MEMORANDUM OF UNDERSTANDING
BETWEEN
THE GOVERNMENT OF THE REPUBLIC OF INDONESIA
AND
THE GOVERNMENT OF THE UNITED KINGDOM OF
GREAT BRITAIN AND NORTHERN IRELAND
•
RELATING TO
THE FULL FEASIBILITY STUDY OF A POWER
DEVELOPMENT SYSTEM FOR BATAM ISLAND, INDONESIA
1.
This Memorandum expresses the understanding of the
Government of the Republic of Indonesia (hereinafter
referred to as ''the Government of Indonesia'') and the
Government of the United Kingdom of Great Britain and
Northern Ireland (hereinafter referred to as "the
Government of the United Kingdom") concerning the
responsibilities and contributions respectively of the two
Governments in regard to the full Feasibility Study of the
proposed Power Development System (hereinafter referred to
as "the Project") located on Batam Island and other
loca-tions which is intended to determine the suitability of
Batam Island as further described and detailed in Annex A
which forms an integral part of this Memorandum.
OBJECTIVES
2.
The objective of the Project is the preparation of a
new comprehensive and properly phased programme for the
development of a power plan for Batarn Island for the 20
year period 1987/1988 - 2007/2008 covering generation,
transmission and distribution.
The outline of this Project
is described in more detail at Annex A of this Memorandum.
'
RESPONSIBLE AUTHORITIES
3. The Government of Indonesia designates the Batam
Industrial Development Authority (hereinafter referred to
as "BIDA") as the Agency responsible for the implementation of its part of this Memorandum. The Government of the
United Kingdom designates the Overseas Development
Administration {hereinafter referred to as ''ODA'') as the Agency responsible for the implementation of its part of
this Memorandum.
ｒｅｓｐｏｎｓｉｂｉｾｉｔｉｅｓ＠ OF THE GOVERNMENT OF THE UNITED KINGDOM
4. The Government of the United Kingdom will provide a Britsh Study Team with expertise in the following fields:
a) technical and economic planning of multipurpose power facilities;
b) financial and organisational management of the proposed facilities;
c) social and environmental impact of
infra-structure and other large scale capital works;
d) generation, transmission and distribution of power technology and construction, and
e) economic and financial project analysis.
5. The assignments of the experts to be provided by the Government of the United Kingdom will amount to about
30 man months.
,
6. The Government of the United Kingdom will, in respect
of the Project, meet the cost of the following:
(i) fees for professional and technical services
of the consultant firm appointed for the
Project;
(ii) travel by air to, from and within Indonesia;
(iii) accommodation for relevant personnel appointed
by or on behalf of the Government of the
United Kingdom;
(iv) production of all required reports and
progress statements;
(v) fares and accommodation expenses of Indonesian
members of the Joint Study Team while visiting
Cvi) providing and maintaining four-wheel drive
vehicles and a boat for transport on site
provided that the vehicles and the boat are
not available from BIDA;
(vii) the use of telephone, postal, telegraph and
cable services for official purposes by or in
respect of all personnel appointed to the
Project by or on behalf of the Government of
the United Kingdom;
(viii) Project related training in Britain for
persons nominated by the Government of
Indonesia and accepted by the Government of
the United Kingdom;
(ix) provision of services associated with computer
utilisation;
(x) accommodation at the Project sites for the British members of the Study Team;
(xi) reimburse reasonable out-of-pocket expenses
necessarily incurred by the British Study Team (as accepted by the Government of the United
Kingdom) other than in respect of the items mentioned in paragraph 7 of this Memorandum;
and
xii) reimburse the cost of items of equipment as approved in writing by ODA, and purchased by
the experts for use on the Project.
RESPONSIBILITIES OF THE GOVERNMENT OF INDONESIA
7. The Government of Indonesia, in accordance with its existing laws and regulations, will provide the following services and facilities:
i) appropriate counterpart staff to work full
time in association and cooperation with the British Study Team described in paragraph 4. The Government of Indonesia's contribution will cover all salaries, wages and allowances of the Indonesian personnel;
ii) all necessary maps and aerial photographs,
documents, data, statistics and information required for the implementation of the Project and make
available assistance in any field survey required by the Project;
iii) furnished office accommodation, secretarial, administrative and clerical staff within Indonesia;
•
PROJECT ORGANIZATION
8.
Responsibility for the development and direction of
the Project will be vested in a Project Joint Study Team
(hereinafter referred to as ''the JST''), whose chairman will
be appointed by the Government of Indonesia.
9.
Membership of the JST will include the British Team
Leader, who is to be appointed by the Government of the
United Kingdom in consultation with the Government of
Indonesia.
The Indonesian membership of the JST will
include representatives of the Batam Industrial Development
Authority, the state electrical company (PLN) and the
Agency of the Assessment and Implementation of Techology
CBPPT).
Meetings of the JST will be held in Indonesia and
attended by the Indonesian Project Manager and British Team
Leader.
10.
The JST will meet at times mutually agreed upon.
11.
Functions of the JST will include:·
Ca)
coordinating policy funding and operations of
the Project;
(b)
reviewing and reporting on progress to the two
Governments; and
(c)
recommending to the two Governments changes in
the programme, budget and future development.
RESPONSIBILITY
12. Overall responsibility for this Project will rest
with the Government of Indonesia. The final authority for
decisions on implementation of the agreed works programme
will rest with the Ministry of State for Research and
Technology after considering consultations between the
Indonesian Project Manager and the British Team Leader.
TAXES, DUTY AND PRIVILEGES
13. In accordance with the existing laws and regulations
in Indonesia, the Government of Indonesia will:
i) provide exemption from import, customs duty or
any other charges on equipment, materials and
supplies required by the Project including the
personal effects of the experts and their dependants
or meet the cost of such charges. In addition,
expedite the clearance through customs of any such
equipment and supplies;
ii) exempt any such equipment, materials and
supplies required by the Project, including the
personal effects of the experts and their dependants,
from export duty or any other charge on exportation.
If such articles are disposed of in Indonesia,
otherwise than by gift to a person or organization
who or which in the exercise of custom franchise
privileges, is entitled to purchase such articles
free of import or customs duty, such duty will be
payable at the rate required by the law of Indonesia
at the time of disposal;
iii) ensure the prompt provision of any necessary
visas, residential permits and other permits required
as well as travel documents for the experts and their
dependants and issue all necessary authorizations for
the experts to carry out their work;
iv) issue to its official agents and
representatives such instructions as may be necessary
or appropriate for the effective implementation of
the services as set forth in paragraph 7 above; and
v) ensure that the experts during their stay in •
Indonesia in the course of the Project will be
accorded the status of experts performing services
for the Government of Indonesia.
FINANCIAL CONTRIBUTION
14. The Government of the United Kingdom through ODA will
contribute a sum not exceeding £250,000 (two hundred and
fifty thousand Pounds Sterling) being the cost of the
services set forth in paragraph 6 of this Memorandum.
15. The Government of Indonesia will provide the cost of .
local services and facilities set forth at paragraph 7 of
this Memorandum amounting to Rp 50,000,000 (fifty million
Rupiah).
16. If a more advanced and detailed study, such as a
detailed engineering design study is needed, i t may be
arranged in a separate Memorandum to be mutually determined
by the two Governments.
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MONITORING AND EVALUATION
17. An evaluation of the progress of the Project may be
made at times arranged between and mutually convenient to
the two Governments. Such an evaluation will be undertaken
by a joint investigation team appointed by the two Govern
-ments and independent of staff involved in the Project.
LIABILITY
18. The Government of Indonesia will be responsible for
dealing with any claims which may be brought by third
parties against the United Kingdom and its experts, agents
or British personnel and will hold harmless the Government
of the United Kingdom and its experts, agents and personnel
in case of any claims or liabilities resulting from
operations under this Memorandum .
19. This provision will not relieve any person from
liability for any criminal or fraudulent act.
SECURITY
20. The Government of Indonesia will arrange for any
protection deemed necessary to ensure the safety of British
personnel, Project and personal equipment both at the
Project location, in transit and on any other offical
representational activity in Indonesia.
21. The Government of the United Kingdom will take
reasonable precautions to ensure that British personnel
have due regard for local traditions and customs.
SETTLEMENT OF DIFFERENCES
22. Any disputes arising out of the interpretation or
implementation of this Memorandum will be settled amicably
by consultation or negotiation between the two Governments.
AMENDMENTS
23. Amendments to this Memorandum may be made at any time
by an Exchange of Letters between the two Governments.
GENERAL PROVISION
24. This Memorandum will take effect on the date of its
signature and
on that date.
arrangements
months after
the Project will be deemed to have commenced
The ODA contribution to the Project and all
set forth in this Memorandum will cease six
the date of signature or on such date as may
be arranged between the two Governments.
25. After completion of the Project, equipment for the
Project supplied by the Government of the United Kingdom
will be transferred to the Government of Indonesia.
26. This Memorandum is intended to set forth the
administrative responsibilities of the two Governments in
relation to the implementation of this Project within the
framework of technical cooperation between the two
Governments.
27. The Government of the United Kingdom and the
Government of Indonesia confirm that their understanding and intentions are correctly set forth above.
In witness whereof, the undersigned on behalf of their respective Government, have signed this Memorandum.
SIGNED at Jakarta, in duplicate, this twenty sixth day of October, 1987.
For the Government of the Republic of Indonesia
Signed
PROF DR ING B J HABIBIE
Minister of State for Research
and Technology of the Republic of Indonesia
I
Chairman of the Batam Industrial DevelopmentAuthority
For the Government of the United Kingdom of
Great Britain and Northern Ireland
Signed
CHRISTOPHER PATTEN, MP
Minister of State for
Foreign and Commonwealth
Affairs and Minister for Overseas Development
ANNEX A
THE FULL FEASIBILITY STUDY OF POWER DEVELOPMENT SYSTEM IN BATAM ISLAND
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TERMS OF REFERENCE
1. Introduction
An earlier study concerning the development of the
electricity system at Batam Island was prepared by Artifact consultants for the Batam Island Authority in 1979. However this study could not anticipate the rapid development of the
island's infrastructure which have taken place recently. These include:
(i) review of the Batam Island Development Authority master plan;
(ii) development of the Batam Centre;
(iii) the movement of oil production sharing
contractors from Singapore to Batam Island;
(iv) projected coal centre.
These and other projected industrial developments have radically changed the island's power requirements.
1.1 The main objective of the British consultancy studies
is the preparation of a new comprehensive and properly
phased programme for the development of power plans
for Batam Island for the 20 year period 1987/1988
-2007/2008 covering generation, transmission and
distribution. The Plans will serve two main purposes:
Ci) to develop the generation needs for Batam
Island and assess possibilities for export of
"electrical power" to other areas;
(ii) to develop options for meeting these generation
needs together with options for transmission
system development and budgeting, including
staff training and development over the medium
term.
1.2 The Power System Development Plans will represent the
least-cost solution for a balanced and co-ordinated
development of generation, transmission and
distri-bution facilities over the Plan period. From an
economic point of view the objective will be to
minimise total long-run costs of integrated system
expansion in the light of realistic projections of
load and energy demand while taking careful account of
implementation capacity and GOI budgetary constraints.
1.3 The Plans will be based on comprehensive studies of
generation, transmission and distribution options up
to "full feasibility" level as appropriate. Economic
evaluation of alternative options using real resource
costs and accounting prices will be carried out at all
stages both for choices within as well as between the
three sub-systems (generation, transmission and
distribution).
1.4 The recommended optimum Plans will be tested for
sensitivity to changes in underlying assumptions,
eg with regard to load projections, relative prices,
implementation schedules and other key parameters;
and, if necessary (eg where critical policy choices
are involved), alternative possible Plans or proposals
will be presented.
1.5 The Plans will, therefore, need to be flexible and
suitable for subsequent updating at regular intervals
in the light of actual variations from planning
assumptions.
1.6 Consideration will be given to the feasibility of a
coal fired power station including siting.
Environ-mental issues should be studied in detail. These
should include the power needs of the future Asia Port
including the proposed palm oil and tapioca terminal
for which construction should start by 1987.
1.7 Because preparation of the Plans will involve a number
of subsidiary studies and investigations of shorter or
longer duration, and given the need for system
expansion to continue in the short term, the
consultants will submit an inception report within six
weeks of beginning their studies, followed by an
interim report by week 16, and a draft final report by
week 26. Economic justification for the Interim
Programme will be based on system studies completed to
date and the programme and component schemes costed,
phased and presented in a form suitable for rapid
approval by GOI.
....
1.8 It is expected that the Final Report will be submitted
approximately six months after inception but an
'
extension may be granted by agreement between GOI and
ODA. The Reports will contain the full results of
surveys, field investigations, economic and financial
studies, etc. Requirements for and proposals related
to staff development, training and Technical
Coopera-tion at all appropriate levels will be included. The
report will be submitted to PLN, the Batam Industrial
Development Authority, ODA, the British Embassy in
Jakarta and the South East Asia Development Division
of ODA in Bangkok. Forty copies of each report will
be ｳｾ｢ｭｩｴｴ･､Ｎ＠ The Final Report and Executive Summary
will be translated into Bahasa Indonesia by the Batam
Industrial Development Authority.
1.9 The consultants will provide suitably qualified staff
who will be approved through the normal UK/GOI
｣ｨ｡ｮｮ･ｬｳｾ＠ by PLN, Sekkab, and the Batarn Industrial
Development Authority.
1.10 The consultants will at all stages work in close
collaboration with PLN, the Batam Industrial
Development Authority and other relevant GOI
Departments and Agencies, including in particular the
regional BAPPEDA (Provincial Planning Agency) offices
and the Directorate General of Water Resources
Development (DGWRD).
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2. Load and Energy Projections
2.1 As the load and energy projections are the basis for the generation, transmission and distribution plans,
particular importance is attached to the production of realistic demand forecasts.
2.2 The consultants will prepare detailed revised
projections of load and energy demand by consumer category, geographical location and load centre.
Existing consumption patterns will be analysed and supplemented by field surveys, questionnaires and
interviews. Alternative bases for load/energy demand projections ·such as per capita kwh consumption,
percentage connected population, household budget studies, statistical trend analysis, etc will be examined and corresponding demand implications
compared.
2.3 The consultants will explore possibilities for export of electrical power to Singapore and Sumatra, and
produce costed studies for its transmission by High Voltage submarine interconnections.
2.4 Sensitivity of the load/energy projections to changes in underlying assumptions should be tested and final results presented in the form of 'minimum', 'central' and 'maximum' projections with associated assumptions
clearly stated.
2.5 Demand forecasts will be carried out with reference to tariff levels.
3. Training and TC
3.1 The consultants will consider the training and staff
development implications of the Plans at all levels
and make appropriate recommendations. The Plans
should be within the realistic implementation capacity
of the Batam Industrial Development Authority, taking
.
account of reasonable staff development
possibili-ties. While maximum use should be made of local
expertise, necessary TC inputs should be identified,
phased and costed consistent with Plan assumptions.
4. Economic Aspects
4.1 As the economic objective of the Plans is to minimise
long-run integrated system development costs to meet
power demand projections from all sources, the
consultants will need to examine alternative solutions
at all critical stages and present related technical
and economic justification for recommended solutions.
4.2 The economic analyses will be based on standard
economic cost benefit methods including the use of
border prices, shadow wages and other appropriate
conversion factors. A range of discount rates should
be employed about a 'central' rate of 12%.
The plans themselves and component schemes and
sub-programme should be costed at both constant and
estimated future current prices.
4.3 The consultants will produce a financial analysis
projecting the Power Authority's cash flow.
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5. Reports
5.1 The Project Joint Study Team shall prepare the final
study reports for the Indonesian and British
Governments after reviewing and evaluating inception,
interim and preliminary draft final reports prepared
by the British Study Team.
