CONFORMED COPY CREDIT NUMBER 165 IND Development Credit Agreement (Electricity Distribution Project) BETWEEN REPUBLIC OF INDONESIA AND INTERNATIONAL DEVELOPMENT ASSOCIATION DATED OCTOBER 29, 1969 CONFORMED COPY CREDIT NUMBER 165 IND Development Credit Agreement (Electricity Distribution Project) BETWEEN REPUBLIC OF INDONESIA AND INTERNATIONAL DEVELOPMENT ASSOCIATION DATED OCTOBER 29, 1969 Brortapiment Tfrebit Agrrgugtru AGREEMENT, dated October 29, 1969 between REPUBLIC OF INDONESLA (hereinafter called the borrower) and INTER- NATIONAL DEVELOPMENT AssoCIATION (hereinafter called the Association). WHEREAS the Borrower has requested the Association to assist in the financing of an electricity distribution project, more particularly described in Schedule 2 to this Agree- ment; WHEREAS the Perusahaan Listrik Ne.ara (hereinafter called PLN), a public authority ("PERUM") of the Bor- rower, will execute the above-mentioned project; WHEREAS for such purpose the Borrower will make avail- able to PLN the proceeds of the credit provided for herein under terms and conditions satisfactory to the Association; and WHEREAS the Association has, on the basis of the fore- going, agreed to make a credit to the Borrower for the said project upon the terms and conditions set forth herein and in the Project Agreement of even date herewith be- tween the Association and PLN; Now THEREFORE the parties hereto hereby agree as follows: ARTICLE I General Conditions; Definitions SECTION 1.01. The parties to this Development Credit Agreement accept all the provisions of the General Condi- tions Applicable to Development Credit Agreements of the Association, dated January 31, 1969, with the same force 4 and effect as if they were fully set forth herein, subject, however, to the following modifications thereof (said Gen- eral Conditions Applicable to Development Credit Agree- ments of th Association, as so modified, being hereinafter called the General Conditions) : (a) Section 8.02 is amended by inserting the words "or either party under the Project Agreement" after the words "the Development Credit Agreement". (b) The following sub-paragraph is added to Section 2.01: "13. The term Project Agreement shall have the meaning set forth in the Development Credit Agreement." SECTION 1.02. Wherever used in this Development Credit Agreement, unless the context otherwise requires, the sev- eral terms defined in the General Conditions have the re- spective meanings therein set forth and the following addi- tional terms have the following meanings: (a) "Project Agreement" means the agreement of even date herewith between the Association and PLN, as the same may be amended or supplemented from time to time. (b) "Governing Laws" means Government Act no. 19, 1960, Government Decree no. 19, 1965, Presidential Decree no. 17, 1967, Law no. 9, 1969, Government Regulation no. 11, 1969 and any other legal provisions at any time governing the organization and operations of PLN, as any of them may be amended or supplemented from time to time. ARTICLE II The Credit SECTION 2.01. The Association agrees to lend to the Borrower, on the terms and conditions in this Development Credit Agreement set forth or referred to, an amount in various currencies equivalent to fifteen million dollars ($15,000,000). 5 SECTION 2.02. (a) The Association shall open a Credit Account on its books in the name of the Borrower and shall credit to such Account the amount of the Credit. (b) The amount of the Credit may be withdrawn from the Credit Account as provided in, and subject to the rights of cancellation and suspension set forth in, this Develop- ment Credit Agreement and in accordance with the alloca- tion of the proceeds of the Credit set forth in Schedule 1 to this Agreement, as such allocation shall be modified from time to time pursuant to the provisions of such Schedule or by further agreement between the Borrower and the Association. SECTION 2.03. The Borrower shall be entitled to with- draw from the Credit Account in respect of the reason- able cost of goods and services required for the Project and to be financed under this A_greement: (a) such amounts as shall have been paid (or if the As- sociation shall so agree, as shall be requined to meet payments to be made) in currencies other than that of the Borrower, for such goods and services de- scribed under Categories 1 through 5 of the alloca- tion of the proceeds of the Credit referred to in Section 2.02(b) of this Agreement as are imported directly for the Project; and (b) the equivalent of seventy-five per cert (75%) of such amounts as shall have been expended by the Borrower for any locally-procured goods under Cate- gory 1, 2 or 3 of such Schedule 1. SECTION 2.04. The currency of the United States of America is hereby specified for the purposes of Section 4.02 of the General Conditions. SECTION 2.05. The Borrower shall pay to the Associa- tion a service charge at the rate of three-fourths of one per 6 cent (3/4 of 17) per annum on the principal amount of the Credit withdrawn and outstanding from time to time. SECTIoN 2.06. Service charges shall be payable semi- annually on June 15 and December 15 in each year. SECTION 2.07. The Borrower shall repay the principal amount of the Credit withdrawn from the Credit Account in semi-annual installments payable on each June 15 and December 15 commencing December 15, 1979 and ending June 15, 2019, each installment to and including the install- ment payable on June 15, 1989 to be one-half of one per cent (1/2 of 17) of such principal amount, and each install- ment thereafter to be one and one-half per cent (11/2o) of such principal amount. ARTICLE III Use of Proceeds of the Credit SECTION 3.01. The Borrower shall make the proceeds of the Credit available to PLN under arrangements in form and substance satisfactory to the Association, such proceeds to be applied by PLN in accordance with the provisions of this Development Credit Agreement exclusively to expendi- tures on the Project, described in Schedule 2 to this Agree- ment. SECTION 3.02. Except as provided in Schedule 3 to this Agreement, or as the Borrower and the Association shall otherwise agree, (i) the goods and services to be financed out of the proceeds of the Credit shall be procured on the basis of international competitive bidding in accordance with the Guidelines for Procurement under World Bank Loans and IDA Credits, published by the Bank in August, 1969, and in accordance with such other procedures sup- plementary thereto as are set forth in such Schedule 3, and (ii) contracts for the procurement of such goods and services shall be subject to the prior approval of the Association. I0 7 SECTION 3.03. Except as the Association may otherwise agree, the Borrower shall cause all goods and services financed out of the proceeds of the Credit to be used ex- clusively in carrying out the Project. ARTICLE IV Particular Covenants SECTIoN 4.01. (a) The Borrower shall cause the Project to be carried out by PLN with due diligence and efficiency, and PLN to be managed and operated, in conformity with sound administrative, financial, engineering and public utility practies. (b) For the purpose, the Borrower shall make available to PLN, promptly as needed, (i) any funds, facilities, services aiid other resources required for the carrying out of the Project, including, if necessary, funds and facilities for the prompt clearance through customs of goods in- ported therefor, and (ii), if PLN's resources shall be inade- quate, the funds required to cover the operating expenses of PLN. SECTION 4.02. The Borrower shall exercise its rights under the arrangements referred to in Section 3.01 in such manner as to protect the interests of the Borrower and the Association, and, except as the Association shall other- wise agree, the Borrower shall not take or concur in any action which would have the effect of modifying such arrangements. SECTIOx 4.03. The Borrower (i) shall enable the Asso- ciation's representatives to inspect the Project, the goods financed out of the proceds of the Credit, all other plants, sites, works, property and equipment of PLN and any relevant records and documents; and (ii) shall furnish or cause to be furnished to the Association all such informa- tion as the Association shall reasonably request concern- ing the Credit and the maintenance of the service thereof, 8 the expenditure of the proceeds of the Credit, the goods and services financed out of such proceeds, the Project, and the administration, operations and financial condi- tion of PLN, and, with respect to the Project, of any other agency of the Borrower responsible for the carrying out of the Project or any part thereof. SECTION 4.04. (a) The Borrower and the Association shall cooperate fully to ensure that the purposes of the Credit will be accomplished. To that end, each of them shall furnish to the other all such information as it shall reasonably request with regard to the general status of the Credit. On the part of the Borrower, such information shall include information with respect to financial and economic conditions in the territories of the Borrower and the international balance of payments position of the Borrower. (b) The Borrower and the Association shall from time to time exchange views through their representatives with regard to matters relating to the purposes of the Credit and the maintenance of the service thereof. The Borrower shall promptly inform the Association of any condition which interferes with, or threatens to interfere with, the accomplishment of the purposes of the Credit or the main- tenance of the service thereof. (c) The Borrower shall afford all reasonable opportunity for accredited representatives of the Association to visit any part of the territories of the Borrower for purposes related to the Credit. SECTION 4.05. The Borrower shall take all action which shall be necessary on its part to enable PLN to perform its obligations under the Project Agreement, including the establishment and maintenance of tariffs and charges as specified in Sections 2.02(b) and 2.04 thereof, a-id shall not take any action that would interfere with the performance of such obligations. 9 (b) Amounts owed to PLN for service's provided by it to Governmental entities which are due and payable as of the date of this Agreement shall be paid to PLN within one year following such date. The Borrower shall take all action necessary to ensure at all times that amounts owed to PLN for such services so provided after such date be promptly paid when due. SECTION 4.06. The principal of, and service charges on, the Credit shall be paid without deduction for, and free from, any taxes, and free from all restrictions, imposed under the laws of the Borrower or laws in effect in its territories. SECTION 4.07. The Development Credit Agreement and the Project Agreement shall be free from any taxes that shall be imposed under the laws of the Borrower or laws in effect in its territories on or in connection with the execution, delivery or registration thereof. SECTION 4.08. Within a period ending not later than April 1, 1971 the Borrower shall cause PLN to be vested with full and exclusive responsibility for the public electric power sector of the Borrower, including planning, procure- ment, construction, operation, maintenance and ownership of all facilities therein. ARTICLE V Remedies of the Association SECTION 5.01. If any event specified in Section 7.01 of the General Conditions or in Section 5.02 of this Agreement shall occur and shall continue for the period, if any, therein set forth, then at any subsequent time during the continu- ance thereof, the Association, at its option, may by notice to the Borrower declare the principal of the Credit then outstanding to be due and payable immediately, together with the service charges thereon; and upon any such decla- 10 ration, such principal, together with such charges, shall become due and payable immediately, anything in this De- velopment Credit Agreement to the contrary notwith- standing. SECTION 5.02. For the purposes of Section 7.01 of the General Conditions, the following additional events are specified: (a) A default shall occur in the performance by PLN of any of its obligations under the Project Agree- ment, and such default shall continue for a period of sixty days after notice thereof shall have been given by the Association to the Borrower and to PLN; (b) Before the Project Agreement shall have terminated in accordance with its terms, the Borrower shall have taken any action for the dissolution or disestablish- ment of PLN or for the suspension of its operations, without the prior consent of the Association; and (c) Before the Project Agreement shall have terminated in accordance with its terms, the Borrower shall have suspended, terminated, repealed or substantially amended any of the Governing Laws without the prior approval of the Association. ARTICLE VI Effective Date; Termination SECTION 6.01. The following events are specified as ad- ditional conditions to the effectiveness of this Development Credit Agreement within the meaning of Section 10.01(b) of the General Conditions: (a) the execution and deivery of the Project Agreement on behalf of PLN have been duly authorized or r%tti- fled by all necessary administrative and govern- mental action; 11 (b) the arrangements referred to in Section 3.01 of this Agreement have been completed and have become fully effective and binding on the parties thereto in accordance with their terms, subject only to the effec- tiveness of this Development Credit Agreement; and (c) PLN has been charged with the full and exclusive responsibility for (i) the selection and procurement of services and of equipment, materials and supplies for the Project and for the electric power system of the Borrower, and (ii) the carrying out of con- struction projects in such system; with the excep- tion of such selection and procurement, and construe- tion, in respect of projects in such system construc- tion of which was started prior to September 17, 1969. SECTION 6.02. The following are specified as additional matters, within the meaning of Section 10.02(b) of the General Conditions, to be included in the opinion or opin- ions to be furnished to the Association: (a) that the delegation of responsibility referred to in paragraph (c) of Section 6.01 above has been duly made, and that PLN has all other necessary powers and authority under the Governing Laws to carry out its obligations under the Project Agreement; (b) that the Project Agreement has been duly authorized or ratified by, and executed and delivered on behalf of, PLN and constitutes a valid and binding obliga- tion of PLN in accordance with its terms; and (c) that the arrangements referred to in Section 3.01 have been duly authorized or ratified by the parties thereto, and are in full force and effect. SECTION 6.03. The date of January 30, 1970 is hereby specified for the purposes of Section 10.04 of the General Conditions. 12 SECTION 6.04. Unless the Development Credit Agree- ment shall be sooner terminated, the obligations of the Borrower under Sections 4.01, 4.02, 4.03 and 4.05 of this Agreement shall terminate on a date twenty-five years after the date of this Development Credit Agreement. ARTICLE VII Miscellaneous SECTION 7.01. The Closing Date shall be December 31, 1973 or such other date as shall be agreed between the Borrower and the Association. SECTION 7.02. The Minister of Finance of the Borrower is designated as representative of the Borrower for the purposes of Section 9.03 of the General Conditions. SECTION 7.03. The following addresses are specified for the purposes of Section 9.01 of the General Conditions: For the Borrower: Ministry of Finance Post Office Box 21 Djakarta, Indonesia Alternative address for cables: Ministry Finance Djakarta For the Association: International Development Association 1818 H Street, N.W. Washington, D. C. 20433 TTnited States of America 13 Alternative address for cables: Indevas Washington, D. C. IN WITNESS WIEREOF, the parties hereto, acting through their representatives thereunder duly authorized, have caused this Development Credit Agreement to be signed in their respective names and to be delivered in the District of Columbia, TJnited States of Akmerica, as of the day and year first above written. REPUBLIC OF INDONESIA By /s/ MARDJUNI Authorized Representative INTERNATIONAL DEVELOPMENT AssocIATIoN By /s/ J. BURKE KNAPP Vice President 14 SCHEDULE 1 Allocation of Proceeds of Credit Amounts Expressed Category in Dollar Equivalent 1. Distribution transformers, switchgear and meters 3,100,000 2. Distribution cable and conductor 6,400,000 3. Miscellaneous power-system equipment, materials and supplies 2,500,000 4. Engineering consultants' services 600,000 5. Management consultants' services 1,400,000 6. Unallocated 1,000,000 Total 15,000,000 Reallocation Upon Change in Cost Estimates 1. If the estimate of the cost of the items included in any of the Categories 1 to 5 shall decrease, the amount of the Credit then allocated to, and no longer required for, such Category will be reallocated by the Association to Cate- gory 6. 2. If the estimate of the cost of the items included in any of the Categories 1 to 5 shall increase, an amount equal to the portion, if any, of such increase to be financed out of the proceeds of the Credit will be allocated by the Asso- ciation, at the request of the Borrower, to such Category from Category 6, subject, however, to the requirements for contingencies, as determined by the Association, in respect of the cost of the items in the other Categories. 15 SCHEDULE 2 Description of the Project The Project comprises: A. The reinforcement and expansion of the electricity distribution system of the City of Djakarta and environs, including 1. The provision of distribution transformers, switch- gear, cable, street lighting, metering and other equipment and supplies; 2. Engineering services for the distribution system's reinforcement and expansion; and B. The provision of extensive management consultants' services to improve the organization and efficiency of the power sector and to provide assistance and training in the operational, technical, financial and administrative spheres of activity. The Project is expected to be completed in the second half of 1972. 16 SCHEDULE 3 Procurement 1. With respect to equipment, materials and supplies de- scribed in Categories 1 through 3 of the allocation of the proceeds referred to in Section 2.02(b) of this Agreement, identical or similar items to be procured shall be grouped together to the extent practicable for the purposes of in- viting bids, and such grouping of items shall be subject to the approval of the Association. 2. In respect of contracts for supply of such goods ex- pected to cost more than the equivalent of US$50,000: (a) Invitations to bid, specifications, the text of proposed advertisements to be published, and all other tender documents, will be submitted to the Association for review and approval prior to the issuance of invita- tions, together with a description of the advertis- ing procedures to be followed. (b) After bids have been received and analyzed, the an- alysis, the recommendations of the consultants, where applicable, and the proposals for awards, to- gether with the reasons for such proposals, will be submitted to the Association for review and approval prior to any award of contract or issuance of any letter of intent. (c) If the proposed final contract is to differ materially from the terms and conditions contained in the re- spective documents approved by the Association under sub-paragraphs (a) and (b) above, then the text of the proposed changes will be submitted to the Association for its approval prior to the execution of such contract or issuance of such letter of intent. (d) One conformed copy of each such contract or letter of intent will be sent to the Association promptly after 17 its issuance or execution and prior to the date of the first application for withdrawal of proceeds of the Credit in respect of any payment thereunder. 3. In respect of any contract for the supply of such goods expected to cost not more than the equivalent of US$50,000, a summary of bids or quotations received, the analysis thereof and the recommendation thereon, together with a copy of the proc<'s-verbal of the public opening of the bids, will be submitted to the Association at the time the award is made. A copy of each such contract will be furnished to the Association promptly after its execution and prior to the submission to the Association of the first application for withdrawal of proceeds of the Credit in respect of any payment thereunder. 4. Pursuant to part 2.8 of the Guidelines referred to in Section 3.02 of this Agreement, the Association agrees that where any bid is submitted by any manufacturer, located in the territories of the Borrower, of equipment, materials or supplies manufactured or processed to a sub- stantial e-Atent in the territories of the Borrower as de- termined by the Association (Local Bid), the following rules shall be observed for the purpose of comparing such Local Bid, as thus defined, to any bid other than a Local Bid (Foreign Bid): (a) All customs duties and similar taxes on the im- portation of the goods offered shall first be deducted from the total of each competing Foreign Bid; (b) The portion of each competing Foreign Bid repre- senting the c.i.f. landed price of the goods shall then be increased by 105% thereof or the rate of such duties, as applicable to non-exempt purchasers in the territories of the Borrower for the importation of such goods, whichever is lower; (c) The resulting figure shall be deemed to be the com- parison price of the Foreign bid; and 18 (d) For the purpose of determining the lowest evaluated bid under part 3.9 of Fach Guidelines, such com- parison price of the Foreign Bid, after converting it into Rupiahs at the Bonus Export exchange rate which prevailed 30 days prior to the date on which bidding was closed, shall then be compared with the price of the goods offered in the competing Local Bid. (e) In cases where an award of a contract based on a Local Bid is recommended, the analysis of bids shall state the rate of duties which would be applicable to a non-exempt purchaser for the importation of such goods. 5. Pursuant to part 1.1 of the Guidelines, it is agreed that the procurement of replacement spare parts and com- poneuts for equipment utilized in or procured for the Proj- ect may be made without resort to international competi- tive bidding. In lieu thereof, the following procedure shall apply: quotations for the supply of such items will be re- quested from more than one competing supplier, where possible. Lists of such items to be procured, indicating the quotations received and the proposed suppliers thereof, will be sent to the Association periodically for its approval. A conformed copy of each purchase agreement relating to such procurement shall be sent to the Association promptly after its execution and prior to the date of the first applica- tion for withdrawal of proceeds of the Credit in respect thereof.