counterparts, each of which shall 
constitute an original, but when taken together, shall constitute one 

[[Page 64990]]

17. Provisional Application

    Upon signature of this Amendment, the Parties will provisionally 
apply this Amendment until the Amendment Effective Date.
    In Witness Whereof, the undersigned, duly authorized by their 
respective governments, have signed this Amendment as of the date first 
written above and this Amendment shall enter into force in accordance 
with the terms hereof.

Attachment I Supplement to Exhibit A to Annex II of the Compact

                                               Additional Funding
                                                 [USD $ million]
             Component                   Year 1           Year 2        Year 3     Year 4     Year 5     Total
1. Regional Infrastructure
 Rehabilitation Project:
    (a) Road Rehabilitation         N/A............  N/A............       3.00      18.00      39.00      60.00
     Project Activity.
    (b) Regional Infrastructure     N/A............  N/A............       1.30       7.80      16.90      26.00
     Development Project Activity.
    (c) Energy Rehabilitation       N/A............  N/A............       0.65       3.90       8.45      13.00
     Project Activity.
        Sub-Total.................  N/A............  N/A............       4.95      29.70      64.35      99.00
4. Program Administration and
    (c) Fiscal and Procurement      N/A............  N/A............       0.20       0.40       0.40       1.00
        Total Estimated MCC         N/A............  N/A............       5.15      30.10      64.75     100.00

[FR Doc. E8-26090 Filed 10-30-08; 8:45 am]