CONFORMED COPY

GEF TRUST FUND GRANT NUMBER TF056722-IND

Global Environment Facility
Trust Fund Grant Agreement

(Marine Electronic Highway Demonstration Project)

between

INTERNATIONAL MARITIME ORGANIZATION

and

INTERNATIONAL BANK FOR RECONSTRUCTION
AND DEVELOPMENT

acting as an Implementing Agency of the Global Environment Facility

Dated June 19, 2006

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GEF TRUST FUND GRANT NUMBER TF056722-IND

GLOBAL ENVIRONMENT FACILITY TRUST FUND GRANT AGREEMENT
AGREEMENT, dated June 19, 2006, between INTERNATIONAL MARITIME
ORGANIZATION (the Recipient) and INTERNATIONAL BANK FOR
RECONSTRUCTION AND DEVELOPMENT (the Bank) acting as an implementing
agency of the Global Environment Facility (GEF) in respect of grant funds provided to
the GEF Trust Fund by certain members of the Bank as participants of the GEF.

WHEREAS (A) the Bank, pursuant to Resolution No. 91-5 of March 14, 1991 of
the Executive Directors of the Bank, established the GEF to assist in the protection of the
global environment and promote thereby environmentally sound and sustainable
economic development;

(B)
following the restructuring of the GEF, such arrangements continued in
place on the basis set forth in Resolution No. 94-2 of May 24, 1994, of the Executive
Directors of the Bank which, inter alia, established the GEF Trust Fund and appointed the
Bank as trustee of the GEF Trust Fund (Resolution 94-2);

(C)
the Recipient, having satisfied itself as to the feasibility and priority of
the project described in Schedule 2 to this Agreement (the Project), has requested
assistance from the resources of the GEF Trust Fund for funding Parts A, B.2, B.3, B.4,
D and E of the Project, and said request having been approved in accordance with the
provisions of the Instrument for the Establishment of the Restructured Global
Environment Facility approved under Resolution 94-2;

(D)
by a GEF Grant Agreement to be entered into between the Republic of
Indonesia and the Bank, the Bank has agreed to make available to the Republic of
Indonesia a GEF grant in the amount of one million four hundred and forty thousand
Dollars ($1,440,000), for purposes of Part B.1 of the Project;

(E)
a Memorandum of Understanding has been entered into among the
Republic of Indonesia, Malaysia, the Republic of Singapore and the Recipient on
September 8, 2005, to provide a framework for participation, collaboration, commitment
and co-operation to implement the Marine Electronic Highway Demonstration Project in
the Straits of Malacca and Singapore (the Memorandum of Understanding); and

(F)
a Memorandum on Arrangements has been entered into among the
Republic of Indonesia, Malaysia, the Republic of Singapore, the Recipient, the
International Hydrographic Organization, the International Association of Independent
Tanker Owners and the International Chamber of Shipping on September 8, 2005, as an
implementing arrangement in accordance with Article IV of the Memorandum of
Understanding to support, promote and collaborate in the implementation of the Marine

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Electronic Highway Demonstration Project in the Straits of Malacca and Singapore (the
Memorandum on Arrangements); and

WHEREAS the Bank has agreed, on the basis, inter alia, of the foregoing, to
extend the GEF Trust Fund Grant to the Recipient upon the terms and conditions set forth
in this Agreement;

NOW THEREFORE, the parties hereto hereby agree as follows:

ARTICLE I

General Conditions; Definitions

Section 1.01. (a) The following provisions of the "General Conditions Applicable
to Loan and Guarantee Agreements for Single Currency Loans" of the Bank, dated May
30, 1995 (as amended through May 1, 2004), with the modifications set forth in
paragraph (b) of this Section (the General Conditions) constitute an integral part of this
Agreement:

(i) Article
I;

(ii)
Sections 2.01 (2), (3), (4), (5), (6), (7), (8), (14), (15), (16), (18)
and (21), 2.02 and 2.03;

(iii) Section
3.01;

(iv)
Sections 4.01 and 4.06;

(v)
Sections 5.01, 5.02, 5.03, 5.04, 5.05, 5.06, 5.07 and 5.09;

(vi)
Sections 6.01, 6.02 (c), (e), (i), (l), (m), (n), (o) and (p), 6.03 (a),
(b), (c), (d) and (e), 6.04 and 6.06;

(vii)
Section 8.01 (b);

(viii)
Sections 9.01 (a), 9.04, 9.05, 9.06 and 9.07;

(ix)
Sections 10.01, 10.03 and 10.04;

(x)
Article XI; and

(xi)
Sections 12.01 (c), 12.03 and 12.04.

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(b)
The General Conditions shall be modified as follows:

(i)
the term "Bank", wherever used in the General Conditions, other
than in Sections 2.01(6) and 5.01(a) thereof, means the Bank
acting as an implementing agency of the GEF, except that in
Section 6.02, the term "Bank" shall also include the Bank acting
in its own capacity;

(ii)
the term "Borrower", wherever used in the General Conditions,
means the Recipient;

(iii)
the term "Loan Agreement", wherever used in the General
Conditions, means this Agreement;

(iv)
the term "Loan" and "loan", wherever used in the General
Conditions, means the GEF Trust Fund Grant;

(v)
the term "Loan Account", wherever used in the General
Conditions, means the GEF Trust Fund Grant Account;

(vi)
a new subparagraph is added after subparagraph (o) in
Section
6.02 of the General Conditions, as follows: "an
extraordinary situation shall have arisen in which any further
disbursement under the GEF Trust Fund Grant would exceed the
resources available for disbursement from the GEF.";

(vii)
the words "corrupt or fraudulent" in paragraph (c) of
Section 6.03 of the General Conditions are replaced with
the words "corrupt, fraudulent, collusive or coercive";

(viii)
the first sentence of Section 10.01 of the General Conditions is
deleted;

(ix)
Section 10.04 of the General Conditions is amended to read:
"Any dispute arising out of or relating to this Agreement which
is not settled by agreement of the parties shall be finally settled
by arbitration in accordance with the UNCITRAL Arbitration
Rules in force on the date of this Agreement. The place of
arbitration shall be Washington, D.C. In the event of a conflict
between the UNCITRAL Arbitration Rules and the terms of this
Agreement, the terms of this Agreement shall govern."; and

(x)
Section 12.03(b) of the General Conditions is amended to read:
"If, before the Effective Date, any event shall have occurred
which would have entitled the Bank to suspend the right of the

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Recipient to make withdrawals from the Grant Account if the
Grant Agreement had been effective, the Bank may postpone the
dispatch of the notice referred to in paragraph (a) of this Section
until such event or events shall have ceased to exist."

Section 1.02.
Wherever used in this Agreement, unless the context otherwise
requires, the several terms defined in the General Conditions and in the Recitals to this
Agreement have the respective meanings therein set forth and the following additional
terms have the following meanings:

(a)
"Eligible Categories" means Categories (1) through (4) set forth in the
table in Part A.1 of Schedule 1 to this Agreement.

(b)
"Eligible Expenditures" means the expenditures for goods and services
referred to in Section 2.02 of this Agreement.

(c)
"Financial Monitoring Report" means each report prepared in accordance
with Section 4.02 of this Agreement.

(d)
"MEH" means the Marine Electronic Highway system to be established
under the Project.

(e)
"MEH Data Center" means the data centers to be established under the
Project in the Republic of Indonesia, Malaysia and the Republic of Singapore.

(f)
"Memorandum of Agreement" means the memorandum of agreement
entered into between the Republic of Indonesia and the Recipient on May 31, 2006,
specifying: (i) the functions of the Project Management Office; (ii) the staffing (including
support staff) and the facilities (including office space), to be provided to the Project
Management Office; and (iii) who shall be responsible for providing the required staff,
the facilities, and the operating costs of the Project Management Office.

(g)
"Procurement Plan" means the Recipient's procurement plan, dated
February 10, 2006, covering the initial 18 month period (or longer) of Project
implementation, as the same shall be updated from time to time in accordance with the
provisions of Section 3.02 of this Agreement, to cover succeeding 18 month periods (or
longer) of Project implementation.

(h)
"Project Area" means the area of the Strait of Malacca from One Fathom
Bank (Permatang Sedepa) to the whole of the Strait of Singapore.

(i)
"Project Implementation Plan" means the plan, acceptable to the Bank,
and adopted by the Republic of Indonesia and the Recipient for purposes of the carrying
out of the Project.

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(j)
"Project Management Office" means the office established at Batam,
Republic of Indonesia, to administer and manage the Project.

(k)
"Project Steering Committee" means the committee established at the
regional level to implement the Project and to administer and manage the MEH system,
and includes representatives of the Republic of Indonesia, Malaysia, Republic of
Singapore, the Recipient (as the Secretariat of the Committee), the International
Hydrographic Organization (as observer), the International Association of Independent
Tanker Owners (as observer) and the International Chamber of Shipping (as observer).

(l)
"Report-based Disbursements" means the Recipient's option for
withdrawal of funds from the GEF Trust Fund Grant Account referred to in Part A.5 of
Schedule 1 to this Agreement.

(m)
"Special Account" means the account referred to in Part B of Schedule 1
to this Agreement.

ARTICLE II

The GEF Trust Fund Grant

Section 2.01.
The Bank agrees to make available to the Recipient, on the terms
and conditions set forth or referred to in this Agreement, the GEF Trust Fund Grant in an
amount equal to six million eight hundred and sixty thousand Dollars ($6,860,000).

Section 2.02. The amount of the GEF Trust Fund Grant may be withdrawn
from the GEF Trust Fund Grant Account in accordance with the provisions of Schedule 1
to this Agreement for expenditures made (or, if the Bank shall so agree, to be made) in
respect of the reasonable cost of goods and services required for Parts A, B.2, B.3, B.4, D
and E of the Project and to be financed out of the proceeds of the GEF Trust Fund Grant.

Section 2.03.
The Closing Date shall be June 30, 2011, or such later date as the
Bank shall establish. The Bank shall promptly notify the Recipient of such later date.

ARTICLE III

Execution of Parts A, B.2, B.3, B.4, D and E of the Project

Section 3.01.
(a) The Recipient declares its commitment to the objectives of
the Project as set forth in Schedule 2 to this Agreement and, to this end, shall carry out
Parts A, B.2, B.3, B.4, D and E of the Project with due diligence and efficiency and in
conformity with appropriate administrative, financial and maritime practices and with
due regard to ecological and environmental factors, and shall provide, promptly as
needed, the funds, facilities, services and other resources required for Parts A, B.2, B.3,
B.4, D and E of the Project.

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(b)
Without limitation upon the provisions of paragraph (a) of this Section
and except as the Recipient and the Bank shall otherwise agree, the Recipient shall carry
out Parts A, B.2, B.3, B.4, D and E of the Project in accordance with the Implementation
Program set forth in Schedule 4 to this Agreement.

Section 3.02.
(a) Except as the Bank shall otherwise agree, procurement of the
goods and services required for Parts A, B.2, B.3, B.4, D and E of the Project and to be
financed out of the proceeds of the GEF Trust Fund Grant shall be governed by the
provisions of Schedule 3 to this Agreement, as said provisions may be further elaborated
in the Procurement Plan.

(b)
The Recipient shall update the Procurement Plan and furnish such update
to the Bank not later than 12 months after the date of the preceding Procurement Plan, for
the Bank's approval.

ARTICLE IV

Financial Covenants

Section 4.01. (a) The Recipient shall maintain a financial management
system, including records and accounts, and prepare financial statements in accordance
with consistently applied accounting standards acceptable to the Bank, adequate to reflect
the operations, resources and expenditures related to Parts A, B.2, B.3, B.4, D and E of
the Project.

(b) The
Recipient
shall:

(i)
have the financial statements referred to in paragraph (a) of this
Section for each fiscal year (or other period agreed to by the
Bank), audited, in accordance with consistently applied auditing
standards acceptable to the Bank, by independent auditors
acceptable to the Bank;

(ii)
furnish to the Bank as soon as available, but in any case not later
than six months after the end of each such year (or such other
period agreed to by the Bank): (A) certified copies of the
financial statements referred to in paragraph (a) of this Section
for such year (or other period agreed to by the Bank), as so
audited; and (B) an opinion on such statements by said auditors,
in scope and detail satisfactory to the Bank; and

(iii)
furnish to the Bank such other information concerning such
records and accounts, and the audit of such financial statements,
and concerning said auditors, as the Bank may from time to time
reasonably request.

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(c)
For all expenditures with respect to which withdrawals from the GEF
Trust Fund Grant Account were made on the basis of reports referred to in Part A.5 of
Schedule 1 to this Agreement (Report-based Disbursements) or on the basis of statements
of expenditure, the Recipient shall:

(i)
retain, until at least one year after the Bank has received the
audit report for, or covering, the fiscal year in which the last
withdrawal from the GEF Trust Fund Grant Account was made,
all records (contracts, orders, invoices, bills, receipts and other
documents) evidencing such expenditures;

(ii)
enable the Bank's representatives to examine such records; and

(iii)
ensure that such reports and statements of expenditure are
included in the audit for each fiscal year (or other period agreed
to by the Bank), referred to in paragraph (b) of this Section.

Section 4.02.
(a) Without limitation upon the Recipient's progress reporting
obligations set out in paragraph 10 of Schedule 4 to this Agreement, the Recipient shall
prepare and furnish to the Bank a financial monitoring report, in form and substance
satisfactory to the Bank, which:

(i)
sets forth sources and uses of funds for Parts A, B.2, B.3, B.4, D
and E of the Project, both cumulatively and for the period
covered by said report, showing separately funds provided under
the GEF Trust Fund Grant, and explains variances between the
actual and planned uses of such funds;

(ii)
describes physical progress in Project implementation, both
cumulatively and for the period covered by said report, and
explains variances between the actual and planned Project
implementation; and

(iii)
sets forth the status of procurement under Parts A, B.2, B.3, B.4,
D and E of the Project, as at the end of the period covered by
said report.

(b)
The first Financial Monitoring Report shall be furnished to the Bank not
later than 45 days after the end of the first calendar quarter after the Effective Date, and
shall cover the period from the incurrence of the first expenditure under Parts A, B.2, B.3,
B.4, D and E of the Project through the end of such first calendar quarter; thereafter, each
Financial Monitoring Report shall be furnished to the Bank not later than 45 days after
each subsequent calendar quarter, and shall cover such calendar quarter.

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ARTICLE V

Remedies of the Bank
Section 5.01. Pursuant to Section 6.02 (p) of the General Conditions, the
following additional events are specified:

(a)
the GEF Trust Fund Grant Agreement between the Republic of Indonesia
and the Bank referred to in Whereas Clause (D) of this Agreement, shall have failed to
become effective six months after its signing or such later date as the Bank may agree;

(b)
the Memorandum of Understanding referred to in Whereas Clause (E) of
this Agreement shall have been amended, suspended, waived or terminated so as to affect
materially and adversely the ability of the Recipient to perform any of its obligations
under this Agreement;

(c)
the Memorandum on Arrangements referred to in Whereas Clause (F) of
this Agreement shall have been amended, suspended, waived or terminated so as to affect
materially and adversely the ability of the Recipient to perform any of its obligations
under this Agreement; and

(d)
the Memorandum of Agreement shall have been amended, suspended,
waived or terminated so as to affect materially and adversely the ability of the Recipient
to perform any of its obligations under this Agreement.

ARTICLE VI

Effectiveness, Termination

Section 6.01.
The following events are specified as additional conditions to the
effectiveness of the GEF Trust Fund Grant within the meaning of Section 12.01 (c) of the
General Conditions:

(a)
The GEF Trust Fund Grant Agreement referred to in Whereas Clause (D)
of this Agreement shall have been executed on behalf of the Republic of Indonesia and
the Bank.

(b)
The Recipient shall have provided to the Bank a Project management
memorandum, acceptable to the Bank, in accordance with paragraph 4 of Schedule 4 to
this Agreement.

(c)
The Project Implementation Plan, acceptable to the Bank, shall have
been adopted by the Recipient and endorsed by the Republic of Indonesia, Malaysia and
the Republic of Singapore, in accordance with paragraph 5 of Schedule 4 to this
Agreement.

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Section 6.02. The date ninety (90) days after the date of this Agreement is
hereby specified for the purposes of Section 12.04 of the General Conditions.

Section 6.03. This Agreement shall continue in effect until the GEF Trust
Fund Grant has been fully disbursed and the parties to this Agreement have fulfilled all
their obligations hereunder.

ARTICLE VII

Privileges and Immunities

Section 7.01. Nothing in or relating to this Agreement shall be deemed a
waiver, express or implied, of any of the privileges and immunities which the Recipient
or its officers, experts and subsidiary organizations may enjoy, whether pursuant to the
Convention on Privileges and Immunities of the Specialized Agencies or any other
convention or agreement, law, order or decree of an international or national character.

ARTICLE VIII

Representative of the Recipient; Addresses
Section
8.01. The Director of the Marine Environment Division of the
Recipient is designated as representative of the Recipient for the purposes of
Section 11.03 of the General Conditions.

Section 8.02. The following addresses are specified for the purposes of
Section 11.01 of the General Conditions:

For the Recipient:

International Maritime Organization
4 Albert Embankment
London SE1 7SR
United Kingdom

Telex: Facsimile:

23588 IMOLDN G
44 207 587 3210

For the Bank:

International Bank for
Reconstruction and Development
1818 H Street, N.W.
Washington, D.C. 20433
United States of America

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Cable
address:
Telex:
Facsimile:

INTBAFRAD 248423
(MCI)

(202)
477-6391
Washington, D.C.
64145 (MCI)

IN WITNESS WHEREOF, the parties hereto, acting through their duly
authorized representatives, have caused this Agreement to be signed in their respective
names in London, United Kingdom, as of the day and year first above written.

INTERNATIONAL MARITIME ORGANIZATION

By /s/ Jean-Claude Sainlos

Authorized Representative

INTERNATIONAL BANK FOR
RECONSTRUCTION AND DEVELOPMENT
as an Implementing Agency of the Global Environment Facility

By /s/ Jeffrey Gutman

Authorized Representative

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SCHEDULE 1
Withdrawal of the Proceeds of the GEF Trust Fund Grant

A. General
1.
The table below sets forth the Categories of items to be financed out of the
proceeds of the GEF Trust Fund Grant, the allocation of the amounts of the GEF Trust
Fund Grant to each Category and the percentage of expenditures for items so to be
financed in each Category:

Amount of the

GEF Trust Fund Grant
% of

Allocated (Expressed
Expenditures
Category
in Dollars)
to be Financed
(1) Goods
464,000
100%

(2)
Consultants' 4,664,000
100%
services



(3) Incremental
operating
672,000
100%
costs

(4) Management
Fee
500,000
100%

(5) Unallocated
(except
560,000
Category
(4))

TOTAL 6,860,000
2.
For the purposes of this Schedule:

(a)
the term "incremental operating costs" means the reasonable costs of
incremental expenditures incurred by the Project Management Office, the Project
Steering Committee, the Working Groups and the Technical Committees in the carrying
out of the Project (which expenditures would not have been incurred absent the Project),
including communications, office supplies, advertising of bidding, printing and
publication of Project information, rental of meeting facilities and project-related travel
expenses; but in all cases excluding staff salaries; and

(b)
the term "management fee" means the fee of the Recipient for the
services provided for the management of the Project.

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3.
Notwithstanding the provisions of paragraph 1 above, no withdrawals shall be
made in respect of payments made for expenditures prior to the date of this Agreement.

4.
The Bank may require withdrawals from the GEF Trust Fund Grant Account to
be made on the basis of statements of expenditure for expenditures under contracts for:
(a) goods costing less than $200,000 equivalent per contract; (b) services of individual
consultants costing less than $50,000 equivalent per contract; (c) services of consulting
firms under contracts costing less than $100,000 equivalent per contract; (d) incremental
operating costs; and (e) management fees, all under such terms and conditions as the
Bank shall specify by notice to the Recipient.

5.
The Recipient may request withdrawals from the GEF Trust Fund Grant Account
to be made on the basis of reports to be submitted to the Bank in form and substance
satisfactory to the Bank, such reports to include the FMR and any other information as
the Bank shall specify by notice to the Recipient (Report-based Disbursements). In the
case of the first such request submitted to the Bank before any withdrawal has been made
from the GEF Trust Fund Grant Account, the Recipient shall submit to the Bank only a
statement with the projected sources and applications of funds for Parts A, B.2, B.3, B.4,
D and E of the Project for the six-month period following the date of such request.


B. Special
Account
1.
The Recipient may open and maintain in Dollars a special deposit account in a
commercial bank acceptable to the Bank, on terms and conditions satisfactory to the
Bank, including appropriate protection against set-off, seizure and attachment.

2.
After the Bank has received evidence satisfactory to it that the Special Account
has been opened, withdrawals from the GEF Trust Fund Grant Account of amounts to be
deposited into the Special Account shall be made as follows:

(a)
if the Recipient is not making Report-based Disbursements, withdrawals
shall be made in accordance with the provisions of Annex A to this Schedule 1; and

(b)
if the Recipient is making Report-based Disbursements, withdrawals
shall be made in accordance with the provisions of Annex B to this Schedule 1.

3.
Payments out of the Special Account shall be made exclusively for Eligible
Expenditures. For each payment made by the Recipient out of the Special Account, the
Recipient shall, at such time as the Bank shall reasonably request, furnish to the Bank
such documents and other evidence showing that such payment was made exclusively for
Eligible Expenditures.

4.
Notwithstanding the provisions of Part B.2 of this Schedule, the Bank shall not
be required to make further deposits into the Special Account:

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(a)
if the Bank, at any time, is not satisfied that the reports referred to in
Part A.5 of this Schedule 1 adequately provide the information required for Report-based
Disbursements;

(b)
if the Bank determines at any time that all further withdrawals for
payment of Eligible Expenditures should be made by the Recipient directly from the GEF
Trust Fund Grant Account; or

(c)
if the Recipient shall have failed to furnish to the Bank, within the period
of time specified in Section 4.01(b)(ii) of this Agreement, any of the audit reports
required to be furnished to the Bank pursuant to said Section in respect of the audit of:
(A) the records and accounts for the Special Account; or (B) the records and accounts
reflecting expenditures with respect to which withdrawals were Report-based
Disbursements or were made on the basis of statements of expenditure, as the case
may be.

5.
The Bank shall not be required to make further deposits into the Special Account
in accordance with the provisions of Part B.2 of this Schedule if, at any time, the Bank
shall have notified the Recipient of its intention to suspend in whole or in part the right of
the Recipient to make withdrawals from the GEF Trust Fund Grant Account pursuant to
the applicable paragraphs of Section 6.02 of the General Conditions. Upon such
notification, the Bank shall determine, in its sole discretion, whether further deposits into
the Special Account may be made and what procedures should be followed for making
such deposits, and shall notify the Recipient of its determination.

6.
(a)
If the Bank determines at any time that any payment out of the Special
Account was made for an expenditure which is not an Eligible Expenditure, or was not
justified by the evidence furnished to the Bank, the Recipient shall, promptly upon notice
from the Bank, provide such additional evidence as the Bank may request, or deposit into
the Special Account (or, if the Bank shall so request, refund to the Bank) an amount equal
to the amount of such payment. Unless the Bank shall otherwise agree, no further deposit
by the Bank into the Special Account shall be made until the Recipient has provided such
evidence or made such deposit or refund, as the case may be.

(b)
If the Bank determines at any time that any amount outstanding in the
Special Account will not be required to cover payments for Eligible Expenditures during
the six-month period following such determination, the Recipient shall, promptly upon
notice from the Bank, refund to the Bank such outstanding amount.

(c)
The Recipient may, upon notice to the Bank, refund to the Bank all or
any portion of the funds on deposit in the Special Account.

(d)
Refunds to the Bank made pursuant to subparagraph (a), (b) or (c) of this
paragraph 6 shall be credited to the GEF Trust Fund Grant Account for subsequent
withdrawal or for cancellation in accordance with the provisions of the GEF Trust Fund
Grant Agreement.

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Annex A
to
SCHEDULE 1

Operation of Special Account When Withdrawals Are
Not Report-based Disbursements

1.
For the purposes of this Annex, the term "Authorized Allocation" means the
amount of $600,000 to be withdrawn from the GEF Trust Fund Grant Account and
deposited into the Special Account pursuant to paragraph 2 of this Annex.

2.
Withdrawals of the Authorized Allocation and subsequent withdrawals to
replenish the Special Account shall be made as follows:

(a)
For withdrawals of the Authorized Allocation, the Recipient shall furnish
to the Bank a request or requests for deposit into the Special Account of an amount or
amounts which in the aggregate do not exceed the Authorized Allocation. On the basis of
each such request, the Bank shall, on behalf of the Recipient, withdraw from the GEF
Trust Fund Grant Account and deposit into the Special Account such amount as the
Recipient shall have requested.

(b)
For replenishment of the Special Account, the Recipient shall furnish to
the Bank requests for deposit into the Special Account at such intervals as the Bank shall
specify. Prior to or at the time of each such request, the Recipient shall furnish to the
Bank the documents and other evidence required pursuant to Part B.3 of Schedule 1 to
this Agreement for the payment or payments in respect of which replenishment is
requested. On the basis of each such request, the Bank shall, on behalf of the Recipient,
withdraw from the GEF Trust Fund Grant Account and deposit into the Special Account
such amount as the Recipient shall have requested and as shall have been shown by said
documents and other evidence to have been paid out of the Special Account for Eligible
Expenditures. Each such deposit into the Special Account shall be withdrawn by the
Bank from the GEF Trust Fund Grant Account under one or more of the Eligible
Categories.

3.
The Bank shall not be required to make further deposits into the Special Account,
once the total unwithdrawn amount of the GEF Trust Fund Grant minus the total amount
of all outstanding special commitments entered into by the Bank pursuant to Section 5.02
of the General Conditions shall equal the equivalent of twice the amount of the
Authorized Allocation. Thereafter, withdrawal from the GEF Trust Fund Grant Account
of the remaining unwithdrawn amount of the GEF Trust Fund Grant shall follow such
procedures as the Bank shall specify by notice to the Recipient. Such further withdrawals
shall be made only after and to the extent that the Bank shall have been satisfied that all
such amounts remaining on deposit in the Special Account as of the date of such notice
will be utilized in making payments for Eligible Expenditures.

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Annex B
to
SCHEDULE 1

Operation of Special Account When Withdrawals Are
Report-based Disbursements

1.
Withdrawals from the GEF Trust Fund Grant Account shall be deposited by the
Bank into the Special Account in accordance with the provisions of Schedule 1 to this
Agreement. Each such deposit into the Special Account shall be withdrawn by the Bank
from the GEF Trust Fund Grant Account under one or more of the Eligible Categories.

2.
Upon receipt of each application for withdrawal of an amount of the GEF Trust
Fund Grant, the Bank shall, on behalf of the Recipient, withdraw from the GEF Trust
Fund Grant Account and deposit into the Special Account an amount equal to the lesser
of: (a) the amount so requested; and (b) the amount which the Bank has determined,
based on the reports referred to in Part A.5 of this Schedule 1 applicable to such
withdrawal application, is required to be deposited in order to finance Eligible
Expenditures during the six-month period following the date of such reports.

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SCHEDULE 2

Description of the Project
The objectives of the Project are:

(a)
to assist the Republic of Indonesia, Malaysia, the Republic of Singapore
and representatives of some of the large commercial ship owners that use the Strait of
Malacca and the Strait of Singapore, to collectively decide whether to establish a marine
electronic highway for the entire length of the Straits of Malacca and Singapore; and

(b)
to improve maritime safety and reduce environmental damage to the
globally-significant shared natural resources of the Straits of Malacca and Singapore.

The Project consists of the following parts, subject to such modifications thereof
as the Recipient and the Bank may agree upon from time to time to achieve such
objectives:

Part A: Marine Electronic Highway System Design, Coordination and Operation

1.
System Planning and International Maritime Organization Management
(a)
Management of the operational aspects of the Project by the International
Maritime Organization.

(b)
Development of a system for the management and on-line access and
storage of data and information, including links to the MEH Data Centers and financial
and economic assessments.

(c)
Development of criteria and measurable indicators for Project
performance assessment, including the carrying out of a baseline survey to compile and
analyze data and information covering a period of about thirty years up to the inception
of the Project, as a basis for evaluation of the impact of the MEH system.

2. Project
Management
Office
(a)
Strengthening the capacity of the staff of the Project Management Office,
including relevant training.

(b)
Establishment of MEH Data Centers in the Republic of Indonesia,
Malaysia and the Republic of Singapore, including provision of relevant training to the
staff of the MEH Data Centers in operation and management of the MEH system and in
data handling and exchange.

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3.
Project Steering Committee Support
Carrying out of meetings of the Project Steering Committee, the Technical
Committees and the Working Groups, including travel and accommodations for
participants.

Part B: Marine Electronic Highway System Development

1.
Tide and Current Facilities
Tidal and current monitoring on the Republic of Indonesia's coast of the Strait of
Malacca, including provision of relevant equipment.

2. Hydrographic
Survey
(a)
Carrying out of a hydrographic survey within the designated traffic
separation scheme in the Strait of Malacca within the Project Area.

(b)
Provision of training to the hydrographic surveyors of the hydro-
oceanographic services of the Republic of Indonesia, Malaysia and the Republic of
Singapore.

3.
Electronic Navigation Charts
Production of high resolution electronic navigation charts for the Project Area,
including provision of relevant computer software licenses to the Republic of Indonesia
and to Malaysia.

4.
Information Exchange System
Establishment of a MEH information exchange system, including data servers,
data exchange protocols and training of staff in data exchange.

Part C: Ship-Board Equipment and Communications

Carrying out of testing of the demonstration MEH system by about 160 ships
fitted with type-approved electronic chart display and information systems, including
internet connectivity.

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Part D: Marine Environment Protection

1.
Oil Spill and Sand Wave Models
Carrying out of a modeling and analysis of: (i) the likely movement of oil spills
originating in the Project Area; and (ii) the sand wave formation and movement in the
Project Area.

2.
Sensitive Area Mapping
Research and development of options for providing real-time geo-referenced
environmental protection information to mariners navigating in the Straits of Malacca
and Singapore and for conservation and coastal resources management and mapping of
sensitive areas.

3.
Emergency Response Systems
Carrying out of simulated oil and chemical spill emergency response exercises to
determine the cost-effectiveness and efficiency of the MEH system in the event of
chemical and oil spill incidents from ships.

Part E: Information Dissemination, Evaluation and Scale-up Plan

1.
Website and Publicity
Production and dissemination of information through the Internet on the MEH
system, including technical reports, progress reports and a newsletter, and carrying out of
national and regional workshops and seminars to provide information and seek feedback
on the benefits and applicability of the MEH system.

2. Evaluation
(a)
Assessment of the cost and benefits of the establishment and use of the
MEH system in terms of maritime safety and marine environment protection, including:
(i) the development of criteria and measurable indicators for the socio-economic
assessment of the MEH system; and (ii) the carrying out of a socio-economic survey to
evaluate the benefits of the MEH system.

(b)
(i)
Carrying out of an assessment of the technical functionalities of
the MEH system, including system performance.

(ii)
Carrying out of a continuous monitoring of new and potential
technologies that could be linked to the MEH system or enhance its performance,
including the carrying out of technical evaluations on the new technologies to determine
their suitability, value added contribution, enhancing performance and cost effectiveness.

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(c)
Carrying out of an assessment of the MEH system, including institutional
and legal aspects.

(d)
Consolidation of the technical, institutional, legal, financial and
economic assessments of the MEH system, including the implementation of the Project,
and development of a managing tool blueprint.

3. System
Development
Carrying out of marketing strategies to package and market the MEH system and
its marine information and other products, and the services it could provide.

* * *
The Project is expected to be completed by December 31, 2010.

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SCHEDULE 3

Procurement

Section I.
General
A. All
goods and services (other than consultants' services) shall be procured in
accordance with the provisions of Section I of the "Guidelines: Procurement under IBRD
Loans and IDA Credits" dated May 2004 (the Procurement Guidelines), and with the
provisions of this Schedule.

B.
All consultants' services shall be procured in accordance with Sections I and IV
of the "Guidelines: Selection and Employment of Consultants by World Bank
Borrowers" dated May 2004 (the Consultant Guidelines), and with the provisions of this
Schedule.

C.
The capitalized terms used below in this Schedule to describe particular
procurement methods or methods of review by the Bank of particular contracts, have the
meanings ascribed to them in the Procurement Guidelines, or Consultant Guidelines, as
the case may be.

Section II.
Particular Methods of Procurement of Goods and Services (other than
Consultants' Services)
A. International
Competitive
Bidding. Except as otherwise provided in Part B of
this Section, contracts shall be awarded on the basis of International Competitive
Bidding. The provisions of paragraphs 2.55 and 2.56 of the Procurement Guidelines,
providing for domestic preference in the evaluation of bids, shall apply to goods
manufactured in the territory of the Recipient.

B.
Other Procurement Procedures
1. Shopping. Goods estimated to cost less than $100,000 equivalent per
contract may be procured under contracts awarded on the basis of Shopping.

Section III.
Particular Methods of Procurement of Consultants' Services
A.
Quality- and Cost-based Selection. Except as otherwise provided in Part B of
this Section, consultants' services shall be procured under contracts awarded on the basis
of Quality- and Cost-based Selection.

B. Other
Procedures
1. Quality-based
Selection.
Services for assignments which the Bank
agrees meet the requirements set forth in paragraph 3.2 of the Consultant Guidelines may

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be procured under contracts awarded on the basis of Quality-based Selection in
accordance with the provisions of paragraphs 3.1 through 3.4 of the Consultant
Guidelines.

2.
Selection Based on Consultants' Qualifications. Services estimated to
cost less than $200,000 equivalent per contract may be procured under contracts awarded
in accordance with the provisions of paragraphs 3.1, 3.7 and 3.8 of the Consultant
Guidelines.

3. Individual
Consultants.
Services for assignments that meet the
requirements set forth in the first sentence of paragraph 5.1 of the Consultant Guidelines
may be procured under contracts awarded to individual consultants in accordance with
the provisions of paragraphs 5.2 through 5.3 of the Consultant Guidelines. Under the
circumstances described in paragraph 5.4 of the Consultant Guidelines, such contracts
may be awarded to individual consultants on a sole-source basis, subject to prior approval
by the Bank.

Section IV.
Review by the Bank of Procurement Decisions
Except as the Bank shall otherwise determine by notice to the Recipient, the
following contracts shall be subject to Prior Review by the Bank: (a) each contract for
goods estimated to cost the equivalent of $200,000 or more; (b) each contract for
consultants' services provided by a firm estimated to cost the equivalent of $100,000 or
more and the first contract for consultants' services provided by a firm and selected on
the basis of the consultant's qualifications. In addition, with respect to the first contract
for the employment of an individual consultant and each contract for the employment of
individual consultants estimated to cost the equivalent of $100,000 or more, the report on
the qualifications and experience of all evaluated candidates, the terms of reference and
the terms of employment of the consultants shall be subject to prior approval by the
Bank. All other contracts shall be subject to Post Review by the Bank.

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SCHEDULE 4

Implementation Program

1.
The Recipient shall take all steps necessary to ensure that the Project Steering
Committee shall be maintained until completion of the Project.

2.
The Recipient shall, in accordance with the provisions of the Memorandum of
Agreement, establish by December 31, 2006, and, thereafter, maintain until the
completion of the Project, the Project Management Office, with terms of reference and
staff and at all times acceptable to the Bank, including a Project Manager.

3.
The Recipient shall, until completion of the Project, maintain at its headquarters a
procurement officer, acceptable to the Bank.

4.
The Recipient shall prepare and furnish to the Bank a Project management
memorandum, acceptable to the Bank, setting forth the management tasks to be carried
out by the Recipient under the Project, including the estimated cost of each task.

5.
The Recipient shall adopt and, thereafter apply in the implementation of the
Project, the Project Implementation Plan, acceptable to the Bank, which shall include the
description of: (a) implementation arrangements; (b) the procurement procedures set forth
in Schedule 3 to this Agreement and standard procurement documentation; (c) reporting
requirements, financial management procedures and audit procedures as set forth in
Article 4 of this Agreement; and (d) the Project Performance Indicators set forth in
Schedule 5 to this Agreement, and shall not amend, suspend, abrogate, repeal or waive
any provisions of the Project Implementation Plan without the prior agreement of the
Bank.

6.
The Recipient shall cause the Project Steering Committee to:

(a)
furnish to the Bank for its review and comments not later than September
30 in each year, commencing September 30, 2007, and until completion of the Project,
draft revisions to the Project Implementation Plan for the components of the Project not
yet carried out, with emphasis on the activities to be carried out in the following calendar
year, including the scope of the activities to be carried out, cost estimates, time based
implementation schedules, financing plan, budget arrangements, and the relevant
procurement plan; and

(b)
finalize the revised Project Implementation Plan by November 30 in each
year, commencing November 30, 2007, taking into account the comments of the Bank
thereon.

7.
In carrying out Part B.3 of the Project, the Recipient shall provide all required
technical assistance to the Republic of Indonesia, Malaysia and the Republic of

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Singapore to ensure the production of the electronic navigational charts by March 31,
2008.

8.
In carrying out Part C of the Project, the Recipient shall provide the required
technical assistance to ensure that the International Association of Independent Tanker
Owners and the International Chamber of Shipping have each, by December 31, 2008, at
least 60 and 100 ships, respectively, equipped with type-approved electronic chart display
and information systems, including internet connectivity.

9.
In carrying out Part E of the Project, the Recipient shall:

(a)
by May 31, 2010, furnish to the Bank the draft final report on the
technical, financial, economic, and legal feasibility of a scaled-up Marine Electronic
Highway system for the entire Straits of Malacca and Singapore; and

(b)
by August, 2010, taking into account the comments of the Bank, furnish
to potential participants and beneficiaries of the full-scale Marine Electronic Highway
system the finalized feasibility study, including the design of an operational and
financing plan and an institutional structure for the scaled-up Marine Electronic Highway
system.

10. The
Recipient
shall:

(a)
maintain policies and procedures adequate to enable it to monitor and
evaluate on an ongoing basis, in accordance with the indicators set forth in Schedule 5 to
this Agreement, the carrying out of Parts A, B.2, B.3, B.4, D and E of the Project and the
achievement of the objectives thereof;

(b)
prepare, under terms of reference satisfactory to the Bank, and furnish to
the Bank, on or about June 30 of each year, commencing June 30, 2007, a report
integrating the results of the monitoring and evaluation activities performed pursuant to
paragraph (a) of this Section, on the progress achieved in the carrying out of Parts A, B.2,
B.3, B.4, D and E of the Project during the period preceding the date of said report and
setting out the measures recommended to ensure the efficient carrying out of Parts A,
B.2, B.3, B.4, D and E of the Project and the achievement of the objectives thereof during
the period following such date; and

(c)
review with the Bank, by September 30 of each year, commencing
September 30, 2007, or such later date as the Bank shall request, the report referred to in
paragraph (b) of this Section, and, thereafter, take all measures required to ensure the
efficient completion of Parts A, B.2, B.3, B.4, D and E of the Project and the
achievement of the objectives thereof, based on the conclusions and recommendations of
the said report and the Bank's views on the matter.

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11. The
Recipient
shall:

(a)
prepare, under terms of reference satisfactory to the Bank, and furnish to
the Bank, on or about September 30, 2008, a report integrating the results of the
monitoring and evaluation activities performed pursuant to paragraph 9(a) of this
Schedule 4, on the progress achieved in the carrying out of the Project, including an
assessment of the commitment of the partners in the Project, the interest of other
countries in the scaled-up marine electronic highway, evaluation of new technologies and
their potential applicability and inclusion in the marine electronic highway, and
determination of the need for Project restructuring, if any.

(b)
review with the Bank and with the parties to the Memorandum on
Arrangements, by December 31, 2008, the report referred to in paragraph (a) of this
Section, and, thereafter, take all measures required to ensure the efficient completion of
the Project and the achievement of the objectives thereof.

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SCHEDULE 5

Performance Indicators

Target Values
Data Collection and
Reporting
Performance
Baseline
YR1
YR2
YR3
YR4
YR5
Frequency
Data
Indicators
and
Collection
Reports
Instruments
Component


One (Part A)

PIPs prepared
No activity
100% 100% 100% 100% 100%
Semi-
Progress
and implemented





annual
report
on schedule and


updated
annually,
financial
management
system effective,
disbursements
on schedule.

All partners
No activity
100%
100% 100% 100% 100%
Annual
Stakeholder
report project





PSC
consultations
management
meetings

system is

functioning
effectively.

Four MEH data
No activity
80%
100% 100% 100%
Semi-
Progress
centers





annual
report
established. Data


production and
management
system
functioning
satisfactorily.

MEH
No activity
75%
100%
Semi-
Progress
demonstration

annual
report
system for


congested
300km section

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- 26 -
of the Straits
fully functional.

Component





Two (Part B)

Hydrographic
No activity
20%
100%
100% 100% 100%
Semi-
Progress
survey of MEH




annual
report
area completed.



Well-functioning No activity
25%
100%
100%
Semi-
Progress
ENCs for MEH
annual
report
demonstration
section of the
Straits available
for use by
appropriately-
equipped ships
in transit.

Component




Three (Part C)
At least 160
Ships use
80%
100%
Quarterly
Reports
large oil tankers
Straits' Auto
from ships
and container
Identification
using the
ships that
System
MEH
regularly pass
through the
Straits are able
and choose to
navigate through
the Straits using
electronic charts
and all other
components of
the
demonstration
MEH system.

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- 27 -
Component Four




(Part D)
Sand wave model
No
25% 100% 100% 100% Semi-
Progress
for the Straits
activity




annual
report
produced, tested and


integrated into the
MEH system.

Environmentally
No
25% 100% 100% 100% Semi-
Progress
sensitive areas
activity




annual
report
within and near



MEH demonstration
area mapped and
incorporated into
MEH system's
Electronic
Navigation Charts.

Environment staff in No
25%
100%
100% Semi-
Activity
the three littoral
activity

annual
plans and
states successfully
completion
complete simulated
reports
marine environment

emergency response
exercises.


Component Five
(Part E)

Well-designed and
No
50% 75%
90%
100% Semi-
Progress
functioning Web
activity


annual
report
Page created for



MEH; suite of
informative
publications issued.

Workshop on
No
50%
100% On
Completion
demonstration
activity


completion report
system design and



initial performance
held.

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Evaluation of
No
20%
100% On
Completion
potential economic,
activity


completion report
financial and



environmental
costs/benefits and
legal feasibility of
MEH system for
entire Straits and
Environment Fund
co-financed by it,
based on
performance of the
demonstration,
approved by key
stakeholders.

If, based on
No
100%
On
Completion
evaluation, key
activity
completion report
stakeholders decide

to develop MEH
system for the entire
Straits, proposal for
its design, financing
plan and
institutional
arrangements
prepared.

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