SIGNIFICANT AGREEMENTS, COMMITMENTS AND CONTINGENCIES continued a.

196 Adaro Energy Annual Report 2009 From Us to Y ou Running Adaro Management Report Owning Adaro Governing Adaro Financial Report Contact Us Corporate Social Responsibility Adaro in Summary www.adaro.com PT ADARO ENERGY Tbk AND SUBSIDIARIES Schedule 558 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 DECEMBER 2009 AND 2008 Expressed in million Rupiah, unless otherwise stated

39. SIGNIFICANT AGREEMENTS, COMMITMENTS AND CONTINGENCIES continued h.

Forestry expenses Based on Government Regulation No. 2 dated 4 February 2008, all companies that have activities in production and protected forest areas but not related to forestry will have an obligation to pay a forestry fee ranging from Rp 1,200,000 full amount to Rp 3,000,000 full amount per hectare. This fee is effective from 2008. The Group has recognised this fee on an accrual basis.

i. Engineering, Procurement and Construction Agreement

PT Punj Llyod Indonesia On 23 April 2008, MSW entered into an Engineering, Procurement and Construction “EPC” Agreement with PT Punj Llyod Indonesia “Punj Llyod Indonesia”. Under this agreement, Punj Llyod Indonesia will provide construction services for the Project Tanjung Tabalong 2x30 MW coal fired power plant project, located in Kalimantan, Indonesia. Under the agreement, MSW is required to pay a 15 advance to Punj Llyod Indonesia and installments upon the achievement of project milestones. Punj Llyod Pte Ltd On 23 April 2008, MSW entered into an EPC Agreement with Punj Llyod Pte Ltd “Punj Llyod”. Under this agreement, Punj Llyod will supply equipment for the Tanjung Tabalong 2x30 MW coal fired power plant project, located in Kalimantan, Indonesia. Under the agreement, MSW is required to pay Punj Llyod a 15 advance and installments upon the achievement of the milestones.

j. Agency fees

Adaro have various agency agreements with third party agents to market their coal for certain customers. The agents will receive commission based on a percentage of sales to those customers.

k. Customer Claims

In 2008, MoEMR requested that Indonesian coal producers renegotiate existing term coal supply contracts to match then current market prices. Those Indonesian coal producers were instructed by MoEMR that they would be required to suspend shipments if they failed to comply with the request. Most of Adaros customers agreed to renegotiate the pricing terms in line with the Government requirement. Adaro declared force majeure and suspended deliveries to three customers. One of these customers later agreed with Adaro a renegotiated price under their contract in line with the Government requirement. The remaining two customers have asserted separate claims against Adaro seeking amounts by way of compensation totaling US399 million. Both of these claims have been referred to arbitration. Although Adaro believes that it has meritorious defenses to these claims, there can be no assurance that these defenses will be successful. Adaro will continue to defend against these claims. As the outcome to this matter is uncertain and no reliable estimate can be made at this point, the Group did not recognise any provision in the consolidated financial statements.

l. Legal proceedings

From time to time, the Group is involved in various legal proceedings as a normal incident to the Group’s business. The Group is of the opinion that adverse decisions in any pending or threatened proceeding, or that any amounts it may be required to pay by reason thereof will not have a material adverse effect on its financial condition or the results of its operations.

m. DBS Bilateral Facility

On 24 February 2009, Adaro entered into a Multicurrency Revolving Credit Facility agreement with DBS Bank Ltd which acts as Original Lender and Facility Agent. Under this agreement, DBS Bank Ltd agreed to provide a multicurrency revolving credit facility in an aggregate amount of US40 million for a period of 36 months after the date of the agreement. This facility will be charged with interest rates at LIBOR plus a certain percentage. Coaltrade, IBT and the Company act as guarantors of this loan facility. As at 31 December 2009, Adaro has not made any drawdown on this facility. In accordance with the terms of the agreement, Adaro is required to maintain certain financial ratios. This loan has similar significant terms and conditions to the long-term Syndicated Loan refer to Note 21a.