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LOAN AGREEMENT

RESOURCE EVALUATION AERIAL PHOTOGRAPHY

INDONESIA

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THIS AGREEMENT MADE IN DUPLICATE
the

day of

A,,.,· I

1978

BETWEEN:

THE GOVERNMENT OF CANADA
herein represented by the Secretary of State
for External Affairs acting through the President
of the Canadian International Development Agency
(hereinafter referred to as "Canada");

AND:

THE GOVERNMENT OF THE REPUBLIC OF INDONESIA
(hereinafter referred to as "Indonesia").

WHEREAS Indonesia wishes to secure a development loan for the use as
described in Annex "A" to this Agreement in the context of an overall
forestry resources evaluation programme with Canada;
AND WHEREAS Canada is willing to make a development loan available for
this purpose on the terms and conditions provided herein;
NOW THEREFORE the Parties hereto agree as follows:

ARTICLE I
The

Loan

Section 1.01
Canada shall make available to Indonesia on the terms and conditions
hereinafter set forth a Loan in an amount not to exceed twenty-one
million Canadian dollars ($21,000,000.00).
Section 1. 02
Canada shall open on its books a Loan Account in the name of Indonesia
and shall credit to such Account the full amount of the Loan.

Withdrawals,

payments and disbursements may be made from the Loan Account in accordance
with the provisions of this Agreement.

- 2 -

Section 1.03
This Loan shall be free from interest, commitment or service charges.
Section 1.04
Repayment of the principal amount of the Loan shall be made in eighty
(80) semi-annual instalments of two hundred and sixty-two thousand five
hundred Canadian dollars ($262,500.00) each, due and payable on March 31
and September 30 in each succeeding year commencing on March 31, 1988
and ending on September 30, 2028.
Section 1.05
Indonesia shall have the right to prepay the principal amount in whole
or in part on any date without notice to Canada.

The amount of any such

prepayment shall be applied to the instalments of the principal ·then
remaining payable in the reverse order of their maturity.
Section 1.06
All payments as set forth herein shall be made by Indonesia in Canadian
dollars to the Receiver General for Canada, and shall be deemed to have
been paid when received by the Receiver General for Canada.

Section 1 . 07
The principal of the Loan shall be paid to Canada without any deductions
whatsoever and more particularly shall be free from any taxes, charges or
other restrictions imposed under the laws of Indonesia and those in effect
in its territories or administrative, political or judicial divisions or
subdivisions.
Section 1.08
The Parties agree that they will negotiate, at the request of either
Indonesia or Canada, concerning acceleration of payments to the Receiver
General for Canada required to be made under this Agreement at any time
after six (6) months before the first payment of the principal becomes

- 3 -

due and payable.

Indonesia and Canada shall mutually determine whether

such an acceleration should take place on the basis of the capacity of
Indonesia to service a more rapid liquidation of its obligations in the

light of its internal and external financial and economic position.
ARTICLE II
Use of the Loan
Section 2.01
Except as may otherwise be specifically agreed to by Canada, the proceeds
of the Loan shall be used by Indonesia exclusively for the purchase of
agreed goods and services as described in Annex "A", and the procedures
for their procurement and payment shall be those set forth in Annex "B".
Each Annex shall be subject to such subsequent modifications as may be
agreed upon between Canada and Indonesia.
Section 2.02
Services, materials and equipment to be financed from the proceeds of the
Loan shall be used exclusively to carry out the project;

the goods and

services procured in Canada and financed from the Loan shall have an
overall Canadian content of not less than sixty-six and two-thirds percent
(66 2/3%) unless otherwise agreed to by Canada.
Section 2.03

Services, materials and equipment contracted for prior to the effective
date of this Agreement may not be financed out of the proceeds of the Loan
except as may otherwise be agreed to by Canada.
Section 2.04
Proceeds from the Loan shall not be used by Indonesia to meet the cost of
any taxes, fees or Customs duties imposed directly or indirectly by
Indonesia on any services, materials or equipment required for the project.
Proceeds from the Loan shall also not be used by Indonesia to meet the

- 4 costs of fees and commissions paid by Canadian firms to local agents and
representatives in respect of services, materials and equipment financed
out of the proceeds of the Loan.
Section 2.05
Indonesia shall immediately notify Canada of any payment it receives for
loss or damage to commodities or materials in transit under an insurance
policy or otherwise.

Unless otherwise agreed to by Canada and Indonesia,

Indonesia shall use such proceeds to replace the commodities or materials

or portion thereof with like goods from a Canadian source.
ARTICLE III
Withdrawals of Proceeds of Loan
Section 3.01
Withdrawals shall be deemed to occur on the dates on which payments are
made by Canada either directly to Indonesia or its designated agent, or
to a firm or banking institution in respect of goods and services supplied
under this Agreement.
Section 3.02
Subject to the conditions and limitations set forth herein, Indonesia
shall be entitled to withdrawals from the Loan Account in such amounts
as are required to meet the costs of the goods, services, freight and
insurance which are eligible for financing as the costs become due and
payable in accordance with Annex "B".
Section 3.03
Indonesia, or its designated agent, shall provide Canada with a copy of
each contract or purchase order for the procurement of services, materials
and equipment in respect of which any withdrawal is to be made, and a copy
of each irrevocable letter of credit issued under this Agreement.
Section 3.04

Withdrawals from the Loan Account may be made in favour of such persons or
agencies as ·may be designated by Indonesia and agreed to by Canada.

- 5 -

Section 3.05
Indonesia or its designated agent shall furnish or cause to be furnished
to Canada such documents and other evidence in support of the letter(s) of
credit as Canada may reasonably request, such evidence to be sufficient in
form and substance to establish that the amounts to be withdrawn are
properly related to the purpose of the project.
ARTICLE IV
Cancellation and Suspension
Section 4. 01
Indonesia may, by sixty (60) days' written Notice to Canada, cancel all
or any part of the Loan not withdrawn by Indonesia prior to the giving
of such Notice and not required to meet outstanding financial obligations
to suppliers or firms incurred under the Loan.
Section 4.02
If any of the following events occur, Canada may suspend in whole or in

part the right of Indonesia to make withdrawals under the Loan Agreement,
or declare the principal outstanding due and payable immediately and
cancel that part of the Loan not previously withdrawn:
(a)

a default by Indonesia in the payment of principal or in any
other payments or repayments required under this Agreement
and the Annexes hereto;

(b)

a default on the part of Indonesia in the performance of any undertakings under this Agreement;

(c)

any extraordinary situation which renders it impossible for
Indonesia to perform its obligations under this Agreement.

Section 4.03
If the full amount of the Loan is not committed by Indonesia as outlined in

Annex "A", the balance will be cancelled by sixty (60) days' written Notice
from Canada and the final instalment or instalments of the repayment to be
made shall be reduced accordingly.

- 6 ARTICLE V
General Undertakings
Section 5 .01
Indonesia shall ensure that the project is carried out, operated and
maintained with due diligence and efficiency and in conformity with sound
engineering construction and financial practices.
Section 5.02
Canada and Indonesia shall cooperate fully to ensure that the purpose of
the Loan will be accomplished, and each shall furnish to the other all such
information as shall reasonably be requested with regard to the general
status of the Loan.

Indonesia shall inform Canada as soon as possible of

any condition or contingency which interferes with, or threatens to interfere !
with, the accomplishment of the Project or any matter or thing in connection

therewith.
Section 5.03
Indonesia shall afford accredited representatives of Canada all reasonable
opportunities to visit any part of the territories of Indonesia for the
purpose related to this Loan Agreement.
Section 5.04
This Agreement and any Annexes thereto shall be free from any taxes, fees
or other charges that may be imposed under the laws of Indonesia and those
in effect in its territories or administrative, political or judicial
divisions or subdivisions in connection with the execution, issue, delivery
and registration thereof.
Section 5.05
It is understood and agreed by Indonesia and Canada that the Articles of
this Agreement and Annexes "A", "B", "C" thereto all form an integral part
of the present Agreement.

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- 7 -

Section 5.06
For the purpose of this Agreement and Annexes thereto, Indonesia shall
include any agent or agents authorized by and on behalf of Indonesia
with regard to its rights, duties and obligations herein.
ARTICLE VI
Communications
Section 6.01
Any communications or documents given, made or sent by either Indonesia or
Canada pursuant to this Agreement or any Annex thereto shall be in writing
and shall be deemed to have been duly given, made or sent to the party to
which it is addressed at the time of its delivery by hand, mail, telegram,
cable or radiogram at its respective addresses, namely:
For Indonesia:

The Ministry of Foreign Affairs
Jalan Pejambon 6-8
Jakarta, Indonesia.
Cable Address: Deplu, Jakarta.
and/or
Bank Indonesia
Jalan Kebon Sirih 82-84
Jakarta, Indonesia.
Cable Address: Delegasi, Jakarta.
and/or
Directorate General for Monetary Affairs
Department of Finance
Jalan Lapangan Banteng Timur 2-4
Jakarta, Indonesia.
Cable Address: Depkeu, Jakarta.

For Canada:

I

The President
Canadian International Development Agency
Place du Centre
200 rue Principale
Hull, P.Q.
Canada, KlA OG4.
Cable Address: CIDA Hull.

Section 6.02
Any one of the Parties hereto may, by written Notice to the other Party
hereto, change the address to which any Notice or request intended for
the Party so giving such Notice shall be addressed.

- 8 -

Section 6.03
All connnunications and documents pertaining to this Agreement shall be
in the English or French language.
ARTICLE VII
Simultaneous Execution of Agreement
Section 7.01
This Agreement may be simultaneously executed in several counterparts each
of which so executed shall be deemed to be an original.
Section 7.02
This Agreement and Annexes "A", "B", "C" attached hereto, which form part
of this Agreement, may be amended from time to time upon agreement of the
Parties concerned.

Amendment to the main body of the Agreement shall be

executed by a formal amendment signed by the authorized representatives.
However, amendments to the Annexes may be by an exchange of letters between
Indonesia and Canada.

IN WITNESS WHEREOF the Parties hereto have caused to be subscribed the
signature of their authorized representatives at Jakarta as of the day and
the year first above written.

SIGNED ON BEHALF OF THE
GOVERNMENT OF CANADA

SIGNED ON BEHALF OF THE GOVERNMENT
OF THE ｾｐｕｂｌｉｃ＠
OF INDONESIA

Signed
Prof. Dr Mochtar Kusumaatmadja SH,
Minister of Foreign Affairs.

Signed
ＮＭﾷｾｇｬ｟･ｮｓｨｯｲｴｩｦＬ＿＠

Ambassador.

I

ANNEX "A"

Use of the Loan
1.0

Description of the Project
For the purpose of this Agreement, the Project is described as the
financing of an aerial survey project in Indonesia more specifically
identified as follows:
1.1

Aerial Photography
1.1.1

Aerial photography at the approximate scale of 1:100,000
on panchromatic emulsion flown with 30% lateral overlap
(40% in the mountains) for Kalimantan (except for an area
of approximately 75,000 sq. km. in West Kalimantan) and
Sulawesi.
Aerial photography at the approximate scale of 1:60,000
on colour infra-red emulsion flown simultaneously with
the 1:100,000 scale photography on panchromatic emulsion
providing discontinuous coverage.
Topographical mapping coverage at the scale of 1:50,000
has been completed for the area of 75,000 sq. km. in West

Kalimantan referred to above.
1.1.2

The programme of photography for Section 1.1.1 will be
reviewed at the end of two photographic seasons.

A more

limited objective will be set if complete coverage does
not appear to be a realistic goal within the financial
limitations.
1.1.3

Aerial photography at the approximate scale of 1:50,000
on panchromatic emulsion for Java, Bali and Nusa Tenggara.
Aerial photography at the approximate scale of 1:30,000
on colour infra-red emulsion flown simultaneously with
the 1:50,000 scale photography on panchromatic emulsion
providing coverage with a minimum of 10% lateral overlap.

- 2 1.2

Horizontal Control Surveys
1.2.1

Establishment of horizontal control points by doppler
satellite receiver as required for production of 1:50,000
scale mapping and in selected areas to tie in existing
triangulation and traverse networks and provide survey
control points on which future control surveys may be
based.

The area to be covered will be the same as in

Section 1.1.1.
1.3

Vertical Control Surveys
1.3.1

Establishment of elevations by airborne radar altimetry
(APR) at a density required for a contour interval of
twenty-five (25) metres.

The area to be covered will

be the same as in Section 1.1.1.
1.4

Topographical Mapping Data Base
1.4.1

Completion of 1:50,000 topographical mapping data base
(adjusted aerial triangulation).

The area to be covered

will be the same as in Section 1.1.1.
2.0

Purpose of the Loan
2.1

Without limiting the generality of the Agreement, Canada shall
provide a loan of twenty-one million Canadian dollars
($21,000,000.00) for the contracting for supplies and services
required to carry out the project as described in Section 1.0
and as further outlined in detail in the project Plan of
Operations.

2.2

The Loan also shall be used for the payment of ocean/air freight
and marine/air insurance for supplies and services contracted for
under this Agreement.

2.3

All results of the work undertaken within the framework of the
Resources Aerial Photography project, either in Indonesia or abroad,

- 3 -

are the property of the Government of Indonesia.

At completion of

the respective tasks as described in the CIDA Plan of Operations,
Indonesia will receive all the original field data, including the
original aerial photography negatives, their duplicates and results

(

of any further processing when applicable.

Use of these data is

subject to Indonesian regulations .
2.4

The Loan shall be fully connnitted within five years of the date of
signature of the Loan Agreement or the uncommitted balance shall
lapse unless otherwise agreed to by Canada and Indonesia.

·.

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ANNEX "B"
Administration of the Loan
1.0

Procurement of Services
1.1

Indonesia with the assistance of Canada shall select Canadian
contractors from a list supplied by Canada of firms considered
capable of undertaking project operations referred to in Annex "A".

1.2

Documents which are to be sent to contractors inviting proposals
for project operations will be prepared by Indonesia with Canadian
assistance and mutually approved.
A plan of operations will be prepared by a technical subcommittee composed of technical specialists from both Indonesia
and Canada.

Indonesia would be represented by Bakosurtanal and

Canada by the Department of Energy, Mines and Resources on behalf
of CIDA.
The Plan of Operations will provide the overall design of the
Project so that the individual components, aerial photography,
doppler satellite receiver positions, airborne radar altimetry
(APR) and adjusted aerial triangulation, can be completed under
separate contracts in the sequences outlined in the plan.
1.3

Proposals will be invited by Indonesia from the list of
contractors selected under Section 1.1 and utilizing documents
prepared under Section 1.2.

A detailed technical assessment and

estimate of costs for each proposal will be prepared by Canada
and forwarded to Indonesia for final assessment and decision for

•

selection of contractor, as soon as possible after proposals
have been received.
1.4

Proposals will be invited for each aspect of the Project and
contractors will be instructed to restrict their proposals to
the aspect involved.

- 3 -

of evidence of services having been rendered or shipments having
been made under and in conformity with the terms of Letters of
Credit opened by Bank Indonesia.
2.3

All banking charges incurred by Bank Indonesia in connection with
the opening of Letters of Credit through a Canadian bank will be
reimbursed by Canada from the development loan funds.

Any interest

charges that may be payable by Bank Indonesia to a Canadian bank
in the event of that bank advancing funds to meet payments to
Canadian contractors will also be reimbursed by Canada from the
development loan funds.
2.4

Advance mobilization payments will be made to the Canadian
contractors under and in conformity with the terms of Letters of
Credit.

2.5

After contracts are signed and Letters of Credit are in place with
the Canadian bank, CIDA will issue confirming purchase orders to
the Canadian contractors.

Canadian contractors will be instructed

by CIDA that they should not begin any project related activities
until the contract, Letter of Credit and CIDA confirming purchase
orders are in place.
2.6

Letters of Credit shall be in place within ninety (90) days of
the signing of contracts.

If there is any delay in issuing Letters

of Credit beyond ninety (90) days and if contract costs increase
as a result, the GOI will be responsible for all such contract
costs which exceed approved loan funds as provided for in this
Loan Agreement.
2.7

Statements of disbursements will be prepared by Canada and
forwarded to Bank Indonesia on a quarterly basis.

ANNEX "C"

Responsibilities of the Government of
the Republic of Indonesia
1.0

With respect to equipment and materials, and to consultant services
provided from Canada, Indonesia will be responsible, subject to the
existing rules and regulations, for the following:
1.1

To arrange with Indonesian customs officials to properly clear
through Indonesian Customs, free of import customs and other
duties and taxes, all equipment and materials required to
support and undertake the implementation of the project .
Indonesia will exempt the consultant and its personnel (other
than personnel who are citizens or permanent residents of
Indonesia) from, or bear the cost of, any taxes, duties, fees,
levies and other impositions imposed under its laws and
regulations or the laws and regulations in effect in its
territories or any political subdivision.

1.2

To provide at no cost to the Loan Account local facilities and
services to enable the consultant to implement the project.
Details of facilities and services requirements to be as
follows:
1.2.1

Authority for entry into Indonesia of all aircraft,
helicopters and other equipment necessary to carry out
project operations.

This would include all administrative

arrangements including customs, entry and exit permits,
aircraft registration, landing rights, and authority and
clearance for refueling at all airports.
1.2.2

Assistance in arrangements for aircraft and helicopter
fuels and lubricants to field from depots and for the
provision of fuel in containers where required.

1.2.3

Office and laboratory accommodation at all bases of

- 2 operations, including furniture, electricity, water and
other services.

This provision will include full access

for contractors' personnel to the facilities and equipment
at Bogor for the processing of infra-red false colour
photography.
1.2.4

Living accommodations for operational crews which will
include furniture, electricity, water and other services.
The contractors will supply air-conditioners, refrigerators,
stoves and filtration systems and be reimbursed out of loan
funds.

1.2.5

Temporary accommodation and transportation for operational
crews when away from the base of operations.

1.2.6

Special arrangements for weather forecasting and meteorological services.

1.2.7

Arrangements for extended hours of operation of airport
facilities and services as required by operational crews.

1.2.8

Assignment of radio frequencies for Canadian contractor's
communications systems.

1.2.9

Provision of vehicles with drivers for contractor's
personnel.

This provision to include all maintenance and

repairs on vehicles.
1.2.10 Liaison and support personnel for Canadian team members to
include liaison officers, security personnel, laboratory
assistants, technicians and drivers.
1.3

To waive or bear the cost of landing or other fees which may be
assessed in Indonesia against aircraft and helicopters used by
the Canadian contractors to carry out the project.

- 3 2,0

Provide:
2.1

All Indonesian permits, licences and other such documents required
to enable Canadian personnel to carry out their respective
responsibilities in Indonesia.

2.2

All export and exit permits required for the return of any of the
material, equipment or effects (including personal effects)
which are the property of or are provided by the Government of
Canada, the firm or individual Canadian employed on the provision
of services under this Agreement .

2.3

Access to those parts of Indonesia required to enable Canadian
personnel to carry out their responsibilities in Indonesia.

3.0

Indemnify and save harmless, at no cost to the Loan Account, Canada or
its personnel engaged in the performance of duties in connection with
the Loan from any civil liability arising from any claims resulting from :
3.1

Injury or death of any such personnel during the performance of
his duties relative to the Loan.

3.2

Injury or death of any person arising from the work of the project.

3.3

Property damage arising from the work of the project.

3.4

The above provisions will not relieve any such personnel of Canada
from liability for any grossly negligent, fraudulent or criminal
act.

4.0

Undertake to arrange for adequate insurance for short shipments, losses
or damage to the equipment and materials during shipment and in transit.
If any part of the lost or damaged equipment and materials is prefinanced for replacement out of the Loan Fund pending settlement of
insurance claims, on settlement of such claims the amounts will be
deposited to the account of the Loan Fund and will be paid in Canadian
dollars.

- 4 5.0

Be responsible for the preparation and submission of claims to
Canadian suppliers for short shipments and for the preparation and
submission of insurance claims in the event of losses or damage
to commodities while in transit.

6.0

Be responsible for the costs of demurrage or damage resulting from
failure to provide adequate berthing and/or clearances in accordance
with local conditions •