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CONFORMED COPY
GRANT NUMBER TF 029453
Japanese Grant Agreement
(West Java and Jakarta Environmental Management Project)
between
REPUBLIC OF INDONESIA
And
INTERNATIONAL BANK FOR RECONSTRUCTION
AND DEVELOPMENT
As Administrator of Grant Funds
Provided by JAPAN
Dated September 23, 1996
GRANT NUMBER TF 029453
JAPANESE GRANT AGREEMENT
AGREEMENT, dated
September 23, 1996, between REPUBLIC OF INDONESIA (the 
Recipient)  and the INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (the Bank) 
acting as Administrator (the Administrator) of grant funds provided by JAPAN (Japan).
WHEREAS: (A) pursuant to a letter agreement dated July 30, 1990 between Japan 
and the Bank and International Development Association (the Association), Japan has 
requested the Bank and the Association, and the Bank and the Association have agreed, 
to administer grant funds to be made available by Japan for the financing of certain 
programs and projects supported by the Bank and the Association, as the case may be, 
in accordance with the provisions of such letter agreement;
WHEREAS: (B) Japan has agreed to make available to the Recipient a grant out of 
said grant funds (the Grant) to finance the cost of carrying out the technical 
assistance described in Schedule 2 to this Agreement (the Technical Assistance) on the 
terms and conditions hereinafter set forth;
NOW THEREFORE the parties hereto hereby agree as follows:
ARTICLE I
General Conditions; Definitions
Section 1.01. (a) The following provisions of the General Conditions Applicable 
to Loan and Guarantee Agreements of the Bank, dated January 1, 1985, with the 
modifications set forth in paragraph (b) of this Section (the General Conditions) 
constitute an integral part of this Agreement:
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(i)
Article 1;
(ii)
Sections 2.01 (1), (2), (3), (4), (6), (8), (9), (10), (11), (18) 
and (20), 2.02 and 2.03;
(iii)
Section 3.01;
(iv)
Section 4.01 and the first sentence of Section 4.09;
(v)
Article V;
(vi)
Sections 6.01, 6.02 (a), (c), (d), (e), (f) and (i), (k), 6.03, 
6.04 and 6.06;
(vii)
Section 8.01 (b);
(viii)Sections 9.01 (a) and (c), 9.04, 9.05, 9.06, 9.07, 9.08 and 9.09;
(ix)
Sections 10.01, 10.03 and 10.04; and
(x)
Article XI.
(b)
The General Conditions shall be modified as follows:
(i)
the term "Bank," wherever used in the General Conditions, other 
than in Sections 2.01 (8) and 6.02 (f) thereof and the last use of 
such term in Section 5.01 thereof, means the International Bank 
for Reconstruction and Development acting as Administrator of the 
Grant pursuant to the letter agreement between Japan and the Bank 
and the Association referred to in Recital (A) of this Agreement, 
except that in Section 6.02, the term "Bank" shall also include 
the International Bank for Reconstruction and Development acting 
in its own capacity;
(ii)
the term "Borrower," wherever used in the General Conditions, 
means the Recipient;
(iii)
the term "Loan Agreement," wherever used in the General 
Conditions, means this Agreement;
(iv)
the term "Loan," wherever used in the General Conditions, means 
the Grant;
(v)
the term "Loan Account," wherever used in the General Conditions, 
means the Grant Account, an account opened by the Administrator on 
its books in the name of the Recipient to which the amount of the 
Grant is credited;
(vi)
the term "Project," wherever used in the General Conditions, means 
the technical assistance described in Schedule 2 to this 
Agreement;
(vii)
Section 4.01 shall be modified to read:
"Withdrawals from the Grant Account shall be made in yen; provided, 
however, that if the expenditures to be financed out of the Grant have been 
paid or are payable in another currency, the Administrator shall, at the 
request of the Recipient, purchase such currency with the proceeds of such 
withdrawal."; and
(viii)the second sentence of Section 5.01 is modified to read:
"Except as the Bank and the Recipient shall otherwise agree, no 
withdrawals shall be made:
(a)
on account of expenditures in the territories of any country which is not 
a member of the Bank or for goods produced in, or services supplied from, such 
territories; or
(b) 
for the purpose of any payment to persons or entities, or for any import 
of goods, if such payment or import, to the knowledge of the Bank, is prohibited by a 
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decision of the United Nations Security Council taken under Chapter VII of the Charter 
of the United Nations".
Section 1.02. Wherever used in this Agreement, unless the context otherwise 
requires, the several terms defined in the General Conditions and in the Recitals to 
this Agreement have the respective meanings therein set forth; and the following 
additional terms have the following meanings:
(a) "Dollars" and "$" mean the currency of the United States of America; and
(b) "Special Account" means the account referred to in Section 2.02 (b) of this 
Agreement.
ARTICLE II
The Grant
Section 2.01. The Administrator agrees to make available to the Recipient, on 
the terms and conditions set forth or referred to in this Agreement, the Grant in an 
amount of one million dollars ($1,000,000).
Section 2.02. (a) The amount of the Grant may be withdrawn from the Grant 
Account in accordance with the provisions of Schedule 1 to this Agreement, as such 
Schedule may be amended from time to time by agreement between the Recipient and the 
Administrator, for expenditures made (or, if the Administrator shall so agree, to be 
made) in respect of the reasonable cost of carrying out the Project and to be financed 
out of the Grant.
(b) The Recipient may, for the purposes of the Project, open and maintain in 
United States dollars a special deposit account in Bank of Indonesia on terms and 
conditions satisfactory to the Administrator. Deposits into, and payments out of, the 
Special Account shall be made in accordance with the provisions of Schedule S to this 
Agreement.
Section 2.03. The Closing Date shall be December 30, 1998 or such later date as 
the Administrator shall establish. The Administrator shall promptly notify the 
Recipient of such later date.
ARTICLE III
Execution of the Project
Section 3.01. (a) The Recipient shall carry out the Project with due diligence 
and efficiency and in conformity with appropriate environmental, social, sanitation, 
administrative and financial practices, and shall provide, promptly as needed, the 
funds, facilities, services and other resources required for the Project.
(b) Without limitation upon the provisions of paragraph (a) of this Section and 
except as the Recipient and the Administrator shall otherwise agree, the Recipient 
shall carry out the Project in accordance with the Implementation Program set forth in 
Schedule 3 to this Agreement.
Section 3.02. Except as the Administrator shall otherwise agree, procurement of 
consultants' services required for the Project and to be financed out of the Grant 
shall be governed by the provisions of Schedule 4 to this Agreement.
Section 3.03. (a) The Recipient shall maintain or cause to be maintained records 
and accounts adequate to reflect in accordance with sound accounting practices the 
operations, resources and expenditures in respect of the Project of the departments or 
agencies of the Recipient responsible for carrying out the Project or any part 
thereof.
(b)
The Recipient shall:
(i)
have the records and accounts referred to in paragraph (a) of 
this Section for each fiscal year audited, in accordance with 
appropriate auditing principles consistently applied, by 
independent auditors acceptable to the Administrator;
(ii)
furnish to the Administrator as soon as available, but in any case 
not later than six months after the end of each such year, the 
report of such audit by said auditors, of such scope and in such 
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detail as the Administrator shall have reasonably requested; and
(iii)
furnish to the Administrator such other information concerning 
said records and accounts and the audit thereof as the 
Administrator shall from time to time reasonably request.
(c)
For all expenditures with respect to which withdrawals from the Grant 
Account were made on the basis of statements of expenditure, the Recipient shall:
(i)
maintain or cause to be maintained, in accordance with paragraph 
(a) of this Section, records and accounts reflecting such 
expenditures;
(ii)
retain, until at least one year after the Administrator has 
received the audit report for the fiscal-year in which the last 
withdrawal from the Grant Account was made, all records 
(contracts, orders, invoices, bills, receipts and other documents) 
evidencing such expenditures;
(iii)
enable the Administrator's representatives to examine such 
records; and
(iv)
ensure that such records and accounts are included in the annual 
audit referred to in paragraph (b) of this Section and that the 
report of such audit contains a separate opinion by said auditors 
as to whether the statements of expenditure submitted during such 
fiscal year, together with the procedures and internal controls 
involved in their preparation, can be relied upon to support the 
related withdrawals.
Section 3.04. For the purposes of Section 9.08 of the General Conditions and 
without limitation thereto, the Recipient shall:
(a)
prepare, on the basis of the guidelines acceptable to the Administrator, 
and furnish to the Administrator not later than six (6) months after the Closing Date 
or such later date as may be agreed for this purpose between the Recipient and the 
Administrator, a plan for the future operation of the Project; and
(b) 
afford the Administrator a reasonable opportunity to exchange views and 
the Recipient on said plan.
ARTICLE IV
Effectiveness; Termination
Section 4.01. This Agreement shall become effective upon its execution by the 
parties hereto.
Section 4.02. This Agreement shall continue in effect until the Grant has been 
fully disbursed and the parties to this Agreement have fulfilled all their obligations 
hereunder.
ARTICLE V
Representation
Section 5.01. The Minister of Finance of the Recipient is designated as 
representative of the Recipient for the purposes of Section 11.03 of the General 
Conditions.
Section 5.02. The following addresses are specified for the purposes of Section 
11.01 of the General Conditions:
For the Recipient:
Ministry of Finance
c/o Directorate General of Budget
Jalan Lapangan Banteng Timur 2-4
P. O. Box 2458
.
Jakarta 10710
Indonesia
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Cable address:
Telex:
FINMINISTRY
45799 DJMLN-LA
JAKARTA
44319 DEPKEU-IA
For the Administrator:
International Bank for
  Reconstruction and Development
1818 H Street, N.W.
Washington, D.C. 20433
United States of America
Cable address:
Telex:
INTBAFRAD
23 (MCI), or
Washington, D.C
45 (MCI)
IN WITNESS WHEREOF, the parties hereto, acting through their duly authorized 
representatives, have caused this Agreement to be signed in their respective names as 
of the day and year first above written.
REPUBLIC OF INDONESIA
By /s/ 
Authorized Representative
INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT
   as Administrator of the Grant
By /s/ Russell Cheetham
Regional Vice President
East Asia and Pacific
SCHEDULE 1
Withdrawal of the Grant
1.
The table below sets forth the Categories of items to be financed out of the 
Grant, the allocation of the amount of the Grant to each Category and the percentage 
of expenditures for items so to be financed in each Category:
Amount of the
Grant Allocated
   % of
  (Expressed in
Expenditures
Category
Dollar Equivalent
to be Financed
(1)
Consultants' services
150,000
100%
under Part A of the
Project
(2)
Consultants' Services
850,000
100%
under Part B of the
Project
TOTAL
    1,000,000
2.
Notwithstanding the provisions of paragraph 1 above, no withdrawals shall be 
made in respect of payments made for expenditures prior to the date of this Agreement.
3.
The Administrator may require withdrawals from the Grant Account to be made on 
the basis of statements of expenditure, for expenditures under contracts, under such 
terms and conditions as the Administrator shall specify by notice to the Recipient 
for:
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(a)
the employment of consulting firms estimated to cost less than one 
hundred thousand dollars ($100,000) equivalent; and
(b)
the employment of individual consultants estimated to cost less than 
fifty thousand dollars ($50,000) equivalent.
SCHEDULE 2
Description of Technical Assistance
The objective of the Technical Assistance is to assist the Recipient in the 
preparation of a proposed West Java and Jakarta Environmental Management Project 
(hereinafter referred to as "the Project").
The Technical Assistance consists of the following parts:
Part A:
Discussion Document
Compilation, review and synthesis of all relevant environmental reports and, on 
the basis of such review, preparation of a brief Discussion Document aimed at the 
dissemination of key issues and development of a social strategy and public awareness 
program, through public review and inter-agency discussion.
Part B: 
Detail Project Preparation
Preparation of a detailed implementation timetable, budgeting estimates and 
assignment of implementation responsibilities to relevant agencies of the Recipient 
identified to carry out the waste management; sanitation; air pollution; industrial 
waste minimization; and environmental education components proposed to be included in 
the Project.
SCHEDULE 3
Implementation Program
Except as the Administrator and the Recipient shall otherwise agree, the 
Technical Assistance shall be carried out in accordance with the following timetable:
ACTIVITY
EXPECTED DATE
1.
Mobilization of consultants and
start-up date for:
(a)
Part A of the Technical
By not later than December 1, 1996
Assistance
(b)
Part B of the Technical
By not later than March 1, 1997
Assistance
2.
Submission of preliminary
(conceptual) reports for:
(a)
Part A of the Technical
By not later than February 1, 1997
Assistance
(b)
Part B of the Technical
By not later than May 1, 1997
Assistance
3.
Submission of draft reports
By not later than August 1, 1997
4.
Completion of final
By not later than March 1, 1998.
reports
5.
Joint review of reports with
By not later than July 1, 1998
Bank (workshop)
SCHEDULE 4
Consultants' Services
Section I
Employment of Consultants
1.
Consultants' services shall be procured under contracts awarded in accordance 
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with the provisions of the "Guidelines for the Use of Consultants by World Bank 
Borrowers and by the World Bank as Executing Agency" published by the Bank in August 
1981 (the Consultant Guidelines). For complex, time-based assignments, such contracts 
shall be based on the standard form of contract for consultants' services issued by 
the Bank, with such modifications as shall have been agreed by the Administrator. 
Where no relevant standard contract documents have been issued by the Bank, other 
standard forms acceptable to the Administrator shall be used.
2.
Notwithstanding the provisions of paragraph 1 of this Section, the provisions of 
the Consultant Guidelines requiring prior Administrator review or approval of budgets, 
short lists, selection procedures, letters of invitation, proposals, evaluation 
reports and contracts, shall not apply to:
(a) contracts for the employment of consulting firms estimated to cost less than 
one hundred thousand dollars ($100,000) equivalent each; or
(b) contracts for the employment of individual consultants estimated to cost 
less than fifty thousand dollars ($50,000) equivalent each. However, said exceptions 
to prior Administrator review shall not apply to:
(i)
the terms of reference for such contracts;
(ii)
single-source selection of consulting firms;
(iii)
assignments of a critical nature, as reasonably determined by the 
Administrator;
(iv)
 amendments to contracts for the employment of consulting firms 
raising the contract value to one hundred thousand dollars 
($100,000) equivalent or above; or
(v)
amendments to contracts for the employment of individual 
consultants raising the contract value to fifty thousand dollars 
($50,000) equivalent or above.
SCHEDULE 5
Special Account
1. 
For the purposes of this Schedule:
(a) the term "eligible Categories" means Categories (1) and (2) set forth in the 
table in paragraph 1 of Schedule 1 to this Agreement;
(b) the term "eligible expenditures" means expenditures in respect of the 
reasonable cost of goods and services required for the Project and to be financed out 
of the amount of the Grant allocated from time to time to the eligible Categories in 
accordance with the provisions of Schedule 1 to this Agreement; and
(c) the term "Authorized Allocation" means an amount equivalent to $250,000 to 
be withdrawn from the Grant Account and deposited into the Special Account pursuant to 
paragraph 3 (a) of this Schedule.
2.
Payments out of the Special Account shall be made exclusively for eligible
expenditures in accordance with the provisions of this Schedule.
3. 
After the Administrator has received evidence satisfactory to it that the 
Special account has been duly opened withdrawals of the Authorized Allocation and 
subsequent withdrawals to replenish the Special Account shall be made as follows:
(a) For withdrawals of the Authorized Allocation, the Recipient shall furnish to 
the Administrator a request or requests for deposit into the Special Account of an 
amount or amounts which do not exceed the aggregate amount of the Authorized 
Allocation. On the basis of such request or requests, the Administrator shall, on 
behalf of the Recipient, withdraw from the Grant Account and deposit in the Special 
Account such amount or amounts as the Recipient shall have requested.
(b)
(i)
For replenishment of the Special Account, the Recipient shall 
furnish to the Administrator requests for deposits into the 
Special Account at such intervals as the Administrator shall 
specify.
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(ii)
Prior to or at the time of each such request, the Recipient shall 
furnish to the Administrator the documents and other evidence 
required pursuant to paragraph 4 of this Schedule for the payment 
or payments in respect of which replenishment is requested. On the 
basis of each such request, the Administrator shall, on behalf of 
the 
Recipient, withdraw from the Grant Account and deposit into 
the Special Account such amount as the Recipient shall have 
requested and as shall have been shown by said documents and other 
evidence to have been paid out of the Special Account for eligible 
expenditures. All such deposits shall be withdrawn by the 
Administrator from the Grant Account under the respective 
eligible Categories, and in the respective equivalent amounts, as 
shall have been justified by said documents and other evidence.
4.
For each payment made by the Recipient out of the Special Account, the Recipient 
shall, at such time as the Administrator shall reasonably request, furnish to the
Administrator such documents and other evidence showing that such payment was made
exclusively for eligible expenditures.
5.
Notwithstanding the provisions of paragraph 3 of this Schedule, the 
Administrator shall not be required to make further deposits into the Special Account:
(a) if, at any time, the Administrator shall have determined that all further 
withdrawals should be - made by the Recipient directly from the Grant Account in 
accordance with the provisions of the Article V of the General Conditions and 
paragraph (a) of Section 2.02 of this Agreement;
(b) if the Recipient shall have failed to furnish to the Administrator within 
the period of time specified in Section 3.03 (b) (ii) of this Agreement, any of the 
audit reports required to be furnished to the Administrator pursuant to said Section 
in respect of the audit of the records and accounts for the Special Account;
(c) if, at any time, the Administrator shall have notified the Recipient of its 
intention to suspend in whole or in part the right of the Recipient to make 
withdrawals from the Grant Account pursuant to the provisions of Section 6.02 of the 
General Conditions; or
(d) once the total unwithdrawn amount of the Grant allocated to the eligible 
Categories, minus the total amount of all outstanding special commitments entered into 
by the Administrator pursuant to Section 5.02 of the General Conditions with respect 
to the Project, shall equal the equivalent of twice the amount of the Authorized 
Allocation.
Thereafter, withdrawal from the Grant Account of the remaining unwithdrawn amount of 
the Grant allocated to the eligible Categories shall follow such procedures as the 
Administrator shall specify by notice to the Recipient. Such further withdrawals shall 
be made only after and to the extent that the Administrator shall have been satisfied 
that all such amounts remaining on deposit in the Special Account as of the date of 
such notice will be utilized in making payments for eligible expenditures.
6.
(a) If the Administrator shall have determined at any time that any payment out 
of the Special Account:
(i)
was made for an expenditure or in an amount not eligible pursuant 
to paragraph 2 of this Schedule; or
(ii)
was not justified by the evidence furnished to the Administrator, 
the Recipient shall, promptly upon notice from the Administrator:
(A)
provide such additional evidence as the Administrator, may 
request; or
(B)
deposit into the Special Account (or, if the Administrator 
shall so request, refund to the Administrator) an amount 
equal to the amount of such payment or the portion thereof 
not so eligible or justified. Unless the Administrator shall 
otherwise agree, no further deposit by the Administrator 
into the Special Account shall be made until the Recipient 
has provided such evidence or made such deposit or refund, 
as the case may be.
(b) If the Administrator shall have determined at any time that any amount 
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outstanding in the Special Account will not be required to cover further payments for 
eligible expenditures, the Recipient shall, promptly upon notice from the 
Administrator, refund to the Administrator such outstanding amount.
(c) The Recipient may, upon notice to the Administrator, refund to the 
Administrator all or any portion of the funds on deposit in the Special Account.
(d) Refunds to the Administrator made pursuant to paragraphs 6(a), (b) and (c) 
of this Schedule shall be credited to the Grant Account for subsequent withdrawal or 
for cancellation in accordance with the relevant provisions of this Agreement, 
including the General Conditions.