PT INDOCEMENT TUNGGAL PRAKARSA Tbk. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Nine months ended September 30, 2005 and 2004 Expressed in rupiah, unless otherwise stated
43
22. SIGNIFICANT AGREEMENTS, COMMITMENTS AND CONTINGENCIES continued
Accordingly, the Company has been trying to pass on the claim to PT Boskalis International Indonesia Boskalis, the contractor appointed by the Company to dredge the jetty area for its
alleged misconduct and improper dumping of dredged materials not at the approved dumping location.
A fact-finding committee consisting of representatives from the Company, the association of fishermen and other related parties has been established to investigate the claim that Boskalis has
dumped the dredged materials not at the approved dumping location. Also, the Company has sent two warning letters to Boskalis for its failure to comply with the “Safety, Security and Protection of
Environment” clause as stipulated in the Dredging Contract of Berthing Pocket and Turning Basin Tarjun Port Facility. As of September 30, 2005, the Company has made a provision of Rp6.2 billion
as its estimated liability that would be borne by the Company, and is presented as part of “Accrued Expenses” account in the 2005 consolidated balance sheet.
c. On June 9, 2004, the Company entered into a “Prototype Carbon Fund Emission Reductions Purchase Agreement” Agreement with the International Bank for Reconstruction and
Development, in its capacity as a trustee “Trustee” of the Prototype Carbon Fund PCF. The PCF is a World Bank-administered fund representing six 6 governments and seventeen 17
companies. As stated in the Agreement, the Company undertakes to carry out a project which is expected to
result in the reduction of greenhouse gas emissions the Project. The Project is composed of two components as follows:
• Introduction of new type of cement which contains a higher proportion of additive materials
• Use of alternative fuels in clinker burning.
Subject to the terms and conditions of the Agreement, the Company shall generate a minimum number of Greenhouse Gases GHG Reductions from the Project and transfer the Emission
Reductions ERs corresponding to these GHG Reductions to the Trustee at a price of US3.60 for each ER. The Project should be implemented in a manner consistent with, or upon entry of the
Kyoto Protocol in accordance with the applicable International UNFCCCKyoto Protocol Rules. The Project shall commence in January 2005 and shall be terminated in 2011 or upon full delivery
of the ERs to be generated by the Project. The agreement will be effective after all the following conditions precedent are fulfilled:
• The Indonesian Government has ratified the Kyoto Protocol on or before December 31, 2005
• Receipt by the Trustee of a Letter of Approval for the Project on or before March 1, 2006 which
includes authorization of the Company’s and the Trustee’s participation in the Project, and in the reasonable opinion of the Trustee meets all other requirements of approval under the
International UNFCCCKyoto Protocol Rules.
As of September 30, 2005, the Project is in the preparation stage.
d. In 2005 and 2004, the Company entered into one-year agreements with several land transporters for the distribution of the Company’s cement in Indonesia. Transportation expense incurred is
recorded as part of “Delivery and Selling Expenses” Delivery, loading and transportation account in the consolidated statements of income, while the unpaid transportation expenses amounting to
Rp12,917,613,842 and Rp19,984,036,135 as of September 30, 2005 and 2004, respectively, are shown as part of “Other Payables to Third Parties” in the consolidated balance sheets.
PT INDOCEMENT TUNGGAL PRAKARSA Tbk. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Nine months ended September 30, 2005 and 2004 Expressed in rupiah, unless otherwise stated
44
22. SIGNIFICANT AGREEMENTS, COMMITMENTS AND CONTINGENCIES continued
