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September 09, 1983

Table of Contents

Article I Loan

1. Amount and Purpose of Loan

2. Use of Proceeds of Loan

Article II Repayment and Interest

1. Repayment of Principal

2. Interest and Method of Payment thereof

Article III Particular Covenants

1. General Terms and Conditions

2. Procurement Procedure

3. Disbursement Procedure

4. Administration of Loan

5. Exemption from Import Restriction

6. Notices and Requests

Schedule 1. Description of Project

Schedule 2. Allocation of Proceeds of Loan

Schedule 3. Amortization Schedule

Schedule 4. General Terms and Conditions

Schedule 5. Procurement Procedure

Schedule 6. Commitment Procedure (III)

Schedule 7. Reimbursement Procedure

Schedule 8. Transfer Procedure

Loan Agreement No. PH-P56, dated September 9, 1983, between THE OVERSEAS ECONOMIC COOPERATION FUND and THE GOVERNMENT OF THE REPUBLIC OF THE PHILIPPINES

Taking into consideration the contents of the Exchange of Notes between the Government of Japan and the Government of the Republic of the Philippines dated July 18, 1983, concerning Japanese financial assistance to be extended to the Republic of the Philippines,

THE OVERSEAS ECONOMIC COOPERATION FUND (hereinafter referred to as "the Fund") and THE GOVERNMENT OF THE REPUBLIC OF THE PHILIPPINES (hereinafter referred to as "the Borrower") herewith conclude the following Loan Agreement (hereinafter referred to as “the Loan Agreement", which includes all agreements supplemental hereto) .

ARTICLE I
  LOAN

1. Amount and Purpose of Loan

The Fund agrees to lend the Borrower an amount not exceeding SIXTEEN BILLION THREE HUNDRED SEVENTY MILLION Japanese Yen (¥16,370,000,000.) as principal for the implementation of Leyte Geothermal Development Project II described in Schedule 1 attached hereto (hereinafter referred to as "the Project") on the terms and conditions set forth in the Loan Agreement and in accordance with the relevant laws and regulations of Japan {hereinafter referred to as "the Loan"), provided, however, that when the cumulative total of disbursements under the Loan Agreement reaches the said limit, the Fund shall make no further disbursement.

2. Use of Proceeds of Loan

(1) The Borrower shall cause the proceeds of the Loan to be used for the purchase of eligible goods and services necessary for the implementation of the Project from suppliers, contractors or consultants {hereinafter collectively referred to as "the Suppliers") of the eligible source countries in accordance with the allocation described in Schedule 2 attached hereto.

(2) The final disbursement under the Loan Agreement shall be made not later than September 9, 1988 and no further disbursement shall be made by the Fund thereafter, unless otherwise agreed upon between the Fund and the Borrower.

ARTICLE II
  REPAYMENT AND INTEREST

1. Repayment of Principal
 The Borrower shall repay the principal of the Loan to the Fund in accordance with the Amortization Schedule set forth in Schedule 3 attached hereto.
 2. Interest and Method of Payment thereof

(1) The Borrower shall pay interest to the Fund semi-annually at the rate of three percent (3%) per annum on the principal disbursed and outstanding.

(2) The Borrower shall pay to the Fund on September 20 of each year the interest that has accrued up to September 19 from March 20 of that year and on March 20 of each year the interest that has accrued up to March 19 of that year from September 20 of the preceding year, provided that, prior to the date of the final disbursement of the proceeds of the Loan, the Borrower shall pay to the Fund on October 20 of each year the interest that has accrued up to September 19 from March 20 of that year, and on April 20 of each year the interest that has accrued up to March 19 of that year from September 20 of the preceding year.

ARTICLE III
  PARTICULAR COVENANTS

1. General Terms and Conditions

Other terms and conditions generally applicable to the Loan Agreement shall be set forth in General Terms and Conditions attached hereto as Schedule 4 with the following supplemental stipulation (hereinafter referred to as "the General Terms and Conditions"):
  Article VI of the General Terms and Conditions shall be disregarded, and, consequently, all references to "the Guarantee" or "the Guarantor", wherever mentioned in the General Terms and Conditions, shall be likewise disregarded.

2. Procurement Procedure

The guidelines for procurement mentioned in Section 3.01. of the General Terms and Conditions shall be as stipulated in Procurement Procedure attached hereto as Schedule 5.

3. Disbursement Procedure

The disbursement procedure mentioned in Section 4.01. of the General Terms and Conditions shall be as follows:

(1) Commitment Procedure (III) attached hereto as Schedule 6 shall apply in cases of disbursements to the Suppliers of the eligible source countries other than the Republic of the Philippines.

(2) Reimbursement Procedure attached hereto as Schedule 7 and/or Transfer Procedure attached hereto as Schedule 8 shall apply in cases of disbursements to Philippine Suppliers.

4. Administration of Loan

(1) The Borrower shall authorize National Power Corporation and Philippine National Oil Company-Energy Development Corporation (hereinafter referred to as "the Executing Agencies") to implement the Project.

(2) Should the funds available from the proceeds of the Loan be insufficient for the implementation of the Project, the Borrower shall make arrangements promptly to provide such funds as shall be needed.

(3) The Borrower shall furnish the Fund with progress reports for the Project semi-annually in January and July of each year until the Project is completed.

(4) Promptly but in any event not later than six (6) months after completion of the Project, the Borrower shall furnish the Fund with a project completion report in such form and in such detail as the Fund may reasonably request.

(5) The Borrower may, out of the proceeds of the Loan, make a loan(s) to the Executing Agencies (hereinafter referred to as "the Sub-loan") for the implementation of the Project. The terms and conditions of the Sub-loan shall be no less favorable than those of the Loan Agreement.

5. Exemption from Import Restriction

As to the importation of the goods required for the implementation of the Project under the Loan, the goods to be procured out of the proceeds of the Loan shall be exempted from any import restriction by the Borrower in accordance with paragraph 3. of the Record of Discussions dated July 18, 1983, between the Government of Japan and the Borrower.

6. Notices and Requests

The following addresses are specified for the purpose of Section 8.03. of the General Terms and Conditions:
  For the Fund

Postal address:

THE OVERSEAS ECONOMIC COOPERATION FUND
  Takebashi Godo Building, 4-1, Ohtemachi 1-chome
  Chiyoda-ku, Tokyo 100, Japan

Attention: Director, Loan Department I

Cable address: COOPERATIONFUND

Telex: Call Nos. J28430, J28790

Answer Back Code: COOPFUND

For the Borrower

Postal address:

The Government of the Republic of the Philippines
  National Economic and Development Authority
  P.O. Box 1116, Manila, Philippines

Attention: Director General

Cable address: NEDAPHIL

If the above addresses and/or names are changed, the party concerned shall immediately notify the other party hereto in writing of the new addresses and/or names.

IN WITNESS WHEREOF, the Fund and the Borrower, acting through their duly authorized representatives, have caused the Loan Agreement to be duly executed in their respective names and delivered at the office of THE OVERSEAS ECONOMIC COOPERATION FUND, Chiyoda-ku, Tokyo, Japan, as of the day and year first above written.

SCHEDULE 1
  DESCRIPTION OF PROJECT

I The Project consists of the following parts:

(1) Location: Malitbog field of Tongonan geothermal area in Leyte Island

(2) Executing Agency: National Power Corporation, Philippine National Oil Company-Energy Development Corporation

(3) Scope of the work:

(i) Construction of 3 x 37.5 MW generating plant and related transmission line facilities (National Power Corporation)

(ii) Development of geothermal field for 3 x 37.5 MW generating plant, including consulting services. (Philippine National Oil Company-Energy Development Corporation)

The proceeds of the Loan are available for the foreign currency portion of items (i) and (ii). However, a part of item (ii) may be financed under the Loan Agreement No. PH-P31 dated June 20, 1980, between the Fund and the Borrower. The foreign currency portion shall be determined by the Fund.

Any balance remaining on the aforementioned items and all other items are to be financed by the Borrower.

II Estimated annual fund requirements by currency are as shown below.

Disbursement of the proceeds of the Loan shall be made within the limit of the Government's budgetary appropriations for the Fund.

III The Project is expected to be completed by the end of February, 1986.

SCHEDULE 2
  ALLOCATION OF PROCEEDS OF LOAN

II Reallocation upon change in cost estimates

1. If the estimated cost of items included in any of Categories (A) through (D) shall decrease, the amount then allocated to, and no longer required for, such Category will be reallocated by the Fund to Category (E).
 

2. If the estimated cost of items included in any of Categories(A) through {D) shall increase, the amount equal to the portion, if any, of such increase to be financed out of the proceeds of the Loan will be allocated by the Fund, at the request of the Borrower, to such Category from Category (E), subject, however, to the requirements for contingencies, as determined by the Fund, in respect of the cost of items in the other Categories.

SCHEDULE 3

AMORTIZATION SCHEDULE

THE OVERSEAS ECONOMIC
  COOPERATION FUND
  TAKEBASHI GODO BUILDING
  4-1, OHTEMACHI 1-CHOME, CHIYODA-KU, TOKYO 100
  CABLE ADDRESS: "COOPERATIONFUND" TOKYO JAPAN

  TELEX:
  CALL NO: J28790. J28360. J28430
  A.A.S. COOPFUND TOKYO

Side Letter

Date: September 9, 1983
  Ref. No.: PH-P56

H.E. Carlos J. Valdes
  Ambassador Extraordinary
  and Plenipotentiary of the
  Republic of the Philippines
  to Japan

Reference: Leyte Geothermal Development Project II under Loan Agreement No. PH-P56

Excellency:

With reference to Loan Agreement No. PH-P56, dated September 9, 1983, between THE OVERSEAS ECONOMIC COOPERATION FUND (hereinafter referred to as "the Fund") and THE GOVERNMENT OF THE REPUBLIC OF THE PHILIPPINES (hereinafter referred to as "the Borrower"), I have the pleasure to confirm the following agreement between the Fund and the Borrower.

1. PROCUREMENT

The Borrower shall, with full responsibility, cause the National Power Corporation (hereinafter referred to as "NPC") and the Philippine National Oil Company-Energy Development Corporation (hereinafter referred to as "PNOC-EDC") to act in the following manner:

(i) NPC

(a) Contracts for balance of plant and transmission line facilities shall not be divided into more than one package each.

(b) The bidding documents for balance of plant shall clearly state that the items categorized as foreign portion must be imported from abroad.

(ii) PNOC-EDC

(a) The bidding documents for the purchase of goods shall clearly state that bid prices must be quoted on the basis of C & F only.

(b) Award of contracts shall be to a single bidder for the total quantity of each tender lot. There shall be no partial awards, unless consented to by the Fund

2. RELATED PROJECT

The Borrower shall cause NPC to complete the related transmission line from Jaro to San Jose within a reasonable period after the commissioning date of the Project.

Please confirm your consent to the foregoing by signing both copies of this letter, retaining one and returning the other to us.

Very truly yours,

THE OVERSEAS ECONOMIC
COOPERATION FUND

________________________
  (Sgd.) TAKASHI HOSOMI
  President

Confirmed:

On the 9th day of September, 1983

THE GOVERNMENT OF THE
  REPUBLIC OF THE PHILIPPINES

(Sgd.) CARLOS J. VALDES
  Ambassador Extraordinary
  and Plenipotentiary of the
  Republic of the Philippines
  to Japan