Development Credit Agreement

Transcription

1 Public Disclosure Authorized CREDIT NUMBER 480 IND CONFORMED COPY Public Disclosure Authorized Development Credit Agreement (Fisheries Credit Project).. BETWEEN Public Disclosure Authorized REPUBLIC OF INDONESIA AND INTERNATIONAL DEVELOPMENT ASSOCIATION Public Disclosure Authorized DATED JUNE 14, 1974

2 CONFORMED COPY CREDIT NUMBER 480 IND Development Credit Agreement (Fisheries Credit Project) BETWEEN REPUBLIC OF INDONESIA AND INTERNATIONAL DEVELOPMENT ASSOCIATION OATED JUNE 14, 1974

3 DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated June 14, 1974, between REPUBLIC OF INDONESIA (hereinafter called the Borrower) and INTERNATIONAL DEVELOPMENT ASSOCIATION (hereinafter called the Association). WHEREAS (A) The Borrower has requested the Association to assist in the financing of the Project described in Schedule 2 to this Agreement by extending the Credit as hereinafter provided; (B) The Project will be carried out in part by P. N. Perikani Maluku and in part by Bank Rakyat Indonesia with the Borrower's assistance and, as part of such assistance, the Borrower will make available to P. N. Perikani Maluku and to Bank Rakyat Indonesia the proceeds of the Credit as hereinafter provided, except the proceeds of the Credit which relate to the services of the consultants referred to in Section 3.02(a) of this Agreement; and (C) The Association is willing to make the Credit available upon the terms and conditions set forth hereinafter and in a project agreement of even date herewith between the Association and Bank Rakyat Indonesia; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I General Conditions; Definitions Section The parties to this Agreement accept all the provisions of the General Conditions Applicable to Development Credit Agreements of the Association, dated January 31, 1969, with the same force and effect as if they were fully set forth herein, subject, however, to the following modifications thereof (said General Conditions Applicable to Development Credit Agreements of the Association, as so modified, being hereinafter called the General Conditions): (a) (b) Section 5.01 is deleted; Section 6.02(h) is deleted and Section 6.02(i) becomes 6.02(h); and (c) In Section 8.02 the words "or the Project Agreement" are added after the words "the Development Credit Agreement".

4 4 Section Wherever used in this Agreement, unless the context otherwise requires, the several terms defined in the General Conditions have the respective meanings therein set forth and the following additional terms have the following meanings: (a) "BRI" means Bank Rakyat Indonesia, established by and operating under Law No. 21/1968 of the Borrower, and any successor or successors thereto; (b) "PNM" means P. N. Perikani Maluku, established by Law No. 50/1961 and operating under Law No. 19/1960 of the Borrower, as such Laws have been amended from time to time; (c) "DGF" means the Directorate General of Fisheries of the Borrower; (d) "Project Agreement" means the agreement between the Association and BRI of even date herewith, as the same may be amended from time to time, and such term includes all schedules to the Project Agreement; (e) "BRI Subsidiary Loan Agreement" means the agreement to be entered into between the Borrower and BRI pursuant to Section 3.0 1(d) of this Agreement, as the same may be amended from time to time, and such term includes all schedules to the BRI Subsidiary Loan Agreement, if any; (f) "PNM Subsidiary Loan Agreement" means the agreement to be entered into between the Borrower and PNM pursuant to Section 3.01(d) of this Agreement, as the same may be amended from time to time, and such term includes all schedules to the PNM Subsidiary Loan Agreement, if any; (g) "Fisheries Cooperative" means a cooperative established and operating under Law No. 12/1967 of the Borrower, as the same may be amended from time to time, for the purpose of carrying out fishing activities; (h) "Sub-loan" means a loan made or proposed to be made by BRI to a fisherman, a Fisheries Cooperative, a pond operator or a private entrepreneur to assist in financing an Investment Sub-project, as defined in paragraph (i) of this Section; (i) "Investment Sub-project" means an investment by a Sub-borrower for the purpose of carrying out part of the Project; (j) "Skipjack Sub-borrower" means a fisherman, a Fisheries Cooperative or a private entrepreneur to which BRI proposes to make or has made a Sub-loan to assist in financing an Investment Sub-project under Part B(i) of the Project;

5 5 (k) "Sub-borrower" means a fisherman, a Fisheries Cooperative, a pond operator or a private entrepreneur to which BRI proposes to make or has made a Sub-loan, and includes a Skipjack Sub-borrower; and (1) "Guidelines" means the Guidelines for Procurement under World Bank Loans and IDA Credits, published by the Bank in April 1972, as revised in October ARTICLE II The Credit Section The Association agrees to lend to the Borrower, on the terms and conditions in the Development Credit Agreement set forth or referred to, an amount in various currencies equivalent to six million five hundred thousand dollars ($6,500,000). Section The amount of the Credit may be withdrawn from the Credit Account in accordance with the provisions of Schedule 1 to this Agreement, as such Schedule shall be amended from time to time, for expenditures made (or, if the Association shall so agree, to be made) in respect of the reasonable cost of goods and services required for the Project and to be financed under the Development Credit Agreement; provided, however, that, except as the Associatioil shall otherwise agree, no withdrawal shall be made on account of expenditures in the territories of any country which is not a member of the Bank (other than Switzerland) or for goods produced in, or services supplied from, such territories. Section Except as the Association shall otherwise agree: (i) (ii) the goods and services (other than the services of consultants) required for the Project and to be financed out of the proceeds of the Credit shall be procured on the basis of international competition under procedures consistent with the Guidelines, and in accordance with, and subject to, the provisions set forth or referred to in Schedule 3 to this Agreement; and the Borrower shall cause DGF to carry out the obligations of DGF set forth or referred to in Schedule 3 to this Agreement. Section The Closing Date shall be June 30, 1979 or such other date as shall be agreed between the Borrower and the Association.

6 6 Section The Borrower shall pay to the Association a service charge at the rate of three-fourths of one per cent (3/4 of 1%) per annum on the principal amount of the Credit withdrawn and outstanding from time to time. Section Service charges shall be payable semi-annually on April 15 and October 15 in each year. Section The Borrower shall repay the principal amount of the Credit in semi-annual installments payable on each April. 15 and October 15 commencing October 15, 1984 and ending April 15, 2024, each installment to and including the installment payable on April 15, 1994 to be one-half of one per cent (1/2 of 1%) of such principal amount, and each installment thereafter to be one and one-half per cent (1-1/2%) of such principal amount. Section The currency of the United States of America is hereby specified for the purposes of Section 4.02 of the General Conditions. Section (a) The Director General of Fisheries or such person or persons as he shall authorize is designated as representative of the Borrower for the purposes of taking any action required or permitted to be taken under the provisions of Section 2.02 of this Agreement and Article V of the General Conditions with respect to Categories 1 and 3 of Schedule 1 to this Agreement. (b) The Board of Managing Directors of BRI or such person or persons as the Board shall authorize is designated as representative of the Borrower for the purposes of taking any action required or permitted to be taken under the provisions of Section 2.02 of this Agreement and Article V of the General Conditions with respect to Category 2 of Schedule I to this Agreement. ARTICLE III Execution of the Project Section (a) The Borrower shall carry out Part C(ii) of the Project, cause PNM to carry out Part A of the Project and cause BRI to carry out Parts B, C(i) and (iii) and D of the Project with due diligence and efficiency and in confonrmity with appropriate administrative, agricultural, commercial, engineering and fisheries practices, and shall provide, or cause to be provided, promptly as needed, the funds, facilities, services and other resources required for the purpose. (a) (b) Without restricting or limiting its other obligations under paragraph of this Section:

7 7 (i) (ii) the Borrower shall ensure that sufficient liquid funds to cover the budgeted expenditures estimated by DGF to be required for Parts A and C(ii) of the Project, for the services of the consultants referred to in Section 3.02(a) of this Agreement, for the services of the extension officers referred to in Section 3.03(a) of this Agreement and for the training of the extension officers referred to in Section 3.03(b) of this Agreement during each calendar quarter shall be available for use by DGF not later than the fifteenth day of such quarter; and the Borrower and the Association shall review from time to time the effectiveness of the financial procedures under which the funds required for the Project are made available, including those described in paragraph (b)(i) of this Section, and the Borrower shall implement such procedures as the Borrower and the Association shall agree are necessary for the diligent and efficient carrying out of the Project. (c) In the event that PNM has insufficient liquid funds to carry out Part A of the Project or Fisheries Cooperatives have insufficient liquid funds available to contribute to their respective parts of the Sub-loans as specified in the applications for Sub-loans which are approved by BRI, the Borrower shall make arrangements satisfactory to the Association to provide PNM or Fisheries Cooperatives with such funds, as required. (d) The Borrower shall relend part of the proceeds of the Credit to PNM under a subsidiary loan agreement to be entered into between the Borrower and PNM under terms and conditions which shall have been approved by the Association and part of the proceeds of the Credit to BRI under a subsidiary loan agreement to be entered into between the Borrower and BRI under terms and conditions which shall have been approved by the Association. (e) Without restricting or limiting its other obligations under this Agreement, the Borrower shall cause: (i) (ii) BRI to perform in accordance with the provisions of the Project Agreement and the BRI Subsidiary Loan Agreement all the obligations therein set forth, and PNM to perform in accordance with the provisions of the PNM Subsidiary Loan Agreement all the obligations therein set forth,

8 8 and shall take or cause to be taken all action, including the provision of funds, facilities, services and other resources, necessary or appropriate to enable BRI and PNM to perform such obligations, and shall not take or permit to be taken any action which would prevent or interfere with such performance. (f) The Borrower shall exercise its rights under the BRI Subsidiary Loan Agreement and the PNM Subsidiary Loan Agreement in such manner as to protect the interests of the Borrower and the Association and to accomplish the purposes of the Credit, and except as the Association shall otherwise agree, the Borrower shall not assign, nor amend, abrogate or waive the BRI Subsidiary Loan Agreement or PNM Subsidiary Loan Agreement or any provision thereof. Section (a) Except as the Association shall otherwise agree, the Borrower shall cause DGF to employ consultants acceptable to the Association on terms and conditions satisfactory to the Association as follows: (i) within six months of the Effective Date, DGF shall employ: (A) (B) (C) a management consultant to assist in carrying out Part A of the Project; an electrical/mechanical engineer to assist in carrying out Parts A and C(iii) of the Project; and a naval architect/master boat builder to assist in carrying out Parts A, B(i) and D of the Project; and (ii) within six months of the Effective Date, DGF shall employ three fish pond development consultants to assist in carrying out Part C of the Project and in training the extension officers referred to in Section 3.03(a) of this Agreement. (b) The Borrower shall cause PNM to repay the Borrower for that portion of the services of the consultants referred to in paragraph (a)(i) of this Section which are allocated to PNM under arrangements satisfactory to the Association. (c) The Borrower shall cause PNM to appoint qualified counterpart staff to work with the consultants referred to in paragraph (a)(i) of this Section. (d) Except as the Association shall otherwise agree, the Borrower shall cause PNM to employ a qualified and experienced accountant to assist PNM in improving its accounting and reporting systems.

9 9 Section (a) The Borrower shall cause to be made available for Parts C(i) and (ii) of the Project, as required, such numbers of extension officers with requisite levels of training as shall be agreed between the Borrower and the Association. (b) The Borrower shall prepare and implement a training program satisfactory to the Association for the extension officers referred to in paragraph (a) of this Section. Section The Borrower shall cause DGF to assist in coordinating and supervising the implementation of the Project and shall cause DGF to employ full-time a competent and experienced senior officer assisted by adequate and competent supporting staff for this purpose. Section (a) The Borrower shall cause PNM to insure, or make adequate provision for the insurance of, the imported goods to be financed out of the proceeds of the Credit with respect to Part A of the Project against hazards incident to the acquisition, transportation and delivery thereof to the place of use or installation, and for such insurance any indemnity shall be payable in a currency freely usable by PNM to replace or repair such goods. (b) Except as the Association shall otherwise agree, the Borrower shall cause all goods and services financed out of the proceeds of the credit relating to Part A of the Project to be used exclusively for the Project. Section (a) The Borrower shall cause PNM to furnish to the Association, promptly upon their preparation, the plans, specifications, reports, contract documents and construction and procurement schedules for Part A of the Project, and any material modifications thereof or additions thereto, in such detail as the Association shall reasonably request. (b) The Borrower: (i) shall cause PNM to maintain separate records adequate to record the progress of Part A of the Project (including the cost thereof) and to identify the goods and services financed out of the proceeds of the Credit relent to it by the Borrower and out of its own funds, and to disclose the use thereof in Part A of the Project; (ii) shall cause PNM to enable the Association's accredited representatives to examine Part A of the Project, the goods financed out of the proceeds of the Credit relent to it by the Borrower and out of its own funds, and any relevant records and documents; and (iii) shall cause PNM to furnish, to the Association all such information as the Association shall reasonably request concerning Part A of the Project, the expenditure of the proceeds of the Credit relent to it by the Borrower and the goods and services financed out of such proceeds and out of its own funds.

10 10 Section Except as the Association shall otherwise agree, the Borrower shall cause PNM to acquire a suitable site on Ambon in order to carry out Part A of the Project and shall cause PNM to furnish to the Association, promptly after such acquisition, evidence satisfactory to the Association that such site is available for purposes related to the Project. ARTICLE IV Other Covenants Section (a) The Borrower shall cause PNM to maintain records adequate to reflect in accordance with consistently maintained appropriate accounting practices the operations and financial resources and expenditures of PNM. (b) The Borrower shall cause PNM to: (i) have its accounts and financial statements (balance sheets, statements of income and expenses and related statements) for each fiscal year audited, in accordance with appropriate auditing principles consistently applied, by independent auditors acceptable to the Association; (ii) furnish to the Association as soon as available, but in any case not later than four months after the end of each such year, (A) certified copies of such financial statements for such year as so audited and (B) the report of such audits by said auditors, of such scope and in such detail as the Association shall have reasonably requested; and (iii) furnish to the Association such other information conc',rning the accounts and financial statements of PNM and the audit thereof as the jissociation shall from time to time reasonably request. Section The Borrower shall take such action as may be necessary, including but not limited to collecting skipjack tuna market information and facilitating negotiations with foreign buyers thereof, to assist PNM in making satisfactory marketing arrangements for the export of skipjack tuna. Section The Borrower shall cause a qualified and experienced person to be employed at all times as Chief Executive Director of PNM and before any such appointment is made, the Borrower shall cause the Association to be informed of the names, qualifications and experience of the persons being considered for such appointment and to be afforded a reasonable opportunity to exchange views on the qualifications and experience of the proposed appointees. Section The Borrower shall cause all demonstration ponds included in Part C(ii) of the Project to be adequately maintained and shall cause funds to be provided, as and when necessary, for this purpose.

11 11 Section The Borrower shall cause the Jepara Research Center to monitor the flow of pesticides into the fish ponds included in Parts C(i) and (ii) of the Project and shall institute, or cause to be instituted, such remedial action as may be necessary to control any adverse effects from such pesticides. Section Except as the Borrower and the Association shall otherwise agree, the Borrower shall cause PNM within the constraints of its freezing capacity to purchase all skipjack tuna suitable for export offered to PNM by Skipjack Sub-borrowers and to pay a price therefor which shall ensure that Skipjack Sub-borrowers are paid a price which is equal to a reasonable proportion of the sales price received by PNM in exporting such skipjack tuna. Section The Borrower shall cause DGF, in consultation with the Association, to establish and maintain an adequate program to monitor and evaluate the economic and financial benefits which result from the Project. Section The Borrower shall cause PNM to make arrangements with BRI satisfactory to the Association to facilitate the repayment of Sub-loans by Skipjack Sub-borrowers. ARTICLE V Consultation, Information and Inspection Section The Borrower and the Association shall cooperate fully to assure that the purposes of the Credit will be accomplished. To that end, the Borrower and the Association shall from time to time, at the request of either party: (a) exchange views through their representatives with regard to the performance of their respective obligations under the Development Credit Agreement, the performance by BRI of its obligations under the Project Agreement and, in respect of the Project, of the departments or agencies of the Borrower responsible for carrying out any part of the Project, and other matters relating to the purposes of the Credit; and (b) 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, including its balance of payments, and the external debt of the Borrower, of any of its political sibdivisions and of any agency of the Borrower or of any such political subdivision.

12 12 Section (a) The Borrower shall furnish or cause to be furnished to the Association all such information as the Association shall reasonably request concerning the administration, operations and financial condition of BRI and, in respect of the Project, of the departments or agencies of the Borrower responsible for carrying out any part of the Project. (b) The Borrower and the Association shall promptly inform each other of any condition which interferes with, or threatens to interfere with, the accomplishment of the purposes of the Credit, the maintenance of the service thereof, the performance by either of them of its obligations under the Development Credit Agreement, the performance by BRI of its obligations under the Project Agreement and the BRI Subsidiary Loan Agreement or the performance by PNM of its obligations under the PNM Subsidiary Loan Agreement. Section 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. ARTICLE VI Taxes and Restrictions Section The principal of, and service charges on, the Credit shall be paid without deduction for, and free from, any taxes imposed under the laws of the Borrower or laws in effect in its territories. Section The Development Credit Agreement and the Project Agreement shall be free from any taxes on or in connection with the execution, delivery or registration thereof, imposed under the laws of the Borrower or laws in effect in its territories. Section The payment of the principal of, and service charges on, the Credit shall be free from all restrictions, regulations, controls and moratoria of any nature imposed under the laws of the Borrower or laws in effect in its territories. ARTICLE VII Remedies of the Association Section If any event specified in Section 7.01 of the General Conditions or in Section 7.03 of this Agreement shall occur and shall continue for the period,

13 13 if any, therein set forth, then at any subsequent time during the continuance 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 declaration such principal and service charges shall become due and payable immediately, anything to the contrary in the Development Credit Agreement notwithstanding. Section For the purposes of Section 6.02 of the General Conditions, the following additional events are specified: (a) BRI shall have failed to perform any covenant, agreement or obligation of BRI under the Project Agreement. (b) Law No. 21/1968 of the Borrower shall have been amended, suspended, abrogated, repealed or waived in such a way as to materially and adversely affect the ability of BRI to carry out the covenants, agreements and obligations set forth in the Project Agreement. (c) The Borrower or any other authority having jurisdication shall have taken any action for the dissolution or disestablishment of PNM or for the suspension of its operations. Section For the purposes of Section 7.01 of the General Conditions, the following additional events are specified: (a) the event specified in paragraph (a) of Section 7.02 of this Agreement shall occur and shall continue for a period of 60 days after notice thereof shall have been given by the Association to the Borrower; and (b) the events specified in paragraphs (b) and (c) of Section 7.02 of this Agreement shall occur. ARTICLE VIII Effective Date; Termination Section The following events are specified as additional conditions to the effectiveness of the Development Credit Agreement within the meaning of Section 10.01(b) of the General Conditions: (a) The execution and delivery of the Project Agreement on behalf of BRI have been duly authorized or ratified by all necessary corporate and governmental action.

14 14 (b) The execution and delivery of the BRI Subsidiary Loan Agreement on behalf of fhe Borrower and BRI, respectively, have been duly authorized or ratified by all necessary corporate and governmental action. (c) The execution and delivery of the PNM Subsidiary Loan Agreement on behalf of the Borrower and PNM, respectively, have been duly authorized or ratified by all necessary corporate and governmental action. (d) Notwithstanding the provisions of Section 3.02(a)(i) and (ii) of this Agreement, at least one of the consultants referred to in Section 3.02(a)(ii) of this Agreement and the consultant referred to in Section 3.02(a)(i)(A) of this Agreement shall have been appointed and taken up their respective duties. (e) The budget of DGF with respect to the implementation of the Project up to March 31, 1975, has been approved by the Borrower and funds equivalent to at least $200,000 have been made available in accordance with the provisions of Section 3.01(b) of this Agreement. Section 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 opinions to be furnished to the Association: (a) That the Project Agreement has been duly authorized or ratified by, and executed and delivered on behalf of, BRI, and constitutes a valid and binding obligation of BRI in accordance with its terms. (b) That the BRI Subsidiary Loan Agreement has been duly authorized or ratified by, and executed and delivered on behalf of, the Borrower and BRI, respectively, and constitutes a valid and binding obligation of the Borrower and BRI in accordance with its terms. (c) That the PNM Subsidiary Loan Agreement has been duly authorized or ratified by, and executed and delivered on behalf of, the Borrower and PNM, respectively, and constitutes a valid and binding obligation of the Borrower and PNM in accordance with its terms. Section The date October 18, 1974 is hereby specified for the purposes of Section of the General Conditions. Section The obligations of the Borrower under Article IV of this Agreement and the provisions of Section 7.02 and Section 7.03 of this Agreement

15 15 shall cease and determine on the date on which the Development Credit Agreement shall terminate or on a date eighteen years after the date of this Agreement, whichever shall be the earlier. ARTICLE IX Representative of the Borrower; Addresses Section 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 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 Jakarta, Indonesia Cable address: Ministry Finance Jakarta For the Association: International Development Association 1818 H Street, N.W. Washington, D.C United States of America Cable address: INDEVAS Washington, D.C.

16 16 IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, have caused this Agreement to be signed in their respective names and to be delivered in the District of Columbia, United States of America, as of the day and year first above written. REPUBLIC OF INDONESIA By /s/ Abdul Habir Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION By /s/ Raymond J. Goodman Acting Regional Vice President Asia

17 17 SCHEDULE 1 Withdrawal of the Proceeds of the Credit 1. The table below sets forth the Categories of items to be financed out of the proceeds of the Credit, the allocation of amounts of the Credit to each Category and the percentage of eligible expenditures so to be financed in each Category: Amount of the Credit Allocated %O of (Expressed in Expenditures Category Dollar Equivalent) to be Financed 1. Civil works, 2,000,000 50% of total equipment, mate- expenditures rials and vessels for Part A of the Project 2. Sub-loans for: 3,500,000 58% of amounts disbursed (a) (b) Part B of the Project Parts C(i) and (iii) and D of the Project 3. Consultants' 60(,, % of foreign services expenditures or 100% of local expenditures (salaries only) 4. Unallocated 400,000 TOTAL 6,500,000

18 18 2. For the purposes of this Schedule: (a) the term "foreign expenditures" means expenditures for goods produced in, or services supplied from, the territories, and in the currency, of any country other than the Borrower; (b) the term "local expenditures" means expenditures in the currency of the Borrower, or for goods produced in, or services supplied from, the territories of the Borrower; and (c) the term "total expenditures" means the aggregate of foreign and local expenditures. 3. Notwithstanding the provisions of paragraph 1 above, no withdrawals shall be made in respect of: (a) expenditures prior to the date of this Agreement; (b) Category 1 unless (i) the accountant referred to in Section 3.02(d) of this Agreement shall have been appointed and (ii) the site referred to in Section 3.07 of this Agreement shall have been acquired; (c) Category 2(a) unless the site referred to in Section 3.07 of this Agreement shall have been acquired; and (d) payments for taxes imposed under the laws of the Borrower or laws in effect in its territories on goods or services, or on the importation, manufacture, procurement or supply thereof. To the extent that the amount represented by the percentage set forth in the third column of the table in paragraph I above in respect of any Category would exceed the amount payable net of all such taxes, such percentage shall be reduced to ensure that no proceeds of the Credit will be withdrawn on account of payments for such taxes. 4. Notwithstanding the allocation of an amount of the Credit set forth in the second column of the table in paragraph 1 above: (a) if the estimate of the expenditures under any Category shall decrease, the amount of the Credit then allocated to such Category and no longer required therefor will be reallocated by the Association by increasing correspondingly the unallocated amount of the Credit; (b) if the estimate of the expenditures under any Category shall increase, the percentage set forth in the third column of the table in paragraph 1 above

19 19 in respect of such expenditures shall be applied to the amount of such increase, and a corresponding amount will be allocated by the Association, at the request of the Borrower, to such Category from the unallocated amount of the Credit, subject, however, to the requirements for contingencies, as determined by the Association, in respect of any other expenditures; and (c) if the Association shall have reasonably determined that the procurement of any item in any Category is inconsistent with the procedures set forth or referred to in Section 2.03 of this Agreement, no expenditures for such item shall be financed out of the proceeds of the Credit and the Association may, without in any way restricting or limiting any other right, power or remedy of the Association under the Development Credit Agreement, by notice to the Borrower, cancel such amount of the Credit as in the Association's reasonable opinion, represents the amount of such expenditures which would otherwise have been eligible for financing out of the proceeds of the Credit. 5. Notwithstanding the percentages set forth in the third column of the table in paragraph I above, if the estimate of total expenditures under Category 1 shall increase and no proceeds of the Credit are available for reallocation to such Category, the Association may, by notice to the Borrower, adjust the percentage then applicable to such expenditures in order that further withdrawals under such Category may continue until all expenditures thereunder shall have been made.

20 20 SCHEDULE 2 Description of the Project The Project is designed to accelerate the Borrower's program to increase production from its fisheries resources for both domestic consumption and export and to provide increased employment opportunities and incomes for fishermen and their families. The Project is in part the improvement and expansion of the facilities and operations of PNM and in part a lending program to be undertaken by BRI in cooperation with DGF. It consists of the following Parts: Part A: PNM (i) Purchase and utilization by PNM of: (a) about ten 30-gross ton pole and line fishing boats for skipjack tuna fishing near Ambon; and (b) two I 00-gross ton carrier vessels to support pole and line fishing boats engaged in skipjack tuna fishing near Ambon; (ii) Construction and equipping by PNM of: (a) (b) an icemaking, freezer and storage facility to preserve the quality of the skipjack tuna catch, two small jetties, one each at Hitu and Waai, to supply provisions for pole and line fishing boats engaged in skipjack tuna fishing; (c) one jetty for loading and unloading carrier vessels and refrigerator vessels loading skipjack tuna for export; and (d) repair facilities, including a workshop and a slipway, for pole and line fishing boats engaged in skipjack tuna fishing and carrievessels; and (iii) Purchase and utilization by PNM of nets for the purpose of supplying bait to the pole and line fishing boats referred to in paragraph (i)(a) of this Part.

21 21 Part B: (i) (ii) Part C: Skipjack Tuna Sub-borrowers Financial assistance through Sub-loans from BRI to Fisheries Cooperatives and private entrepreneurs for the purchase and utilization of about ten 30-gross ton pole and line fishing boats for skipjack tuna fishing near Ambon; and Financial assistance through Sub-loans from BRI to Fisheries Cooperatives and fishermen at Ambon engaged in bait fishing for the purchase and utilization of nets. Fish Pond Sub-borrowers (i) Financial assistance through Sub-loans from BRI to pond operators in order to increase production of milkfish and shrimp from about 15,000 hectares of smallholder brackish water ponds in South Sulawesi and along the northern coast of Java by: (a) introducing improvements to pond construction such as levelling of ponds, relocating and increasing the number of sluice gates and strengthening and constructing dikes and ditches; (b) increasing the use of fertilizers and pesticides; and (c) initial stocking of ponds with fish fry and shrimp larvae and introducing new methods of fish stocking management; (ii) (iii) Establishment by DGF of a total of about forty-five ponds, one to five hectares in size, in South Sulawesi and along the northern coast of Java in order to demonstrate the pond construction improvements, the use of fertilizers and pesticides and the fish stocking management methods referred to in paragraph (i) of this Part; and Financial assistance through Sub-loans from BRI to Fisheries Cooperatives and private entrepreneurs for the construction and equipping of about nine ice plants, each designed to produce at least five tons of ice per day, including a storage capacity of at least fifteen tons of ice, to preserve the quality of fish and shrimp obtained under Parts C and D of the Project.

22 22 Part D: Trawler Sub-borrowers Financial assistance through Sub-loans from BRI to Fisheries Cooperatives and private entrepreneurs for the purchase and utilization of about twenty-five 30-gross ton trawlers for use in catching fish and shrimp primarily in the Java Sea. The Project is expected to be completed by June 30, 1978.

23 23 SCHEDULE 3 Procurement Part A. Responsibility for Procurement 1. The civil works and equipment included in Part A(ii) of the Project shall be procured under a single contract by PNM. 2. (a) Vessel wooden hulls, vessel engines, fishing gear and other equipment shall be procured from suppliers,prequalified by DGF pursuant to the provisions of paragraph 4 of this Part of this Schedule, by PNM under Part A(i) of the Project and by the relevant Sub-borrowers through BRI under Parts B(i) and D of the Project. (b) Without restricting or limiting any obligations under the provisions of sub-paragraph (a) of this paragraph, vessel wooden hulls shall be procured by PNM and the relevant Sub-borrowers only from shipyards in Indonesia which have been prequalified by DGF pursuant to all provisions of paragraph 4 of this Part, except for the obligation therein to transmit copies of invitations to bid to representatives of member countries of the Bank and Switzerland.. 3. The nets included in Part A(iii) of the Project shall be procured by PNM, and the nets included in Part B(ii) of the Project, the materials, equipment and services related to the improvements to the fish ponds included in Part C(i) of the Project and the ice plants included in Part C(iii) of the Project shall be procured by the relevant Sub-borrowers through BRI. 4. If bidders or suppliers are required to prequalify for any contract included in the Project, DGF shall, before qualification is invited, inform the Association in detail of the procedure to be followed, which shall include, inter alia, the transmittal of copies of invitations to bid to representatives of member countries of the Bank and Switzerland, and shall introduce such modifications in said procedure as the Association shall reasonably request. The list of prequalified bidders or suppliers shall be furnished by DGF to the Association as soon as such list is completed. Part B. Contracts Governed by Guidelines With respect to the contract for the civil works and equipment included in Part A(ii) of the Project and to the contracts for ice plants included in Part C(iii) of the Project:

24 24 (a) With respect to the contracts for ice plants incliled in Part C(iii) of the Project, all references in paragraphs (b) to (e) of this Part to PNM's obligation to inform the Association of, and furnish the Association with, various documentation shall include an obligation of BRI to inform the Association of, and furnish the Association with, the same documentation. (b) Before bids are invited, PNM shall furnish to the Association, for its comments, the text of the invitations to bid and the specifications and other bidding documents, together with a description of the advertising procedures to be followed for the bidding, and shall make such modifications in the said documents or procedures as the Association shall reasonably request. Any further modification to the bidding documents shall require the Association's concurrence before it is issued to the prospective bidders. (c) After bids have been received and evaluated, PNM shall, before a final decision on the award is made, inform the Association of the name of the bidder to whom it intends to award the contract and shall furnish to the Association, in sufficient time for its review, a detailed report on the evaluation and comparison of the bids received, together with the reasons for the intended award. The Association shall, if it determines that the intended award would be inconsistent with the procedures set forth or referred to in Section 2.03 of this Agreement, promptly inform the Borrower, and state the reasons for such determination. (d) The terms and conditions of the contract shall not, without the Association's concurrence, materially differ from those on which bids were asked. (e) Two conformed copies of the contract shall be furnished to the Association promptly after its execution and prior to the delivery to the Association of the first application for withdrawal of funds from the Credit Account in respect of any such contract. Part C Contracts Governed by Procedures Other than the Guidelines 1. (a) Contracts for vessel wooden hulls included in Parts A(i), B(i) and D of the Project shall be awarded on the basis of local competition among the shipyards prequalified pursuant to Part A of this Schedule. (b) Before a final decision is made on the award of any contract referred to in paragraph 1(a) of this Part with respect to Part A(i) of the Project, PNM shall inform the Association of the name of the bidder to whom it intends to award the contract and shall furnish to the Association, in sufficient time for its review, a detailed report on the evaluation and comparison of the bids received,

25 25 together with the reasons for the intended award. The Association shall, if it determines that the intended award would be inconsistent with the procedures set forth or referred to in Section 2.03 of this Agreement, promptly inform the Borrower, and state the reasons for such determination. (c) The terms and conditions of any contract included in Part C(i)(b) of this Schedule shall not, without the Association s concurrence, materially differ from those on which bids were asked. (d) Two conformed copies of each contract included in Part C(i)(b) of this Schedule shall be furnished to the Association promptly after its execution and prior to the delivery to the Association of the first application for withdrawal of funds from the Credit Account in respect of any such contract. 2. (a) Contracts for vessel engines and fishing gear and other equipment shall be awarded on the basis of local competition, provided, however, that such competition shall include, but not be limited to, the solicitation of not less than three price quotations. (b) Without restricting its obligations under paragraph 4 of Part A of this Schedule, DGF shall: (i) advertise internationally the intended procurement of vessel engines and fishing gear and other equipment in order that suppliers not yet established or represented in Indonesia may have an opportunity to become so established or represented and to make provision in Indonesia for adequate spare parts inventories and after-sale service facilities; and (ii) not less than three months after the advertisement referred to in sub-paragraph (b)(i) above has been completed for each respective type of equipment. prequalify suppliers of such equipment from those established or represented in Indonesia pursuant to the provisions of paragraph 4 of Part A of this Schedule. 3. (a) Materials, equipment and services for the improvements to the fish ponds included in Part C(i) of the Project and nets included in Part B(ii) of the Project shall be procured pursuant to procedures which BRI shall reasonably establish.

26 26 (b) Nets included in Part A(iii) of the Project shall be procured pursuant to procedures which PNM shall reasonably establish. 4. To the extent possible, PNM shall bulk, and BRI shall bulk or cause to be bulked, contracts for the equipment referred to in paragraphs 1 and 2 of this Part.