GREEN PROSPERITY PROJECT WINDOW 3.B CALL FOR PROPOSALS FOR CO-FINANCING GRANTS FOR COMMERCIAL RENEWABLE ENERGY PROJECTS IN INDONESIA

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1 MILLENNIUM CHALLENGE ACCOUNT - INDONESIA GREEN PROSPERITY PROJECT WINDOW 3.B [CfP Ref: CfP/GP-W3B /001/2015] CALL FOR PROPOSALS FOR CO-FINANCING GRANTS FOR COMMERCIAL RENEWABLE ENERGY PROJECTS IN INDONESIA 16 January 2015

2 Acronyms and Abbreviations AMDAL ANDAL BI CBO CfP COD CSR EPC ERR ES ESIA ESMP ESMS FA FS GHG GOI GP GP Facility IC IPP MCA-Indonesia MCC NGO NREL O&M PFS PLN PMC RE SGIP SLO SNI SPPL SPV TA Panel TAPP TOR TIP UKL UPL Analisis Mengenai Dampak Lingkungan Hidup Analisis Dampak Lingkungan Bank Indonesia Community-Based Organization Call for Proposal Commercial Operation Date Corporate Social Responsibility Engineering, Procurement & Construction Economic Rate of Return Environmental Services Environmental and Social Impact Assessment Environmental and Social Management Plan Environmental and Social Management System Financial Agent Feasibility Study Greehouse Gas(es) Government of Indonesia Green Prosperity Green Prosperity Facility Investment Committee Independent Power Producer Millennium Challenge Account - Indonesia Millennium Challenge Corporation Non-Governmental Organization National Renewable Energy Laboratory Operation & Maintenance Pre-Feasibility Study PT Perusahaan Listrik Negara (Persero) Project Management Consultant Renewable Energy Social and Gender Integration Plan Sertifikat Layak Operasi Standar Nasional Indonesia Surat Pernyataan Pengelolaan Lingkungan Special Purpose Vehicle Technical Appraisal Panel Technical Assistance & Project Preparation Terms of Reference Trafficking in Persons Upaya Pengelolaan Lingkungan Hidup Upaya Pemantauan Lingkungan Hidup 2

3 TABLE OF CONTENTS 1 Introduction Objective Nature of Grant... 5 Invitation Eligibility Information Applicant and Project Eligibility Requirements Renewable Energy Technology Geographic Focus for the GP Project... 7 Project Ownership Grant Process Overview Appraisal Criteria Envelope 1: Eligibility Screening Applicant Eligibility Appraisal Project Eligibility Appraisal Envelope 2: Technical Evaluation Technical and Operational Feasibility Documentation Review Environmental, Social and Gender Review Monitoring & Evaluation Preparedness & Implementation Plan Envelope 3: Commercial & Economic Evaluation Investment Committee, Grant Award & Disbursement Application Contents, Deadlines and Submission Instructions Application Contents Language and Form of Application Application Deadlines and Submission Instructions Questions and Answers PART A APPLICATION FORMS FOR ENVELOPE 1 - ELIGIBILITY Annex 1 Document Checklist Annex 2 Cover Letter Annex 3 Power of Attorney for signing of the Application Annex 4 Power of Attorney in favor of Lead Member of a Consortium Annex 5 Joint Application Agreement Annex 6 Applicant Information Annex 7 Attachment 1: Auditor s Certificate PART B APPLICATION FORMS FOR ENVELOPE 2 - TECHNICAL Annex 8 Document Checklist Annex 9 Business Proposal Template Annex 10 Social and Gender Inclusion Plan Annex 11 Environmental and Social Performance Data Sheet Annex 12 Monitoring & Evaluation Plan PART C APPLICATION FORMS FOR ENVELOPE 3 - COMMERCIAL & ECONOMIC Annex 13 Document Checklist Annex 14 Annex 15 Format of the Commercial and Economic Proposal Attachment 1 - Additional Commercial Information Annex 16 Annex 17 Attachment 2 - Indicative Financial Model Attachment 3 Data Sheet for Economic Analysis PART D GUIDANCE ON APPLICABLE MCA-INDONESIA STANDARDS Annex 18 Annex 19 Applicant and Related Definitions Criteria of Eligibility and definition of Non-Eligible Projects Annex 20 Annex 21 Non-Eligible Entities Conflict of Interest

4 Annex 22 Eligible Project Costs Annex 23 Annex 24 Project Ownership and Structure Indicative contents of a Feasibility Study Annex 25 Annex 26 Equipment and Plant Performance Standards Social and Gender Integration Guidance Annex 27 Annex 28 International Finance Corporation Performance Standards Other Pertinent Information PART E CONTRACTUAL ARRANGEMENTS Annex 29 Indicative Term Sheet for RE Co-Financing Grant

5 Millennium Challenge Account Indonesia Call for Proposals RE Co-Financing Grants for Commercial RE IPP Projects 1 Introduction On November 19, 2011, the Government of the United States, through the Millennium Challenge Corporation (MCC), entered into an agreement (the Compact) with the Government of Indonesia (GOI) aimed at reducing poverty in Indonesia through economic growth. The GOI established Millennium Challenge Account Indonesia (MCA-Indonesia) to manage and implement the Compact and its three projects on behalf of the GOI. The five-year Compact came into force on April 2, Among the Compact s three projects is the Green Prosperity (GP) Project, which has two main objectives: Increasing productivity and reducing reliance on fossil fuels by expanding generation from Renewable Energy (RE); and Increasing productivity and reducing land-based greenhouse gas emissions by improving land use practices and management of natural resources. The Green Prosperity Facility (GP Facility) is one of four activities under the GP Project. Under this Facility, MCA-Indonesia is launching this Call for Proposals (CfP) to Applicants per the details mentioned in the following sections. 1.1 Objective The objective of this CfP is to fulfill the goals of the GP Project by increasing short term commercial private RE investment in grid-connected projects that can be substantially completed by April 1, Nature of Grant The award of RE Co-Financing will be in the form of a cash grant (RE Co-financing Grant) for the purpose of reducing the investment required to meet the Project s capital cost (for details please refer to Annex 22). It is envisioned that the RE Co-Financing Grant will be disbursed during the construction phase of the Project based on agreed milestones. The terms and conditions of the RE Co-financing Grants shall be encapsulated in a grant agreement (Grant Agreement) to be signed between MCA-Indonesia and the Applicant (for details please refer to PART E). Applicants can be either an Independent Power Producer (IPP) which is the project enterprise, or the Promoter of the IPP, or a group of eligible entities (Consortium). For more details please refer to Annex 18. The main goal of this CfP is to accelerate development of predominately distributive-scale commercial RE power generation facilities selling power into PLN s grid. This CfP will also be used to assess eligibility for and award Technical Assistance and Project Preparation (TAPP) Grants as needed. TAPP Grants provide need-based finance to Eligible Applicants to strengthen their project preparation to meet MCA-Indonesia requirements, address any gaps identified by MCA-Indonesia as being required to be rectified to meet GP requirements and improve the quality of the required Project s Detailed Feasibility Study (DFS). 5

6 1.3 Invitation MCA-Indonesia is launching this CfP to provide RE Co-Financing Grants to on-grid RE IPP projects (Projects) to make them financially viable, achieve financial closure and accelerate their implementation. In order to assist the GOI s policy objectives, RE Co-Financing Grants are prioritized for projects with installed capacity between 1 and 10 MW 1. Subject to availability of funding after this prioritization, projects with capacity over 10 MW will be considered if they already have PPAs and meet MCA-Indonesia Project Eligibility criteria. Under this CfP, MCA-Indonesia has notionally allocated total RE Co-Financing Grant funds of approximately US$ 100 Million. MCA-Indonesia s authority to award grants remains available until committed but all grants must be disbursed no later than April 1, This CfP and its associated and pertinent documents can be downloaded from upon registration. More Information on TAPP Grants TAPP grants shall be awarded as milestone-based cash grants to Eligible Applicants in order to support high quality, evidence-based project preparation and will be utilized to obtain professional services such as, but not limited to, the following: Specific studies to bridge design gaps identified within an existing FS/DFS. These could include, among others, technical surveys and investigations; design engineering; economic and financial analysis; environmental, social and gender, and lifescape assessments; Capacity-building, staff training, and supervision services necessary for successful project preparation for implementation; and Incremental work related to complying with IFC s environment and social performance standards, as well as economic and life-scape analysis. 2 Eligibility Information 2.1 Applicant and Project Eligibility Requirements Before applying, an Applicant is strongly encouraged to refer to the key criteria detailed in Annex 18, Annex 19, Annex 20 and Annex 21 and to verify that it meets the Eligibility requirements specified in Section & In addition, an Applicant should verify that its proposed Project is compliant with the Project Eligibility delineated in Annex 19 and that all of the eligibility requirements of the Compact and this CfP are met. 1 W throughout this CfP refers to W electricity (W e). All capacities relate to net output after parasitic loads and internal losses. 6

7 2.2 Renewable Energy Technology Applicants are invited to submit projects that feature technology types that meet the objectives of the GP Project, Indonesian law, IFC Performance Standards and other relevant criteria listed in this CfP. The following table is provided for illustrative purposes only and features examples of technology types that are likely to be deployed within the limited Compact time frame and can meet the criteria and objectives of this CfP. Applicants may propose technologies other than those listed as long as such technology(ies) and project(s) meet all eligibility requirements set forth in this CfP, in particular the GP Facility goals of reducing reliance on fossil fuels and Greenhouse Gas (GHG) emissions. Category Power from Biomass or Biogas Table 1: Indicative RE Technologies Description Using Palm oil mill effluent (POME) fuel derived from sustainably derived palm oil Using Biogas fuel derived from animal manure or other organic waste materials Using Biomass fuel derived from trees, plants, cellulosic or other vegetative materials PV Solar Solar Photovoltaic systems with or without smart grid Thermal or Concentrated Solar Technologies Hydro-power Run of River Hydro Storage Hydro and/or Pumped Storage Hydro, providing that existing dams are utilized Wind Wind power systems Hybrid Combinations of the above. Projects may not bring on new fossil fuel-based generation. Only existing and operating diesel units are eligible to be combined with technologies listed above. It should be noted that MCA-Indonesia intends to feature as wide a spectrum of RE technologies as practical in its portfolio of commercial Projects. 2.3 Geographic Focus for the GP Project The GP Project originally identified and selected twelve Provinces (GP Provinces) which were eligible for Community RE Grant funding by the GP Facility. The number of eligible provinces changed to thirteen on the 25 th October 2012 with the creation of North Kalimantan, originally part of the eligible province of East Kalimantan. A list of these targeted GP Provinces is provided in Table 2 below and illustrated in Figure 1 below. All Projects must be sited and built within these GP Provinces. Table 2: MCA-Indonesia s GP Provinces Provinces where IPPs can be considered for RE Co-Financing Grants under this CfP 1 Jambi 8 West Sulawesi 2 West Sumatra 9 South Sulawesi 3 Bengkulu 10 Southeast Sulawesi 4 Riau 11 West Kalimantan 5 South Sumatra 12 North Kalimantan 6 West Nusa Tenggara 13 East Kalimantan 7 East Nusa Tenggara 7

8 It is a condition of entry of MCA-Indonesia into a given GP District that the local government should execute a Memorandum of Understanding (MoU) with MCA-Indonesia, through which the District agrees, including but not limited to, open and transparent issuance of permits, etc. A number of GP Districts have executed MoUs and these existing MoUs are available to be downloaded at this link: If an Application is received for a District which has yet to execute a MoU at date of Application, then it will be a condition that such a MoU must be in place prior to the award of a RE Co-Financing Grant. Applicants should understand that a RE Co-financing Grant can only be awarded in a District with an executed MoU. A TAPP Grant can be awarded in the absence of a MoU. MCA-Indonesia is responsible to obtain the MoU from the District. Figure 1: GP Provinces 2.4 Project Ownership The IPP should be the owner of the Project. It should be a company incorporated under Indonesia s company law and should have the right to participate in, undertake and operate RE projects in Indonesia. The IPP will be managed by a Promoter, who shall be responsible for implementing the Project. The IPP shall hold all licenses and permits. The IPP will be the entity to execute the Engineering Procurement and Construction (EPC) contract, warrants and the post-warranty Operations and Maintenance (O&M) contract for the Project and Power Purchase Agreement (PPA) with PLN. 8

9 The IPP may be owned by the Promoter, strategic investors and or other relevant key parties (such as the technology providers). The IPP should have an equity ownership of 51% or more by the private sector and the share capital in the IPP should be at least 20% of the Project s capital expenditure. The ownership portion by Applicant may not be diluted during the Grant Agreement and the completion of the construction of the Project. It should be noted that it is not the responsibility of MCA-Indonesia to undertake the work needed to obtain any licenses and permits. These responsibilities fall solely on the Applicant. To support sharing of benefits with the community, a condition of MCA-Indonesia s RE Co-Financing Grant shall be that the project enterprise (IPP) apportions a percentage profit share towards Corporate Social Responsibility (CSR) and/or Environmental Services (ES) activities. A passive revenue interest is envisioned. The percentage of profit share shall NOT be deemed as part of the CSR and/or ES responsibilities of Applicant as required under Law No. 40/2007 regarding Company Law, Law No. 32/2009 regarding Protection and Environmental Management or other prevailing laws and regulations. The percentage of profit share for CSR and/or ES will be determined and set during Grant Agreement finalization and will take into consideration the findings of an existing or required Enivironmental Impact Assessment (EIA)/Environmental and Social Impact Assesment (ESIA) and the required Social and Gender Assessment and Lifescape Analysis that will be conducted for the Project. For purposes of evaluation on an equivalence basis, Applicants should set the virtual community shareholding and hence profit share as equivalent to the ratio of 10% of RE Co-financing Grant Amount divided by the sum of equity capital and 10% of RE Co-financing Grant amount, such that: Percentage Profit Share for CSR and/or ES = 10% of RE Co-financing Grant Amount (Total Equity Capital + 10% of RE Co-financing Grant Amount) The specific CSR and/or ES activities will be identified through an EIA/ESIA and a Lifescape Analysis (see Annex 26), framed in the Project s Environmental and Social Management System (ESMS) and detailed in a comprehensive Environmental and Social Management Plan (ESMP). The terms and conditions of the CSR and/or ES component shall be discussed with successful Applicants and encapsulated in the RE Co- Financing Grant Agreement. More details on the Project structure and draft RE Co-Financing Grant Agreement are provided in Annex 23 and Annex 29, respectively. 3 Grant Process Overview The Application will consist of three envelopes: Envelope 1: Eligibility Envelope 2: Technical Envelope 3: Commercial & Economic Full details are given in the Part A, Part B & Part C Annexes. The overall timelines 2 of the RE Co-financing Grant process are presented below. 2 MCA-Indonesia reserves the right to extend any review timeframe depending upon response from the market, complexity of evaluations or other considerations. 9

10 Table 3: Call of RE Co-Financing Grant Process Timelines Process Milestones Dates Issuance of Call for Proposals 16-Jan 2015 Written Questions & Answers (weekly) 17-Jan 2015 through to 23-Mar 2015 Pre-Submission Meeting 3-Feb 2015 Proposal Submission Date 10-Apr 2015 Appraisal of Proposals by the Technical Appraisal Panel (TA Panel) 3 finish Approval from Investment Committee (IC) MCA-Indonesia announces IC decisions: 1. Successful Applicants approved by the IC, receive RE Co- Financing Grant Endorsement Letter; 2. Merit-worthy Projects which are substantially complete 4 approved by the IC, receive RE Co-Financing Grant Endorsement Letter and TAPP 5 Grant; 3. Merit-worthy Projects which are regarded as having substantially incomplete studies may receive a TAPP 6 Grant and can resubmit in a second call; 4. Unsuccessful Applicants informed. 15-Jun Jun Jun 2015 Applicant achieves Financial Close 7 at the latest within 6 months Grant Agreement signed 8 2 weeks after Financial Close Grant disbursements in installments as per disbursement milestones in the Grant Agreement Periodic progress monitoring by MCA-Indonesia Quarterly Last disbursement on or before 01-Apr 2018 A second call may be announced with the last date of submission in September 2015, depending upon application volume to this CfP and availability of funds after RE Co- Financing Grant awards from this CfP but there can be no guarantee. Prospective Applicants are therefore encouraged to respond to the current CfP in as complete manner as possible. 3 MCA-Indonesia may seek clarifications from Applicants with respect to the information provided in their Proposals and/or invite all Applicants who have passed the Eligibility Screening to make a short presentation on their Proposal to the TA Panel of MCA-Indonesia. 4 Applicants whose projects are found to be merit-worthy in general but have substantive deficiencies (e.g. technical issues, cross cutting issues, such as environmental, social, gender and economic aspects, etc.) that can constrain the efficacy of a decision by the Investment Committee will be advised to strengthen their project preparation and, subject to there being a second call, reapply for the RE Co-Financing Grant once the deficiencies are addressed. MCA- Indonesia may consider providing TAPP Grants on a selective basis, at its discretion. 5,6 TAPP Grant is used to fund studies to rectify the slight incompleteness of sound Detailed Feasibility Studies proffered by Applicants. 7 Financial Close includes financial restructuring in case of projects facing cost overruns. 8 Latest date of signing Grant Agreement upon fulfilment of conditions precedent, including financial close. 10

11 4 Appraisal Criteria Applicants are required to follow the format outlined in PART A, PART B and PART C of the Annexes. MCA- Indonesia will review each submission to determine whether or not such submission is responsive to the requirements of the CfP. As part of its review process, MCA-Indonesia will conduct a thorough review of the Application as per the criteria outlined below. Projects must pass each of the three stages on all criteria stipulated below to achieve RE Co-financing Grant award. 4.1 Envelope 1: Eligibility Screening At this stage an initial screening shall be conducted to verify the eligibility of each Applicant and its Project. An Applicant may submit more than one Proposal, if they have multiple Projects. Proposals not clearing this hurdle will be rejected Applicant Eligibility Appraisal The definition of Applicant and related entities can be seen in Annex 18. The appraisal will evaluate financial strength, technical expertise, management expertise and legal authorization of the Applicant. Detail of this evaluation is included below. [A] Financial Strength If the Applicant is an IPP or the Promoter of the IPP, then the Applicant may choose to showcase its own credentials or on its behalf place forth the credentials of its Promoters or an Associate company. If the Applicant is a Consortium, then all members proposing to invest at least 10% equity stake in the IPP can be evaluated including the Promoter and/or lead member. The assessment of the credentials shall be based on the following: Solvency: No cumulative loss in past 3 years, as per audited annual accounts statements. Cash Availability: The Applicant must demonstrate that it has an availability of cash to fund at least 20% of the Total Project Cost (TPC) 9. Cash availability shall be computed as a sum of Equity already invested in the Project (if any), the Cash Profit (Profit After Tax + Depreciation+ Amortized Expenses) for the latest audited year, deposits held with banks and other liquid investments. Tax Clearance: A satisfactory tax clearance certificate from the relevant tax authority. Credit Reference: A satisfactory letter of reference from bank(s) providing information on the existing credit facilities and the repayment track record for the past 3 years. [B] Technical Expertise An Applicant must fulfill the technical experience of developing power plants and also showcase satisfactory credentials of the intended EPC Contractor. The assessment of the technical credentials shall be based on the following: 1. Experience of Developing power plants (one of the following experience to be met) (a) Experience of Developing, as a Promoter, of power plant(s) with total capacity similar in size to the proposed Project. Only projects that have achieved commencement of operations shall be considered. 9 TPC is defined as per section

12 If the Applicant is an IPP or the Promoter of the IPP, then the Applicant may choose to showcase its own credentials or on its behalf place forth the credentials of its Promoters or an Associate company. If the Applicant is a Consortium, then it can showcase the credentials of a member of the consortium that proposes to hold at least 10% equity stake in the IPP or the credentials of its Promoter or Associate company, as applicable, OR (b) Experience of an individual who has worked as senior management in a company that has developed or constructed power plant(s), having experience of developing or managing project(s) with total capacity similar in size to the proposed Project. AND If the Applicant is not able to showcase experience of developing a power plant, as mentioned in (a) above, then it could showcase the curriculum vitae of an individual that fulfills the experience as mentioned in (b) above. However, the proposed individual is then expected to be employed as a senior management of the IPP or have a suitable contractual or shareholder arrangement with the IPP, as applicable. 2. Credentials of the EPC Contractor proposed for the IPP (must be fulfilled by all Applicants) Satisfactory experience of construction, installation and commissioning works (as an EPC contractor) of power plant(s) of a total installed capacity similar in size to the proposed Project. Only projects that have achieved commencement of operations shall be considered. The credentials of the entity that shall undertake construction, installation and commissioning works for the IPP should be showcased herein. The IPP should have either signed a contract with the EPC contractor or be in advanced stage of finalization of the EPC contract. [C] Management Expertise The Applicant should provide details of its key management team and the board of commissioners. The assessment shall be based on the following: Satisfactory credentials of the key management team (e.g. Board of Directors), Satisfactory credentials of the members of the Board of Commissioners. Satisfactory assessment of any reputational risk to MCA. [D] Legal Authorization The Applicant should fulfill these requirements. The assessment shall be based on the following: Registration: The IPP must be legally registered in Indonesia and should have the right to undertake and operate RE projects in Indonesia. If the IPP has yet to be established, it should be demonstrated that the Applicant, Promoter and Consortium as appropriate has warranted the intention to establish the IPP and that title to all lands, permits, contracts etc can be transferred to the IPP. Private Ownership: The IPP should not have its majority ownership or management control vested with the national or local government of Indonesia. 12

13 Applicant must not fall under a Non-Eligible Applicant: The Applicant should not be a Non-Eligible Project Partner. Please refer to Annex 20 for further information. No Conflict of Interest: The Applicant should not have a conflict of interest. Please refer to Annex 21 for further information. Licenses and permits: The IPP should have or be in the process of obtaining all licenses and permits for the Project Project Eligibility Appraisal This review will consist of evaluating whether the Project meets the following key eligibility criteria: [A] Project Type, Technology and Scale Technology: The Project must employ a renewable energy technology, be sized in compliance with this CfP and capable of connection to the PLN Grid (See details provided in Sections 1.3 and 2.2). Location: The Project must be located in one of the GP Provinces as listed in Section 2.3. Equity Contribution: The Project must have a capital structure with an equity contribution greater than or equal to 20 percent of Total Project Costs. Ownership: The Project must have an ownership structure consistent with the requirements specified in Section 2.4. [B] Pre-requisites Screening Objectives: The expected outcomes of the IPP are aligned with the GP objectives. Compact Conditions: Subject to a detailed examination to be undertaken by MCA-Indonesia in the technical proposal evaluation stage, the Project is expected to meet the Compact conditions of a minimum economic rate of return of 10%, achieved a reduction in reliance on fossil fuels by expanding renewable energy and the reduction of land-based greenhouse gas emissions. The Project must meet the Eligibility Requirements and in addition must not fall into the definition of Non-Eligible: The Project should meet the specific Eligibility Requirements of the Compact and the GP Project and not fall under the Non-Eligible Project list, both as defined in Annex 19. Implementation Time: The Project must be reasonably expected to achieve substantial completion on or before April 1, Projects that are not found acceptable will not proceed to Envelope 2 Technical Evaluation and will not have subsequent Application envelopes opened for consideration. Unopened envelopes will be discarded by MCA-Indonesia. 4.2 Envelope 2: Technical Evaluation At this stage, a detailed technical analysis of the business proposals shall be done. Only Applications passing this technical evaluation will be evaluated under Envelope 3: Commercial and Economic Evaluation. Applicants whose Projects are found to be merit-worthy in general but have substantive deficiencies (e.g. technical issues, cross cutting issues such as environmental, social, gender and economic aspects, etc.) which can constrain the efficacy of an investment decision, will be advised to strengthen their project preparation and reapply for the RE Co-Financing Grant once the deficiencies have been addressed. The TA Panel will recommend TAPP Grants for these otherwise merit-worthy projects to the IC for approval. 13

14 However, merit-worthy Projects with or without minor deficiencies and where an investment decision can be made will be taken forward for evaluation under Envelope 3: Commercial & Economic Evaluation. For a Project to succeed in Envelope 2 evaluation, it must comply with and pass on each of the below mentioned criteria Technical and Operational Feasibility A comprehensive assessment of the Application shall be conducted on the feasibility and long term sustainability of the technical and operational aspects of the Project. This shall include, but not be limited to, the analysis of: The Project site, to examine issues including but not limited to the site topography, geology, resource potential (i.e. acceptable geotechnical data, solar irradiation, wind, seismic or volcanic activity) access and deliverability of plant componentry. Supporting infrastructure, such as access roads, transmission and distribution lines, ability to immediately dispatch power, interconnection Right of Way and feasibility during operations. Fuel, Feedstock and Energy Supply sustainability, adequacy, security and reliability in relation to the Project s scope, scale of production and catchment area. Emphasis should be placed on security of supply, backup supplies and avoidance of total loss of supply. As appropriate, proposed fuel and feedstock contracts will be analyzed. Preliminary engineering design, to adequately address key project risks and optimize power generation. Design Life/ Sustainability, to verify that Project possesses a minimum 20-year design-life using an acceptable methodology. Plant Outputs, statement of projected scheduled and unscheduled outages for each year through the term of the PPA. Construction and Operating Standards, adherence to construction, equipment supply, operations and maintenance standards as per good industry practice, government regulations and PLN requirements. EPC arrangements, adequacy of proposed arrangements in relation to construction, equipment supply installation, testing and commissioning of the facility, contractor or vendor performance and quality assurance mechanisms. Clear preference shall be given to arrangements that provide greater time, cost and quality certainties. Competence, creditworthiness and financial health of the EPC contractor and its willingness and ability to accept a date-certain, lump-sum, fixed price EPC or comparable construction contract with appropriate liquidated damages to cover penalties for non-performance. Capability of EPC contractor to post Advanced Payment and Performance guarantees to ensure delivery of the Project. Demonstration of how pricing within the EPC contract represents good value. O&M arrangements, adequacy of proposed arrangements in relation to operations, maintenance, spares, repairs and downtime management. Contractor or vendor performance and quality assurance mechanisms. Management arrangements, including quality of key management team, corporate governance, financial management, auditing and reporting arrangements, project management and monitoring arrangements. Risk analysis, including project-specific risk identification and mitigation strategy. Key risks examined shall include siting, design, construction and commissioning, technology, feedstock, operating, maintenance and refurbishment, interface and grid integration, financial, market, political and force majeure. Total Project Cost (TPC) estimates, including detailed break-down of hard costs (construction costs) and soft costs (including, detailed engineering, price and scope contingency, project supervision, etc.), including any financing costs such as arranger fees, lender commitment fees 14

15 and Interest During Construction (IDC). A critical review of the reasonableness and reliability of cost estimates based on quality of underlying surveys, investigations and studies will also be undertaken. For purposes of calculation of Lender commitment fees and IDC. For purposes of comparison, every Application to this CfP will have its proposal converted by MCA-Indonesia into US Dollars using the average exchange rates posted by Bank Indonesia (BI) on the CfP release date. Such exchange rate will be published by MCA-Indonesia in the website. Construction schedule, including quality and completeness of project planning, reasonableness of the Project s timeline and ability to meet the GP window timelines Documentation Review A comprehensive due diligence shall be conducted to assess legal compliance and validity. This shall include, an assessment of the following: Project structure, to assess the legal viability of the Project structure proposed for the IPP. Contractual framework, legal viability and adequacy of risk sharing under Project contracts. Due diligence on title, licenses and permits, to verify validity and rights of the IPP through the term of the PPA, together with extent of local government support for the Project Environmental, Social and Gender Review 1. Environmental, social and gender sustainability Environmental, social and gender sustainability of the Project shall be a critical factor in selecting Projects which will receive RE Co-Financing Grants. In this context, MCA-Indonesia expects that all selected Projects must possess a core objective of improving environmental and social stewardship through adherence to Social and Gender Integration Plan (Annex 26), ESMS and IFC Performance Standards (Annex 27) as presented in ANDAL/UKL-UPL or SPPL documents, or other relevant environmental and social studies, that must meet IFC Performance Standards. The review shall include assessment of the following: Compliance with MCA-Indonesia s guiding documents and policies (ESMS, SGIP, Stakeholder Engagement Plan, etc.). Implementation Feasibility; includes the practicality of the actions required to manage the environment and social aspects of proposed project activities, components and associated facilities, and to gauge their impact on the overall timing of the project implementation within the GP time window. Applications should include the Environmental and Social Performance Datasheet (ESDS) provided in Annex 11. The ESDS should demonstrate a clear understanding of the priorities and risks for the proposed Project, including mitigation strategies and identification of any additional studies that will be required to further understand and identify risks, mitigation and opportunity options related to environmental and social issues. Should further studies be identified as needed, they should be built into Project design and budget structure. Applications should also include plans for Social and Gender Inclusion as provided in Annex Land Acquisition and Involuntary Resettlement Issues This is a major factor in determining whether a Project would be able to off-take grants in an expeditious manner and be successfully implemented. A comprehensive understanding on the following shall be developed: Interests and issues identified, including identification of land owners, issues and counter-claims thereof, etc. Land acquisition and resettlement action plan, including activities related to consultation, valuation, compensation and land acquisition. The interplay of environment and social aspects in land acquisition shall be examined. An assessment on the practicality of the land acquisition and 15

16 resettlement action plan shall be made in light of requirement that all compensation and resettlement activities must be completed prior to construction, or, for planned development prior to each phase of constructions. Compliance with MCA-Indonesia s standards, as highlighted in Annex Stakeholder Engagement This is another major factor in determining whether a Project would be able to receive grants in an expeditious manner and be successfully implemented. A comprehensive understanding on the following shall be developed: Stakeholder identification: Identification of government ministries (national, provincial and district level), private sector entities, Non-governmental Organizations (NGOs), Community-Based Organizations (CBOs) and other existing forum that have been or need to be informed or consulted as part of a stakeholder engagement process. Stakeholder engagement plan: Describes the policies, procedures and methods undertaken to engage stakeholders over the life of the Project Monitoring & Evaluation [A] Monitoring and Evaluation Plan For MCA-Indonesia, Monitoring and Evaluation is a continuing function that uses systematic data collection and analysis to provide project stakeholders with information on progress toward project outputs and objectives/goals. This information is critical both from an accountability perspective, as well as to inform implementation and sector learning. Applicants are required to provide a preliminary Monitoring & Evaluation (M&E) Plan that conveys how the Project will demonstrate results in line with the Project objectives. The plan must include clear output and outcome indicators and their targets. Outcomes and outputs for the M&E Plan should be clearly linked to the program logic and objectives provided above. The preliminary M&E Plan should be updated (as necessary), and finalized prior to signing the Grant Agreement. Applicants will be expected to undertake day-to-day monitoring of the progress of their Projects based on the indicators in the M&E Plan. More detail on this requirement is provided in Annex 12. [B] Impact Evaluation and Research Questions Testing and adding to the body of learning around the relationship between renewable energy and reductions in GHGs and economic activity is of special interest to MCC and MCA-Indonesia. To assist MCA- Indonesia s effort to draw policy and implementation lessons from each project through project-level impact evaluations, Applicants should suggest research questions related to renewable energy project design or results that could be examined as part of the impact evaluation of the proposed project. These questions will assist MCA-Indonesia in developing evaluations that can test the effectiveness of GP investments in RE and contribute to the literature. More detail on this requirement is provided in Annex Preparedness & Implementation Plan Based on a review of the Project documents and Applications, an overall assessment shall be made of the level of the Project s preparedness to move to an investment decision and ability of the Project to fit within the GP time-window. This shall include satisfactory assessment of any reputational risk to MCC. This shall include an assessment of: Level of Project preparedness, to gauge the extent to which Project documents and the Application are adequate for MCA-Indonesia to proceed for an investment decision. 16

17 To determine the extent and materiality of the Project preparation and design gaps in comparison to MCA-Indonesia s standards as applicable. To examine the possibility of remedial actions and technical assistance, if any. Implementation plan, to gauge the Project s fit within the GP time-window. Including reasonable ability of the Project to achieve Commercial Operation Date (COD) on or before April 1, Envelope 3: Commercial & Economic Evaluation It is expected that all Applications that successfully pass the Envelope 2 evaluation shall move forward to the evaluation under Envelope 3. The final selection shall be based on a ranking of the RE Co-Financing Grant quotes received. This shall include an assessment of: Financial Model, to assess the completeness and consistency of the proforma financial model to the business proposal submitted by the Applicant and compliance with the terms and conditions stipulated by MCA-Indonesia for providing RE Co-Financing Grants. Material inconsistencies, inadequacy and non-compliance shall be a ground for rejection of the proposal. In a case where a Project has an older PPA (before May 2014), it is expected to factor in a reasonable increase in tariff that it expects to renegotiate with PLN. Typically, it is expected that all Applicants (that have PPAs signed before May 2014 or later) will target the PLN s reference rate (Equity Internal Rate of Return of 18%), while seeking RE Co-financing Grants from MCA-Indonesia. RE Co-financing Grants will not be awarded to projects that seek excessive returns (defined as Equity Internal Rate of Return exceeding 23%). Economic Rate of Return (ERR), to assess that, the Project must achieve an ERR of at least 10%, such assessment will be undertaken by MCA-Indonesia using data provided by the Applicant. Level of RE Co-Financing Grant requested. The final selection and merit order list of Projects, as appropriately differentiated by technology shall be based on the RE Co-Financing Grant Index Value per Net Unit of Electricity Generated per annum. Mathematically this shall be computed as under: RE Co-Financing Grant Index Value = Total US Dollar Amount of RE Co-Financing Grant MWh of Averaged Net Electricity Generated Per Annum Where, MWh of Net Electricity Generated Per Annum is equal to the averaged projected amount of power expressed in MWh p.a. which will be delivered to PLN s Grid over the Term of the PPA. Evaluation will be done in single currency United States Dollars. 5 Investment Committee, Grant Award & Disbursement Applications which have passed the three Envelopes of evaluation and have been ranked upon their RE Co-Financing Grant Value, will have their Projects presented to the Investment Committee (IC) for the IC approval. These will also include merit-worthy projects with minor deficiencies and where the TA Panel has determined that an investment decision could be made on a conditional basis with TAPP Grants being allocated for any gap rectification, such as those related to environmental, social and gender management, etc. Merit-worthy projects with substantive deficiencies will be proposed to the IC to receive only TAPP Grants for strengthening the Project preparation and resubmit proposal at second call, if any. 17

18 For all Projects that are approved by the IC, MCA-Indonesia shall issue a Grant Endorsement Letter that shall stipulate the various conditions of the RE Co-Financing Grant. Such Grant Endorsement Letter can be used by the Applicants to improve their ability to effect an early financial close. The Grant Agreement must be executed within a period of six months from the date of issuance of the Grant Endorsement Letter. Disbursement of the RE Co-Financing Grant funds is based on EPC milestones, whereby a given deliverable is recognized from the successful performance and achievement of activities as reported by PMC and accepted by MCA-Indonesia. The EPC Contractor will need to nominate its Engineer of Record, who will be responsible to ensure delivery of the Project through self-certification in coordination with the Lenders Engineer. MCA- Indonesia through one or more of its consultants will undertake verification to monitor progress and ensure compliance with specification and standards. 6 Application Contents, Deadlines and Submission Instructions 6.1 Application Contents 1. The Application should consist of the following three envelopes and supporting documents: Envelope 1: Eligibility. For details please refer to PART A. Envelope 2: Technical. For details please refer to PART B. Envelope 3: Commercial & Economic. For details please refer to PART C. Each Envelope should be sealed and clearly identified by appropriate markings. 2. All three Envelopes should be within a further sealed package marked as Application for RE Co- Financing Grants for Commercial RE IPPs in Indonesia. 6.2 Language and Form of Application 1. All applications should be in the English language. Accurate translation should be provided for all documentation originally in Bahasa Indonesia or any other languages, such as feasibility study, permits, approvals, etc. Original documents should be submitted along with the translation. 2. The complete Application should be submitted in hard printed copy (1 original plus 3 copies) and an electronic copy (either in a CD ROM or flash-drive). 6.3 Application Deadlines and Submission Instructions 1. In order to encourage submissions of complete Applications as early as possible, the following deadlines have been established. Unless otherwise notified Applications are due at 12:00 hours Jakarta time on the deadline date specified below. 18

19 2. Applications shall be received no later than 10 th April Applications received after that time & date will be rejected and returned unopened. 3. Applications will be systematically reviewed as they are received. However, final selection will not occur until after all applications are competitively evaluated against all others submitted during the corresponding review. 4. Any further submissions associated with this CfP, deadline dates and additional Calls for Proposals will be announced on MCA-Indonesia website as soon as they are available. The complete Application should be sent to: Sub: Application for RE Co-Financing Grants for Commercial RE IPPs in Indonesia To: Grant Administrative Support Team MCA - INDONESIA MR21 Building, 6 th Floor, Jl. Menteng Raya No. 21 Jakarta 10340, Indonesia 6.4 Questions and Answers 1. MCA-Indonesia will only accept Written Questions and will only give Written Answers. All Q & A will be published on the MCA-Indonesia website including those which took place at the Pre-submission Meeting. 2. Written questions, clarification requests or feedback related to this CfP must be submitted to gp.window3b@mca-indonesia.go.id during the period of 17 th January 2015 to 16 th March MCA-Indonesia will respond to all queries and responses at least weekly through this period through a rolling answering/posting at: through to the last posting on the 23 rd March

20 PART A Annex 1 APPLICATION FORMS FOR ENVELOPE 1 - ELIGIBILITY Document Checklist The Applicant must submit the following documents which are required to be fulfilled at the relevant stage on the day of proposal submission. No Document Reference 1 Cover Letter Annex 2 2 Power of Attorney for authorized signatory of Applicant Annex 3 3 Power of Attorney in favor of Lead Member of a Consortium, if applicable Annex 4 4 Joint Application Agreement Annex 5 5 Applicant and Project Eligibility Information Annex 6 6 Documents related to the IPP: Copy of certificate of incorporation. Memorandum and Articles of Association / or equivalent documents Reports on all studies, investigations and surveys undertaken for the Project Copy of all licenses and permits Copy of the latest tax clearance certificate Copy of the signed Power Purchase Agreement with PLN or draft under discussions, as applicable Certificate from a chartered accountant certifying the investments already made in the IPP, if applicable Audited annual reports of the IPP for last 3 financial years. Latest being not older than December Promoter / Consortium Information Certificate of Registration and Memorandum and Articles of Association of the Company or Consortium Agreement Copy of the latest tax clearance certificate Audited Annual Accounts of the Promoter Company /lead member/entity responsible for project financing for the last three years. Latest being not older than December Key Management - CVs 9 Technical Experience Applicable for developer or EPC experience, a certificate of completion of construction related to power plant (commissioning certificate). Applicable for developer experience only, a certificate from a chartered accountant certifying the equity investment made in the power plant and the role of the company thereof. Applicable for individual experience, a bio-data of a senior management staff with past employer contact details for reference check. Additional documents related to the EPC contractor such as, audited annual accounts for last three years, corporate brochure or presentation, certificates of completion of works undertaken in the last three years, letters of recommendations from clients (if any), credit reference from EPC Contractor s bank, and ongoing litigation details (if any). 10 Bank Reference A reference letter from applicant/promoter s bank providing information on existing credit facilities and repayment track record for last 3 years. 20

21 No Document Reference Any letters from banks expressing their intent to lend to the Project, if applicable. Where projects have incurred cost over-runs, copies of loan agreements, financing documents, and all recent communications between the Applicant and Lender should be provided. 11 Attachment 1: Auditor s Certificate Annex 7 21

22 Annex 2 Cover Letter RE CO-FINANCING GRANTS FOR COMMERCIAL RE IPPs IN INDONESIA To: Millennium Challenge Account-Indonesia MR21 Building, 11 th Floor Jalan Menteng Raya No. 21 Jakarta 10340, Indonesia Attn. Director - Green Prosperity [Place, Date/Month/Year] Dear Sir, We the undersigned, [name of Applicant, include members of the consortium, if applicable], are [type of organization] based in [complete address of organization, including location]. [Please also inform about your organization/consortium background in one or two paragraphs] Herewith we would like to convey our interest to apply for MCA-Indonesia s Call: RE Co-Financing Grants for Commercial Renewable Energy IPPs in Indonesia. We have interest for the specific Project: [please indicate the name and brief details of the project]. We are willing to follow the whole procedure that is set forth by MCA-Indonesia for this particular Grant. We are pleased to discuss any details regarding our Application if required. Sincerely yours, [Signature of the Applicant s Representative] [Name & Position of Applicant s Representative] 22

23 Annex 3 Power of Attorney for signing of the Application Defined terms in this Power of Attorney have the respective meanings given in the CfP. Whereas MCA- Indonesia has invited Applications from Applicants for the RE Co-Financing Grants for Commercial Renewable Energy IPPs in Indonesia; and whereas it is necessary for Applicants to submit a Power of Attorney authorizing the signatory of the Application to commit the Applicant. Know all people by these presents, we []/ [and []; [] if a Consortium] (name of the firms and addresses of the registered office) do hereby irrevocably constitute, nominate, appoint and authorize Mr./ Ms.[] and presently residing at[]who is presently employed with [] and holding the position of[], as our true and lawful attorney (hereinafter referred to as the Attorney)[being one of the Members of the Consortium, as the lead Member of the Consortium] to do in our name and on our behalf, all such acts, deeds and things as are necessary or required in connection with or incidental to submission of our application for the Project proposed including but not limited to signing and submission of all applications and other documents and writings, participate in investor conference and other conferences and providing information/ responses to MCA-Indonesia, representing us in all matters before MCA-Indonesia, signing and execution of all relevant CfP Documents including the Grant Agreement, and undertakings consequent to acceptance of our Application, and generally dealing with MCA-Indonesia in all matters in connection with or relating to or arising out of our application for the said Project and/ or upon award thereof to us and/or till the entering into of the Grant Agreement with MCA-Indonesia. AND We hereby agree to ratify and confirm and do hereby ratify and confirm all acts, deeds and things done or caused to be done by our said Attorney pursuant to and in exercise of the powers conferred by this Power of Attorney and that all acts, deeds and things done by our said Attorney in exercise of the powers hereby conferred shall and shall always be deemed to have been done by us. IN WITNESS WHEREOF WE [], / [and []; [] if a Consortium] THE ABOVE NAMED PRINCIPAL HAVE EXECUTED THIS POWER OF ATTORNEY ON THIS [DAY] OF [] 201[]. For.. Witnesses: 1. (Signature, name, designation and address) 2. (Notarized) Accepted (Signature) (Name, Title and Address of the Attorney) Notes: The mode of execution of the Power of Attorney should be in accordance with the procedure, if any, laid down by the applicable law and the charter documents of the executants (s) and when it is so required, the same should be under common seal affixed in accordance with the required procedure. Wherever required, the Applicant should submit for verification the extract of the charter documents and documents such as a board or shareholders resolution/power of attorney in favour of the person executing this Power of Attorney for the delegation of power hereunder on behalf of the Applicant. 23

24 Annex 4 Power of Attorney in favor of Lead Member of a Consortium Only in case of a Consortium, this Power of Attorney needs to be signed by the authorized signatory of other members of the Consortium in favor of the Lead Member. Defined terms in this Power of Attorney have the respective meanings given in the CfP. Whereas MCA-Indonesia has invited Applications from Applicants for the RE Co-Financing Grants for Commercial Renewable Energy IPPs in Indonesia. Whereas, the members of the Consortium are interested in applying for the RE Co-Financing Grants and implementing their Project in accordance with the terms and conditions of the CfP Documents, and Whereas, it is necessary under the CFP for the Members of the Consortium to designate the Lead Member with all necessary power and authority to do for and on behalf of the Consortium, all acts, deeds and things as may be necessary in connection with the Consortium s application who, acting jointly, would have all necessary power and authority to do all acts, deeds and things on behalf of the Consortium, as may be necessary in connection with the Consortium s application for RE Co-Financing Grant. NOW THEREFORE KNOW ALL MEN BY THESE PRESENTS We, [](Lead Member) and [](the respective names and addresses of the registered office 9 ) do hereby designate []being one of the Members of the Consortium, as the lead Member of the Consortium, to do on behalf of the Consortium, all or any of the acts, deeds or things necessary or incidental to the Consortium s application for RE Co-Financing Grant, including submission of application/proposal, participating in conferences, responding to queries, submission of information/ documents and generally to represent the Consortium in all its dealings with MCA-Indonesia, any other Government Agency or any person, in connection with the Project until culmination of the process of application and thereafter till the Grant Agreement is entered into with MCA-Indonesia. We hereby agree to ratify all acts, deeds and things lawfully done by Lead Member, our said attorney pursuant to this Power of Attorney and that all acts deeds and things done by our aforesaid attorney shall and shall always be deemed to have been done by us/ Consortium. Dated this the [] day of [], (Executants) Note The mode of execution of the Power of Attorney should be in accordance with the procedure, if any, laid down by the applicable law and the charter documents of the executant(s) and when it is so required, the same should be under common seal affixed in accordance with the required procedure. Wherever required, the Applicant should submit for verification the extract of the charter documents and documents such as a board or shareholders resolution/power of attorney in favor of the person executing this Power of Attorney for the delegation of power hereunder on behalf of the Applicant. 9 In case of partnership firm : name and address of principal office of the partnership firm to be provided 24

25 Annex 5 Joint Application Agreement (Only in case of a Consortium, this Joint Application Agreement needs to be signed by the authorized signatory of the members of the Consortium). THIS JOINT APPLICATION AGREEMENT is entered into on this the day of 2015 (the Agreement ) AMONGST 1. { Limited, a company incorporated under the **************** and having its registered office at (hereinafter referred to as the First Part which expression shall, unless repugnant to the context include its successors and permitted assigns); AND 2. Limited, a limited liability company incorporated under the ************ and having its registered office at (hereinafter referred to as the Second Part which expression shall, unless repugnant to the context include its successors and permitted assigns); AND 3. Limited, a limited liability company incorporated under the ********************* and having its registered office at (hereinafter referred to as the Third Part which expression shall, unless repugnant to the context include its successors and permitted assigns)} The above mentioned parties of the FIRST, SECOND and, THIRD PART are collectively referred to as the Parties and each is individually referred to as a Party. WHEREAS, A. The Millennium Challenge Account Indonesia, hereinafter referred to as ( MCA-Indonesia ) has invited Applications by its Call for Proposal No. dated (the CfP ) for selecting Applicants for providing RE Co-Financing Grants for Commercial Renewable Energy IPPs in Indonesia (the Project ) through private sector participation; B. The Parties are interested in jointly applying for the Project as Members of a Consortium (as defined below) and in accordance with the terms and conditions of the CfP Documents; and C. It is a necessary condition under the CfP that the Members of the Consortium shall enter into a joint application agreement and furnish a copy thereof with their Application. NOW IT IS HEREBY AGREED as follows: 1. Definitions and Interpretations In this Agreement, the capitalized terms shall, unless the context otherwise requires, have the meaning ascribed thereto under the CfP. 2. Consortium The Parties do hereby irrevocably constitute a Consortium (the Consortium ) for the purposes of jointly participating in the Application Process for the Project. The Parties hereby undertake to participate in the Application Process only through this Consortium and not individually and/or through any other consortium constituted for the Project, either directly or indirectly. 25

26 3. Covenants The Parties hereby undertake that in the event the Consortium is selected, they shall make equity investments in the IPP as required by and in accordance with the CfP Documents for performing all its obligations in accordance with the Grant Agreement. 4. Role of the Parties The Parties hereby undertake to perform the roles and responsibilities as described below. a) Party of the First Part shall be the lead Member of the Consortium and shall have the Power of Attorney from all Parties for conducting all business for and on behalf of the Second Consortium during the Application Process and until the effective date under the Grant Agreement when all the obligations of the Project Enterprise shall become effective; b) {Party of the Second Part shall be ; and} c) {Party of the Third Part shall be.} 5. Joint and Several Liability The Parties do hereby undertake to be responsible for their respective obligations and liabilities relating to the Project in accordance with the terms of the CfP Documents for the performance of the Project Enterprise s obligations. 6. Shareholding in the Project Enterprise The Parties agree that the proportion of shareholding among the Parties in the IPP shall be as follows: First Party: Second Party: Third Party: etc. 7. Representation of the Parties Each Party represents to the other Parties as of the date of this Agreement that: a. such Party is duly organized, validly existing and in good standing under the laws of its incorporation and has all requisite power and authority to enter into this Agreement; b. the execution, delivery and performance by such Party of this Agreement has been authorized by all necessary and appropriate corporate or governmental action and a copy of the extract of the charter documents and board resolution/power of attorney in favor of the person executing this Agreement for the delegation of power and authority to execute this Agreement on behalf of the lead Member of the Consortium is annexed to this Agreement, and will not: i. require any consent or approval not already obtained; ii. iii. violate any Applicable Law presently in effect and having applicability to it; violate the memorandum of association and articles of association, by-laws or other applicable organizational documents thereof; 26

27 iv. violate any clearance, permit, concession, grant, license or other governmental authorization, approval, judgment, order or decree or any mortgage agreement, indenture or any other instrument to which such Party is a party or by which such Party or any of its properties or assets are bound or that is otherwise applicable to such Party; and v. create or impose any liens, mortgages, pledges, claims, security interests, charges or any other encumbrances or obligations to create a lien, charge, pledge, security interest, encumbrances or mortgage in or on the property of such Party, except for encumbrances that would not, individually or in the aggregate, have a material adverse effect on the financial condition or prospects or business of such Party so as to prevent such Party from fulfilling its obligations under this Agreement; c. this Agreement is the legal and binding obligation of such Party, enforceable in accordance with its terms against it; and d. there is no litigation pending or, to the best of such Party s knowledge, threatened to which it or any of its affiliates is a party that presently affects or which would have a material adverse effect on the financial condition or prospects or business of such Party in the fulfillment of its obligations under this Agreement. 8. Termination This Agreement shall be effective from the date hereof and shall continue in full force and effect until the signing of the Grant Agreement. However, in case the Consortium does not get selected, the Agreement will terminate, in accordance with the mutual agreement of the Parties. 9. Miscellaneous This Joint Application Agreement shall be governed by laws and regulations of Indonesia. The Parties acknowledge and accept that this Agreement shall not be amended by the Parties without the prior written consent of MCA-Indonesia. IN WITNESS WHEREOF THE PARTIES ABOVE NAMED HAVE EXECUTED AND DELIVERED THIS AGREEMENT AS OF THE DATE FIRST ABOVE WRITTEN. SIGNED, SEALED AND DELIVERED For and on behalf of LEAD MEMBER by: (Signature) (Name) (Address) (Designation) SIGNED, SEALED AND DELIVERED For and on behalf of 27

28 SECOND PART (Signature) (Name) (Designation) (Address) SIGNED, SEALED AND DELIVERED For and on behalf of THIRD PART (Signature) (Name) (Designation) (Address) In the presence of: (Signature) (Name) (Designation) (Address) (Signature) (Name) (Designation) (Address) Notes: 1. The mode of execution of the Joint Application Agreement should be in accordance with the procedure, if any, laid down by the applicable law and the charter documents of the executant(s) and when it is so required, the same should be under common seal affixed in accordance with the required procedure. 28

29 2. Each Joint Application Agreement should attach a copy of the extract of the charter documents and documents such as resolution/power of attorney in favor of the person executing this Agreement for the delegation of power and authority to execute this Agreement on behalf of the Member of the Consortium. 29

30 Annex 6 Applicant Information 1. Applicant Details Applicant Name Registered Address # Year of Incorporation # Nature of incorporation # (Joint Stock Company/ Others specify): Contact Point # Authorized Signatory # Name and contact details of the individual who will serve as the point of contact/ communication Name: Designation: Company: Address: Telephone Number: Address: Fax Number: Particulars of the authorized signatory of the Applicant: Name: Designation: Company: Address: Telephone Number: Address: Fax Number: # In case the Applicant is a Consortium, the above information should be provided for all members of the Applicant Consortium. 2. Promoter Details Promoter Name Registered Address # Year of Incorporation # Nature of incorporation # (Joint Stock Company/ Others specify): Information regarding the role of each member should be provided in accordance with the following table: No. Name of the Consortium Member Role Please specify the following, as applicable: Lead Promoter Consortium Member(s) to be assessed for financial strength Consortium Member(s) to be assessed for technical strength Consortium Member(s) to provide EPC for IPP 30

31 3. Project Name and Description Parameter Project Name IPP Name Location Capacity (in Mega Watts) Installed Capacity Annual Averaged Availability Technology Project Eligibility Project Cost Project Description Description Please give Gross & Net capacities, and expected scheduled and unscheduled outages per averaged year. Specify major scheduled outages after a given number of hours. Using the guidelines in Annex 19, present the case to demonstrate that the Project meets Eligibility and that it is Non- Eligible. Studies and Investigations already undertaken Licenses and permits Tax Clearance Certificate Does the IPP have a signed Power Purchase Agreement with PLN? Land Acquisition and Resettlemnt Current Status of Project Any other relevant Information Please provide a list of studies, surveys and investigations already done: Please annex a copy of the reports in Envelope 2. Please provide a list of licenses and permits that the IPP has received from the government or statutory authorities. Please provide a copy of all licenses and permits received, as annex to this form in Envelope 1. Yes/ No. If yes, then please provide a copy as annex to this form. Yes/ No If yes, then please provide a copy of the PPA., as annex to this form in Envelope 1. Please briefly explain the land acquisition plan and how much land has been acquired, as well as any resettlement and/or occurance of physical or economical displacement. Has the construction started? If yes, then please specify the amount already spent along with a certificate from the lender s engineer or a chartered accountant. Has the equity and debt required for the project been souced/committed? If yes then please provide details. Describe and present any other relevant data or information pertaining to the Project 31

32 4. Equity Ownership Information Role Name Equity Stake in Project Promoter or % Lead Member -a Equity Investor 1 -b % Equity Investor 2 -c % Registered Address -d Legal Status e Equity Investor 3 -c Equity Investor N -c % % % Total 100% -a: The entity that shall have the management control of the IPP -b: The entity responsible for arranging the the project financing, if different from the promoter -c: Other investors holding or proposing to hold equity capital in the IPP project -d: The registered address of the entity and country of incorporation or domicile -e: Whether the entity is an individual or a firm or company, partnership, association, society, trust, joint venture, joint stock company, or other business entity 5. Key Management Information Brief information on the key management team, including members of the governing board and members of the Board of Directors. Name Designation Tenure Key Qualifications Experience Profile 6. Technical Experience An Applicant must fulfill the technical experience of developing power plants and also showcase satisfactory credentials of the intended EPC Contractor. Please specify as applicable and indicate the documentary evidence being provided to support this claim. (1) IPP/Promoter/Shareholder or Consortium Member: 32

33 (2) Technical (Development) Experience cited (please select from one or more of the below options). Experience of Developing power plants (one of the following experience to be met) (a) Experience of Developing, as a Promoter, of power plant(s) similar in size to the proposed Project. Only projects that have achieved commencement of operations shall be considered. If the Applicant is an IPP or the Promoter of the IPP, then the Applicant may choose to showcase its own credentials or on its behalf place forth the credentials of its Promoters or an Associate company. If the Applicant is a Consortium, then it can showcase the credentials of a member of the consortium that proposes to hold at least 10% equity stake in the IPP or the credentials of its Promoter or Associate company, as applicable, OR (b) Experience of an individual who has worked as senior management in a company that has developed or constructed power plant(s), having experience of developing or managing project(s) with a total capacity similar in size to the proposed Project. AND If the Applicant is not able to showcase experience of developing a power plant, as mentioned in (a) above, then it could showcase the curriculum vitae of an individual that fulfills the experience as mentioned in (b) above. However, the proposed individual is then expected to be employed as a senior management of the IPP or have a suitable contractual or shareholder arrangement with the IPP, as applicable. Project Details for Technical Experience cited in (a) or (b) above. No. Item Particulars of the Project 1 Title & Nature of the Project Technology Capacity (Installed, Capacity Factor) 2 Category of Technical Experience Developer Experience or Individual Experience IPP Shareholder/Ultimate Shareholder (Promoter) 4 Location 5 Total Project Cost Amount US$ 6 Equity investment made in the project, if Amount US$ (% of equity) applicable Equity Investor Name 7 Value of construction contract undertaken, if Amount US$ applicable Contractor Name 8 Date of commencement of project construction 9 Date of completion/commissioning (COD) A separate table should be filled for each Eligible Project Certificate from the Applicant s/ or Member s statutory auditor or its respective clients must be furnished in accordance with the format shown in Attachment 1 for each Eligible Project. In jurisdictions that do not have statutory auditors, the auditors who audit the annual accounts of the Applicant/ Member may provide the requisite certification. Additional documentary evidence (SLO) to support the technical experience claim, as required. Individual s Experience Details (Curriculum Vitae) for Technical Experience cited in (b) above. This should showcase academic and general qualifications, employment experience and specific task details related to the project showcased. In addition, the table for project details should be filled up. 33

34 (3) Technical (EPC Contractor) Experience cited. Credentials of the EPC Contractor proposed for the IPP (must be fulfilled by all Applicants) Satisfactory experience of construction, installation and commissioning works (as an EPC contractor) of power plant(s) of a installed capacity similar in size to the proposed Project. Only projects that have achieved commencement of operations shall be considered. The credentials of the entity that shall undertake construction, installation and commissioning works for the IPP should be showcased herein. The IPP should have either signed a contract with the EPC contractor or be in advanced stage of finalization of the EPC contract. Project Details for Technical (EPC Contractor) Experience. No. Item Particulars of the Project 1 Title & Nature of the Project Technology Capacity (Installed, Capacity Factor) 2 Category of Technical Experience EPC Experience IPP Shareholder/Ultimate Shareholder (Promoter) 4 Location 5 Total Project Cost Amount US$ 6 Total Equity in the project Amount US$ (% of equity) Equity Investor Name 7 Value of construction contract undertaken Amount US$ Contractor Name 8 Date of commencement of project construction 9 Date of completion/commissioning (COD) A separate table should be filled for each Eligible Project Certificate from the Applicant s/ or Member s statutory auditor or its respective clients must be furnished in accordance with the format shown in Attachment 1 for each Eligible Project. In jurisdictions that do not have statutory auditors, the auditors who audit the annual accounts of the Applicant/ Member may provide the requisite certification. Additional documentary evidence (SLO) to support the technical experience claim, as required. Additional information and documents related to the EPC contractor should be provided including: Audited Annual Accounts for last three years Corporate Brochure or presentation Certificates of completion of works undertaken in the last three years Letters of recommendations from clients, if any Credit reference from EPC Contractor s bank: A letter of reference bank(s) providing information on the existing credit facilities and the repayment track record for last 3 years. Details about any ongoing litigation against the EPC Contractor, if applicable. If yes, then please provide brief details and reasons why it will not affect the IPP project. 34

35 7. Financial Strength If the Applicant is an IPP or its Promoter, then the Applicant may choose to showcase its own credentials or on its behalf place forth the credentials of its Promoters or an Associate company. In case of Consortium, all members proposing to invest at least 10% equity stake in the IPP can be evaluated including the Promoter and/or lead member. Parameter Promoter Member 2 Member 3 n Name Proposed Equity Share Capital in IPP Profit After Tax FY 2013: US$ FY 2012: US$ FY 2011: US$ Ability to Fund Equity (in US$) Cash Availability: The Applicant shall demonstrate that it has an availability of cash to fund at least 20% of the Total Project Cost. Cash Availability shall be computed as a sum of = (1) Equity already invested in the Project (if any), (2) the Cash Profit (Profit After Tax + Depreciation+ Amortized Expenses) for the latest audited year, (3) deposits held with banks and (4) other liquid investments. Tax Clearance Certificate If yes, then please provide a copy as annex to this form. Yes/ No Yes/ No Yes/ No 35

36 8. Credit Track Record (a) Current Status of Borrowings (separately for project enterprise and promoter): No. Borrower Loan Amount Period Purpose of loan Lender Lender Contact Person Address and Telephone Loan Outstanding As on date (b) Credit Track Record for the last three years: (Please show separately for project enterprise and promoter, details of any overdue payments during the last three years, even if they have been settled now) No. Borrower Loan Amount Overdue Period for which overdue Purpose of loan Reasons for Payment delay/default Lender Current Status (c) Credit reference from Applicant s or lead member s bank: A letter of reference from the Applicant s or its promoter/ lead member s bank(s) providing information on the existing credit facilities and the repayment track record for last 3 years. (d) Any letter of intent or endorsement from a prospective lender expressing its interest in lending to the IPP will also be considered. 9. Disputes Is there any litigation ongoing against the Applicant, Project Company and/or its equity investors? (a) Yes / No (b) If yes, then please provide brief details and reasons why it will not affect the IPP project. 36

37 Annex 7 Attachment 1: Auditor s Certificate [In case of Technical Experience related to developing power plants] Based on its books of accounts and other published information authenticated by it, this is to certify that.. (name of the Applicant/Member) is/ was an equity shareholder in.. (title of the project company) and holds/ held US$... (US$..) of equity (which constitutes..% of the equity) of the project company from... (date) to.. (date). The project has an installed capacity of Mega Watts. The project was commissioned on. (date of commissioning of the project). We further certify that the total estimated construction cost of the project is US$. (US$ ). OR [In case of Technical Experience related to Constructing power plants] We certify that the (name of the Applicant / Member / EPC Contractor) has constructed the Eligible Project and the total capital cost of such Eligible Project is US$.... (US$ ). The project has an installed capacity of Mega Watts. The project was commissioned on. (date of commissioning of the project). Name of the audit firm: Seal of the audit firm: (Signature, name and designation of the authorized signatory) Date: 37

38 PART B APPLICATION FORMS FOR ENVELOPE 2 - TECHNICAL Annex 8 Document Checklist No Document Reference 1 Business Proposal Template Annex 9 2 Social and Gender Inclusion Plan Annex 10 3 Environmental and Social Performance Data Sheet Annex 11 4 Monitoring & Evaluation Plan Annex 12 38

39 Annex 9 Business Proposal Template Applicants are advised to prepare their applications using the following Table of Contents. Applications should be prepared addressing each of the items listed below. Exclusion of information listed below may weaken the overall quality of the application and may eliminate the project from consideration. [A] PROJECT SUMMARY Project Summary is a total overview of the technical information. Applicant should give all the important facts and figures in a brief manner, in not more than 20 A4 Pages of 11 font. Applications should be prepared addressing each of the items listed below. 1. Location of The Project 2. Contact Person Name of IPP Location of the project 1 Dusun 2 Village/Desa 3 Sub District/Kecamatan 4 District/Kabupaten 5 Province/Provinsi 6 GPS Coordinate Contact Person 1 Name of Contact Person 2 Type and Organization Name (Private Ltd Co., Public Ltd Co., Consortium, Cooperative / others specify). Specify the relevant law under which the entity is registered. 3 Name of head of the organization 4 Postal address: 5 Office phone numbers - landline: 6 Fax: Website: 9 Key contact person 10 Cell number of the key contact person 39

40 3. List of Permits List of Permits No Permit Type Issue Date Expiry Date 1 Location Permit 2 Principal Permit 3 Disturbance Permit (HO) 4 Intake and utilization of Surface Water Permit 5 Environmental Permit 6 Building Development Permit (IMB) 7 Forestry Permit 8 Temporary Power Sale Permit/Power Purchase Permit 9 PPA (Power Purchase Agreement) 10 Standard Operating Feasibility (SLO) 11 And other permit available related to the Project (Please listed) 12 Other Relevant Permits.. 4. Executive Summary shall contain: Provide a description of the nature and scope of the Project, The latest status and condition of the Project. The technology, site, purpose, size, capacity, design features, key metrics, key milestones, Environmental Management Plan, Social and Gender Plan, Safety and Health Plan and Quality Assurance/Quality Control plan. Describe the commercial feasibility of the technology(ies) and how you intend to employ such technology(ies) in the Project. Include target dates for (i) financial close for the debt and strategic/sponsor equity, (ii) commencement of site preparation and construction, (iii) commercial operation; and (iv) supplying electricity to PLN Provide a brief description of the capital expenditure and operational expenditure including maintenance. Financial analysis and information should be provided in Envelope 3. Every Application to this CfP will have its Rupiah and other non US Dollar components of the TPC converted by MCA-Indonesia into US Dollars using the average exchange rates posted by Bank Indonesia (BI) on the CfP release date. Proposal Rationale (including why the Applicant requires funds from MCA-I, and how the fund can accelerate the Project) 40

41 [B] PROJECT DESCRIPTION AND TECHNICAL INFORMATION The Applicant should provide all necessary documents in detail including feasibility study technical specification, datasheet, certification letter, report or any related document. 1. Description of Project Design: A description of the basic processes involved in the Project design including Basic Engineering Design, Technical Specification and standard. 2. Description of Technology to be employed: A description of the technology to be employed in the Project, and a description of how this technology meets the eligibility requirements as set forth in Section 2.2 of this CfP. 3. Detailed Total Cost: Provide a detailed estimate of Project Costs in accordance with generally accepted accounting principles and practices including (i) a breakdown by cost category, year of expenditure and basis for amounts, (ii) a description of the methodology and key assumptions used to make each estimate, and (iii) costs for escalation and contingencies indicating whether each cost is firm or subject to change. Distinguish between eligible and ineligible costs as set forth in the MCA-Indonesia Eligible Cost (please refer to Annex 222). 4. Provincial and Local Support: Describe the status of potential and actual forms, amounts and conditions of provincial and local support for the project or facility. Provide timelines for such assistance. 5. Proposed Project or Facility Location: Identify the proposed location and the rationale for the site location. An Applicant proposing more than one location for a project must set forth in its Application its justification for situating the Project in more than one location. Applicant must confirm that the site is located in an eligible Province as set forth in the Compact. 6. Feasibility Study(ies): It is expected that the Application shall be based on a thorough Feasibility Study that should have been undertaken by the Applicant. An indicative table of contents of a Feasibility Study is presented in Annex 24. Feasibility Study for Hybrid Systems Power Generation must provide a Detailed Feasibility Study for each technology(ies) used for the Hybrid Power Generation. 7. Critical Path Agreement Status: The status of critical path contracts and agreements, such as a Power Purchase Agreement (PPA), Front End Engineering Design agreement, technology license and teaming agreements, Engineering, Procurement and Construction (EPC) contract, long-lead time component contracts, feedstock agreements, relevant stakeholder permits, approvals and consultations and plant off-take or sales agreements. 8. Planning Documents: Key planning documents for the Project such as the construction plan, operation and maintenance plan, waste disposal plan, and preliminary risk management plan. 9. Acquisition Strategies: Land, raw material, equipment, and component supply chain acquisition strategies. 10. Key Contracts and Agreements: Provide a top-level description, schedule, current status, and drafts or executed copies of all critical path contracts and agreements relevant to the PPA, investment, design, engineering, financing, construction, startup, commissioning, shakedown, operation and maintenance of the Project, including: EPC contract; Long-term contracts for materials, components and equipment to be used in the Project; Any leases, operating or maintenance contracts; and Any additional relevant agreements or commitments. If drafts or executed copies of any of the foregoing contracts and agreements are unavailable, provide a detailed description of such contracts and agreements, including all key terms and counterparties, and indicate when copies of such contracts and agreements will be available. 41

42 11. Engineering and Construction Plans: A detailed description of the engineering and design contractor(s), EPC contractor(s), equipment supplier(s), and construction schedules for the Project. 12. For each engineering and design contractor, EPC contractor and equipment supplier to be involved in the Project, describe their major activities as linked to specified cost milestones and performance guarantees, as well as performance guarantees, performance bonds, liquidated damages provisions, and equipment warranties to be provided. Describe the (i) the extent to which all required contractors are engaged; (ii) the extent to which pre-construction design has been completed; and (iii) describe each contractor or supplier s experience and qualifications as related to the Project. 13. Key Site Components: Describe the key site components of the Project and risks associated with their availability (e.g., water, electricity, gas, or other utilities). Describe site access (roads, highway and rail) including rights-of-way, easements, and logistical considerations. 14. Operation Costs: Provide an estimate of operation costs on an annual basis. 15. Project Plan: Provide a comprehensive Project plan that will guide design, engineering, and construction of the Project, including a description of: Prior successful implementation of similar project plans for projects of this scale by the Applicant or any Project Sponsor (Applicants that are not able to include examples of successful implementation of similar project plans for projects of this scale should provide a detailed description of the facts that they believe are sufficient to demonstrate to MCA- Indonesia that they have the expertise that would be evidenced in examples of successful implementation of similar project plans for projects of this scale. MCA-Indonesia will determine in its sole and final judgment, whether the experience described shows sufficient expertise). Each step of the proposed process; Fully sourced or cited material and energy balance, including system simulation for processes, using industry standard software; The process for selecting an EPC firm, if applicable, or the internal resources used to serve this function; Equipment requirements; Rights or licenses to use processes proposed; An integrated schedule or Project work plan that encompasses time periods for design, procurement (including long-lead procurements), construction (including mobilization, testing and start-up), and commissioning. The project shall identify any Project dependencies such as the timing of land-use agreements, environmental permits, or licenses, or physical improvements such as utility tie-ins. Minimum design specifications in which process flow diagrams are coupled to preliminary cost estimates Project management tools, including Gantt charts, resource-based scheduling or other methods to assess and track progress; Staffing plans, including identification of costs and resources to design, engineer, construct and operate the Project; Project risks and mitigation strategies, including risk related to construction, performance, etc. and the potential Project impact and mitigation of such risks; Contingency plans to address cost overruns and schedule slippage. 42

43 16. Operating and Maintenance Plans: Provide the following: The plant operating plan, proposed providers, expected staffing requirements, anticipated parts inventory, major maintenance schedules, estimate annual downtime and any performance guarantees and related liquidated damage provisions; A description of the plans for commissioning and initial operations, taking into account the construction schedule, the establishment of material supply chains, the hiring, and training of management and operating personnel, logistics, potential bottlenecks, and delays, financing for contingencies and working capital; A description of any plans for expanding capacity over initial operations and the Applicant or the Project Sponsor s experience with comparable ramp-ups; and A description of the operations and maintenance plans for the Project, including acquisitions of critical spares, inventory sources, operations and maintenance procedures, and associated risks. 17. Engineer s Report: In case of projects that are facing a cost over-run and where available, please provide an independent engineer s report that includes a review, evaluations, analysis, and recommendations in the following areas: Base Technology; Project Feasibility ; Engineering and Design Approach; Integrated Project schedule, including the schedule for completion; Cost estimates and technical input to the financial model; Contractual requirements and arrangements; Proposed supply chain; Projects risks, including mitigation activities and milestones; Direct labor requirements during construction and operation; Sitting and permitting; Testing and commissioning; Operation and Maintenance. 18. Environmental Feasibility Study: the study of potential and significant (positive or negative) impacts of planned activities of the proposed Project on the environment, in combination with the study on the Stratecic Environmental Assessment and/or other environmental and social policy, program, or project prior to the decision to move forward with the proposed Project. The required studies and documents (ANDAL/ UKL-UPL /SPPL) or other required studies under IFC PS, will depend on the location, nature and size of the Project. 19. Risk Management Plans: Provide a detail document to foresee risks, estimate impacts, and define responses to issues, includes processes for risk management planning, identification, analysis, monitoring and control 20. Safety and Health Plans: Provide detail document to prepare, develop and implement a written plan which sets out how health and safety will be managed in every stage of development (Preparation stage, during construction and operational). 21. Testing, Certification and Commissioning : provide a detailed of the project testing, certification and commissioning plans as required by Lenders and GOI 22. Quality Assurance Plan/Quality Control Plan: The QA/QC Plan defines the various management and inspection staff personnel directly responsible for the quality control (QC) activities, as well as electrical, mechanical and construction quality assurance (QA) activities, including position descriptions, responsibilities, and experience requirements. 43

44 Annex 10 Social and Gender Inclusion Plan Applicants are required to provide a brief summary of the social and gender assessment and integration plans for their projects in the following manner. Social and Gender Assessment: In order to fulfill requirements of MCA Indonesia s Social and Gender Integration Plan (SGIP) and inform project design and beneficiary targeting and selection, Applicants will carry out a preliminary participatory social and gender assessment that will include desk review of existing literature on social and gender issues in targeted areas and consultations with women and men, local community based organizations and other stakeholders in order to identify constraints and economic opportunities in the RE sector and collect information needed to guide beneficiary selection, training and other support needs. This preliminary assessment will also identify key social and gender based constraints, as well as opportunities, and contributes to the detailed design of the proposal, identify beneficiaries, especially tools for equitable participation and benefits; and monitoring and evaluation of the investments. Applicants who are selected for Grant Endorsement will be required to conduct a more detailed and expanded social, gender and landscape study (Lifescape Analysis) prior to Grant disbursement. MCA- Indonesia, at its sole discretion, may provide a TAPP Grant funding to the Applicant to carry out this analysis. This process should include use of tools such as focus group discussion (FGDs); key informant interviews (KIIs); beneficiary assessment; participatory natural resource mapping with community and key stakeholders in order to identify targeted beneficiaries, their existing livelihood patterns, institutions working with beneficiaries, and gaps in services if any; their livelihood depending on natural resources, degradation affecting livelihoods and how the relationship between people and natural resources can be harnessed properly for sustainability and scalability of RE and low carbon development. Identification of vulnerable groups: As part of the SGIP requirements and as part of the process of conducting the participatory social assessment, the Applicant is required to identify vulnerable groups, if any, in their target areas. Vulnerable and marginalized groups are defined as groups that experience a higher risk of exclusion of social and economic aspects resulting in their higher poverty than the general population. The IFC Performance Standards specify that vulnerable status may stem from an individual s or group s race, color, sex, language, religion, political or other opinion, national or social origin, property, birth, or other status. Vulnerability is location, sector and context-specific and the following table provides an indicative list of potential vulnerability in targeted beneficiaries, if members of vulnerable groups are selected as beneficiaries, these should be included in the monitoring indicators. Potential vulnerable groups 1. Poor landless women, female headed households 2. Landless farming household 3. Ethnic minority, poor migrants 4. Lower caste, groups exclusively working for the elites Potential vulnerability/exclusion 1. May not be able to bear electricity connection and/or regular cost 2. May not be able to bear electricity connection and/or regular cost 3. Dominant group favoritism, lack of established social networks and/ or representation, may not be able to access electricity 4. May not be allowed to participate in RE project activities and benefit from investments 44

45 Applicant s Social and Gender Integration Plan is expected to include the following: 1. Objective and Output The Project s design and activities should explicitly demonstrate a contribution towards equal access and opportunity to all, especially women and vulnerable groups to participate and benefit from the projects. 2. Beneficiaries Highlight key characteristics of targeted direct and indirect beneficiaries including sex, wealth/economic and vulnerability status. 3. Capacity building Include capacity building activities for local communities, especially for technology transfers to women, vulnerable groups and households in remote areas that could enhance their economic opportunities. Applicants can propose to work with local social/gender experts and local organizations who can support outreach for gender and social inclusion and sustainability of the outcomes. 4. Budget Applicant are encouraged to include budget for gender related activities and vulnerable inclusiveness. The activities can include supporting economic activities of households, especially of women and vulnerable groups and promoting value chain, market access, conducting regular assessment and dissemination of good gender practices. 5. No Trafficking In Person (TIP) and Child Labor Both MCC and MCA-Indonesia have zero tolerance on TIP and child labor, therefore, Applicants will not engage in such activities. MCC TIP Guideline is available on indonesia.go.id/publikasi/publikasi-kegiatan-lintas-proyek/mcc-counter-trafficking-in-persons-policy-25- november-2014/ Social and gender integration in the Project design and technical approaches will be evaluated using the following Checklist. Area Development Stage Participative Social and gender Assessment Does Project preparation, implementation and monitoring include gender and social participatory process? Has preliminary social and gender analysis been undertaken? Are social and gender inclusion activities included in the Project design and outputs of the proposal, using the findings of the assessment? Budget Does the proposal clearly state the specific budget line items for Social and Gender related activities and vulnerable inclusiveness along with the outputs? Beneficiaries Are poor women and men, and vulnerable community identified clearly as targeted beneficiaries? Yes or No. Remarks 45

46 Access and Opportunity Does the proposal clearly state equal access and opportunity for poor women and men, and vulnerable communities to participate in and receive benefits from different Project activities (employment, training, electricity connection etc.) and outputs? Capacity building Does Capacity building for beneficiaries, especially women and vulnerable groups has been clearly defined in the proposal? Benefit sharing Does the proposal include benefit sharing with communities activity? Is there any special provision for women and vulnerable groups within the benefit sharing approach? No TIP and Child Labor Conformation with MCA Indonesia and MCC rules on not engaged in TIP and child labor. 46

47 Annex 11 Environmental and Social Performance Data Sheet This Annex provides guidance in preparing the Environmental and Social Performance Data Sheet included below. The objectives of this process are to: Help Applicants identify and address potential adverse environmental and social impacts of GP funded projects early in the Project cycle. Help Applicants plan for environmental and social performance measures to be integrated into Project design. Serve as a media/document to inform the public (public disclosure) on applicable ESP and mitigation measures in the project. A copy of the Compact Specific Tier 1 MCA-Indonesia ESMS Framework and the Tier 2 GP Project ESMS publications can be downloaded from after registration. ENVIRONMENTAL AND SOCIAL PERFORMANCE DATA SHEET A. Basic Information 1.Applicant 2. Brief description of Applicant 3. Name of Project to be funded by MCA-Indonesia 4. Location(s) 5. Estimated Project duration 6. Estimated budget for Project activity 7. Project objectives 8. Description of Project activities/components/ associated facilities required to achieve project objectives 9. IFC Performance Standard Triggered (Please refer to the ESMS Tier 1 & Tier 2 for GP Project and IFC Performance Standards) 10. Explain Applicant capacity to meet ESP requirements 11. ESP Principal (name and affiliation) (please tick the trigger if yes, please provide short explanation) PS1. Assessment and Management of Environmental and Social Risks and Impacts explanation :... PS2. Labor and Working Condition PS3. Resources Efficiency and Pollution Prevention PS4. Community Health, safety and Security PS5. Land Acquisition and Involuntary Resettlement PS6. Biodiversity Onservation and Sustainable Management of Living Natural Resources PS7. Indigenous Peoples PS8. Cultural Heritage Yes No Unknown 47

48 12. Short explanation of Project Environmental Category based on GOI MOE Reg. 05/2012 GOI Law 32/2009 GP ESMS Section 12.1 B. Environmental and Social Performance Issues and Management 13. Describe any direct and/or indirect ESP issues related to the Project to be funded by MCA-Indonesia and its associated facilities. Identify and describe any potential large scale, significant and/or irreversible impact. 14. Describe any potential long term or cumulative impacts from the Project/Investment to the Project area 15. Describe any Project alternatives (if relevant) considered to help avoid or minimize adverse impacts: 16. Describe measures taken by the Applicant to address environmental and social issues. Provide an assessment of capacity to plan and implement the measures described: 17. Identify the key stakeholders and describe the mechanisms for consultation and engagement, with an emphasis on potentially affected people: C. Disclosure Requirement 18. Please provide documentation to be disclosed, when (date) and where (website) D. Approval Date Prepared and submitted by: ESP Director: GP Director: Approved by: A. Environmental and Social Performance Issues and Management. This part will describe more detail of the potential issues and impact from the Project and the alternatives/mitigation to help avoid/minimize the adverse impact. Also describe what measure will be taken to address environmental and social issues and information of proponent capacity to plan and implement the measures described. 48

49 B. Disclosure Requirement. Describe the type of environmental and social documents that has/have been or will be disclosed, such as EIA and EMP, LARAP and IP Plan, when it will happen and where the documents will be uploaded. C. Approval. The GP Project and ESP units will check the accuracy of submitted contents and will approve when all documents meet all requirements. 49

50 Annex 12 Monitoring & Evaluation Plan Eligible Applicants are required to provide a preliminary M&E Plan, which will be reviewed by MCA- Indonesia M&E and will be finalized as part of the Grant Agreement. Applicants will agree to perform routine monitoring of progress of their Project and to provide data to MCA-Indonesia on M&E Plan indicators on a quarterly basis, or potentially less frequently if agreed by MCA-Indonesia. The Plan should include clear process, output, and outcome indicators that are clearly linked to the program logic and objectives. Guidance on developing M&E Plans and categorizing indicators is available at: The M&E Plan must align with the Compact-wide M&E Plan (available here: such that the Project/grant-level data can feed into the GP aggregate performance indicators. Specific for the Application Stage, the Applicant has to submit the following template to describe their M&E Plan: Indicator Level Outcome (related to project objectives)... Indicator Name Definition Unit of Measure Disaggrega tion Reporting Frequency Baseline Target (Year) Outputs (related to project activities)... Process (related to project inputs)... At a minimum, the table above should include the applicable standard RE indicators from the Compact M&E Plan (included below) and any additional indicators that are relevant to demonstrate progress on the project being proposed. Outcome Estimated diesel generators and coal power plants use displaced Estimated diesel generator and coal power use displaced as a result of the Project. MWh 50

51 Outcome Estimated greenhouse gas emissions reduced or avoided Estimated metric tons of greenhouse gas emissions (CO 2) equivalent reduced or avoided as a result of completion of Projects. Metric tons CO 2 equivalent Output Project participants trained through MCA-Indonesia funded projects and/or partnerships Number of Project participants who have satisfactorily completed funded training and/or technical assistance training package. Number Output Electricity connections energized (if applicable) Total number of connections (household and business) installed and energized by the Project. Number Output Additional capacity of renewable energy added The amount of additional capacity of renewable energy that is installed (i.e. constructed) or enabled (i.e. operationalized) by the Project. Mega Watts Output Electricity connections planned (if applicable) Total number of connections (household and business) planned to be established by the Project. Number Output Additional capacity of renewable energy planned The amount of additional capacity of renewable energy that is planned to be installed or added/enabled as a result of the Project. Mega Watts Process External resources disbursed (if applicable) Total value of non MCA-Indonesia funds committed for the Project (i.e. private/nonstate resources and direct contributions to implement projects or other complementary public resources) disbursed by the Project. US Dollars Process RE Co-financing Grant disbursed Total value of RE Co-financing Grant disbursed by the Project. US Dollars In addition to the M&E Plan, Applicants are requested to consider opportunities for project learning through evaluation. MCA-Indonesia is committed to evaluating MCA-Indonesia investments for accountability purposes and to contribute to the policy literature on RE interventions. Applicants should propose questions or hypotheses related to the proposed intervention that they would be interested in being tested through an evaluation. Examples of these types of questions would be: a) is one construction modality for RE infrastructure more effective than another? or b) what is the impact of one type of RE intervention on the key intervention outcomes versus another? Where possible, Applicants should support proposed research questions with references to relevant RE literature. The proposed questions will not commit the Applicant to conducting evaluation work, but rather will guide MCA-Indonesia in selecting which projects in the GP portfolio will be evaluated. 51

52 If a project is selected for impact evaluation, MCA-Indonesia's M&E team will work closely with the project team to develop an evaluation plan in line with implementation. Note that Applicants will be expected to collaborate with the M&E team in order to facilitate a rigorous evaluation -this could include discussions about designing implementation strategies that allow for comparisons between treatment groups that receive the project interventions and comparison groups that do not. Similarly, Applicants will be expected to adhere to agreed- implementation and evaluation strategies. Applicants may be expected to provide routine administrative data to support the impact evaluation, but MCA-Indonesia's M&E team will design the evaluation and collect all the survey-based data. While this application request is not a critical aspect of proposal evaluation, proposals with thoughtful responses will be viewed more favorably. 52

53 PART C APPLICATION FORMS FOR ENVELOPE 3 - COMMERCIAL & ECONOMIC Annex 13 Document Checklist No Document Reference 1 Format of the Commercial & Economic Proposal Annex 14 2 Attachment 1: Additional Commercial Information Annex 15 3 Attachment 2: Indicative Financial Model Annex 16 4 Attachment 3: Data Sheet for Economic Analysis Annex 17 53

54 Annex 14 Format of the Commercial and Economic Proposal Millennium Challenge Account-Indonesia MR21 Building, 11 th Floor Jalan Menteng Raya No. 21 Jakarta 10340, Indonesia Attn. Director - Green Prosperity [Place, Date/Month/Year] Dear Sir, Commercial & Economic Proposal for RE Co-Financing Grants for Commercial RE IPPs in Indonesia Having gone through this CfP document and having fully understood the terms and conditions therein, we are pleased to inform that we would seek the following RE Co-Financing Grant for our Project: Amount in Figures Amount in Words 1 TOTAL RE CO-FINANCING GRANT US$ United States Dollars Of the above, the amounts 2 -to be disbursed in USD US$ United States Dollars 3 -to be disbursed in IDR* IDR Indonesian Rupiah ENERGY GENERATION 4 Averaged Gross MWh generated per annum 5 Averaged Auxiliary consumption, downtime and losses in MWh per annum 6 Net MWh available for sale p.a. (6=4-5) 7 RE CO-FINANCING GRANT Per Net Unit (7=1/6) For purposes of comparison, every Application to this CfP will have its Rupiah and other non US Dollar components of the TPC converted by MCA-Indonesia into US Dollars using the average exchange rates posted by Bank Indonesia (BI) on the CfP release date. We confirm that: The total amount quoted is all inclusive and no other RE Co-Financing Grant payment is payable to us. In case of discrepancy in figures and words, the amount in words will be considered. Our Commercial & Economic Proposal is final in all respects and contains no conditions. The information submitted is complete and correct. We would be solely responsible for any errors or omissions in our Proposal. We have studied the provisions of relevant Indonesian laws and regulations required to enable us to prepare this Commercial Proposal. We have reviewed all the terms and conditions of the CfP Documents and would undertake to abide by all the terms and conditions contained therein. We hereby declare that there are, and shall be, no deviations from the stated terms in the CfP Document. Yours faithfully, For and on behalf of (Name of Applicant) Duly signed by the Authorized Signatory of the Applicant (Name, Designation and Address of the Authorized Signatory) 54

55 Annex 15 Attachment 1 - Additional Commercial Information For purposes of comparison, every Application to this CfP will have its Rupiah and other non US Dollar components of the TPC converted by MCA-Indonesia into US Dollars using the average exchange rates posted by Bank Indonesia (BI) on the CfP release date. [1] Details on the Total Project Cost Amount USD million or Rp Billion as applicable EPC power plant Interconnection Essential spares Others 1 Others 2 [A] Total Hard Costs Contingences Preliminary and Preoperative Expenses Interest During Construction Project Management and Consultancy Expenses Others 1 Others 2 [B] Total Soft Costs 10 [C] Total Project Cost [A + B] [2] Details on the Financing Plan for the Total Project Cost Equity Debt RE Co-Financing Grants Any other source Amount USD million or Rp Billion as applicable Total Sources of Finance 10 Soft costs shall include Contingencies, Preliminary and Preoperative Expenses, Interest during Construction, Project Management and Consultancy Expenses and any other recurring expenses incurred during the construction period to make the project operational. 55

56 [3] Phasing of the Total Project Cost over the construction period Year 1 Year 2 Year 3 EPC works Interconnection works Essential spares Others 1 Others 2 Contingencies Preliminary and Preoperative Expenses Interest During Construction Project Management and Consultancy Expenses Others 1 Others 2 Total Project Cost [4] Funding of the Total Project Cost over the construction period Year 1 Year 2 Year 3 Equity investment Debt RE Co-Financing Grant Any other source Total Sources of Finance [5] Key Financial Indicators Project IRR (%) Equity IRR (%) Minimum Debt Service Coverage Ratio (times) Minimum Loan Life Coverage Ratio (times) Value Applicants are encouraged to provide further additional information as they deem appropriate for supporting their Commercial & Economic Proposal quote. 56

57 Annex 16 Attachment 2 - Indicative Financial Model Applicants should submit their Financial Model in electronic (Microsoft Excel format) in a CD or flashdrive. The Indicative Financial Model should be accompanied by (1) an assumptions book detailing the key assumptions made for projecting the key financial statements, assessing the financial viability and hence determining the RE Co-Financing Grant amount; and (2) an instructions manual to facilitate easy usage. A. Structure of the Indicative Financial Model The Financial Model should be consistent with the assumptions and be structured as follows: It should be well constructed and professional in appearance; It should be produced in Microsoft Excel 2000 or later versions; It should extend for the term of the power purchase agreement; It should be presented in millions of Indonesian Rupiah and summary results in both Indonesian Rupiah and United States Dollars; The reference rate is the average exchange rates posted by Bank Indonesia (BI) on the CfP release date. No sheets or cells should be hidden nor password protected; Calculations should flow down and to the right; Calculations should be sufficiently disaggregated so that they can be followed logically on screen(without examining the contents of cells) or on paper; Cells that import data from other sheets or calculation areas should not include calculations; Cells containing hard-coded entry should be colored yellow; Financial statements should not include formulas other than mathematical signs; Tabs that feed the financial statements should be highlighted; All sheets should be set up to print clearly and legibly on A4 or A3 paper; If the calculation is circular, circularities should be solved. If circularities are included, a description of where and why these occur should be included; It should not include macro calculation to avoid circularities; The Financial Model should be in annual periods. However, construction cost and funds draw down should be shown on a monthly basis; Utilize the fiscal incentive of MoF Regulations for RE projects; It should have, - An Index Sheet summarizing the contents of the various tabs in the model; - A Key Input Output Sheet summarizing the critical input variables and key financial indicators; - A detailed assumptions sheet for the Project timelines, Construction Cost assumptions, O&M Cost assumptions, revenue assumptions, interest rate and financing assumptions, depreciation assumptions, taxation assumptions and other relevant assumptions; - Working sheets showing projection of Construction Costs, Financing of Construction Costs, projection of volume, projection of revenues, schedules for Debt, Income Tax and Depreciation; - Key Financial Statements including the Income Statement, the Cash flow Statement and the Balance Sheet presented in accordance with internationally accepted accounting principles; and - Key Financial Indicators sheet including but not limited to Project IRR, Equity IRR, NPV of Project, NPV of Equity, Minimum DSCR, Minimum PLCR, Minimum LLCR, and Minimum ICR. 57

58 B. Assumptions Book The Applicant should provide sufficient details in an assumptions book for a duplicate Financial Model to be constructed. The assumptions book should cover the following areas: Capital and operating cost schedules; An indicative financing plan, including a breakdown of all fees, costs of the financing, interest rate and discount rate; Assumptions for volume forecast and revenue projections; Macro-economic assumptions; Taxation assumptions; Accounting policies and depreciation rates; and All other assumptions required to construct the Indicative Financial Model. C. Instruction Manual The instruction manual should explain in sufficient detail the functionality of the Financial Model and its structure. 58

59 Annex 17 Attachment 3 Data Sheet for Economic Analysis MCA-Indonesia utilizes economic analysis in the evaluation of the proposed Project. Economic analysis helps prioritize investment decisions based on impact, but also serves to provide discipline in project design, since it requires clearly specified set of interventions and clear logic in order to evaluate its economic impact. It also helps clarify potential trade-offs between expected benefits and other factors like risk, safeguards, distributional impacts and other concerns. MCA-Indonesia requires that the Economic Rate of Return on all proposed projects in this CfP is 10% or greater. It is stressed that MCA-Indonesia will undertake the calculations based on the proposed project logic and Applicants are not expected to do so. Nevertheless, MCA-Indonesia will require the following information at a minimum in order to construct preliminary economic model: No Description of Request for Information 1 Cost Efficiency Is the Project going to displace or reduce Fossil Fuel (viz diesel, coal, gas) Power Generation? If yes, - Please specify capacity of Fossil Power Generation that will displace and or be reduced by the Project? - please specify PLN s current average purchase price of fossil fuel If no, - What is PLN s current average purchase price of power (average of all fuel sources)?; - What is the projection of PLN s average purchase price of power inclusive of the power generated by the Project? - What level of fossil fuel avoidance is achieved from the Project? 2 Electrification a. What is the Electrification Ratio in the Project grid? - Currently - Possible after Project COD b. Is the Project able to support additional connections? If yes, how many additional connections on: - Households - Industry - Public facilities 3 What are the Benefits to the Community residing in the vicinity of the Project a. Benefit Sharing under MCA-Indonesia Grant arrangement, expressed in USD/year for the PPA term, based on escalation as expected to be incorporated in the PPA; b. What are the additional benefits to the Community from the Project during the term of the PPA? Baseline Economic Data Economic Data Operation Years

60 PART D Annex 18 GUIDANCE ON APPLICABLE MCA-INDONESIA STANDARDS Applicant and Related Definitions An Applicant (Applicant) could be any one of the three - (1) the Project enterprise i.e. the Independent Power Producer (IPP); or (2) the Promoter of the IPP (Promoter); or (3) a group of entities proposing to invest in the IPP (Consortium), each being legally registered in Indonesia or elsewhere. The IPP it should be registered in Indonesia and it is expected that it shall apply and obtain fiscal incentives from BKPM and the Ministry of Finance, Government of Indonesia. The term Promoter or the Project Sponsor shall mean, in relation to an Applicant or a Consortium Member, a person who controls the Applicant or the Consortium Member (the Promoter or the Project Sponsor). As used in this definition, the expression control means, with respect to a person which is a company or corporation, the ownership, directly or indirectly, of more than 25% (twenty five per cent) of the voting shares of such person, and the power to direct the management and policies of such person by operation of law. Adequate documentary evidence would need to be provided by the Applicant to validate its claim. This could be a certificate from a qualified external auditor. The term Associate shall mean, in relation to an Applicant or a Consortium Member, a person who controls, is controlled by, or is under the common control with such Applicant or Consortium Member (Associate). As used in this definition, the expression control means, with respect to a person which is a company or corporation, the ownership, directly or indirectly, of more than 25% (fifty per cent) of the voting shares of such person, and with respect to a person which is not a company or corporation, the power to direct the management and policies of such person by operation of law. Adequate documentary evidence would need to be provided by the Applicant to validate its claim. This could be a certificate from a qualified external auditor. In case the Applicant is a Consortium, the members of the Consortium shall nominate one member as the lead member (the Lead Member or Lead Consortium Member) to represent and irrevocably bind all members of the Consortium in all matters relating to the RE Co-financing Grant Process. The nomination(s) shall be supported by a duly notarized Power of Attorney, in accordance with the format set out in Annex 4, signed by all the other members of the Consortium. The members shall also sign a joint application agreement as per Annex 5. The Lead Member will also be required to hold 25% or more of the equity in the IPP. 60

61 Annex 19 Criteria of Eligibility and definition of Non-Eligible Projects The Project must be an Eligible Project and must not fall under the Non-Eligible Projects as listed in the following Tables: Table 1 Project Eligibility 1 Location 2 Renewable Energy Criteria 3 Meet Emission Standards 4 Reduction of Greenhouse Gases 5 Project Schedule 6 Reduce Reliance on Fossil Fuels 7 Environmental Stewardship 8 Support for Local Communities 9 Fuel or Energy Sustainability 10 Stakeholder engagement 11 Land Acquisition and/or Involuntary Resettlement Eligible Project Finding The Project is located in one of the eligible Provinces under the GP project as listed in Table 1 & Figure 1 of this CfP. Applicant must demonstrate that the Project can be regarded as using a Renewable Energy technology. Project must meet appropriate GOI emission limitations. Applicant must state the GOI requirements applicable and demonstrate that the Project will meet these requirements. The Applicant must demonstrate that the Project contributes directly or indirectly to the reduction of greenhouse gas emissions. The Applicant must demonstrate that the Project will be reasonably expected to be substantially complete by April 1, Be easily and quickly readied for construction and commissioning with a presentation of current status and plan/schedule for arriving at the COD of the Project. Project must reduce reliance on fossil fuels by expanding renewable energy. Applicant should present the current generation technology mix of the grid into which the Project will inject its power and show how the use of fossil fuels will be reduced. Replacement or avoided is acceptable. Project must possesses a core objective of improving environmental stewardship and providing evidence of adoption of environmental and social safeguards and social and gender inclusion mechanisms as outlined in IFC Performance Standards and in compliance with MCA-Indonesia s ESMS Tiers 1 & 2 and the SGIP Plan Applicant must describe how the Project will support the local community and how they will share in the Project s benefits Project must demonstrate sustainability of the energy source and Project sustainability Possesses a stakeholder engagement plan and copies of environmental documents and permits or has such plan or documentation under process. Provide a compensation and resettlement plan if land acquisition and/or physical and/or economic displacement are unavoidable 61

62 Table 1 Project Non-Eligibility List of Non-Eligible Projects 1 Any project that would violate the terms of the Compact. Any project that violates the laws of Indonesia or would violate the restriction on the use of 2 MCC Funding set forth in Section 2.7 of the Compact. Any project that is likely to cause a significant environmental, health or safety hazard as 3 defined by the MCC Environmental Guidelines. Any project with significant potential to create, exacerbate or reinforce existing social and/or 4 gender inequalities. Any project in which due diligence requirements and risks are too high to justify the 5 investment (e.g. unmanageable land ownership dispute and conflict). Any project in which the Key Parties (defined in Table 4 below) would have a conflict of 6 interest. 7 Any project involving forced labor or child labor. Any project which involves removal of existing non-degraded (that is Primary) natural forest 8 to make way for a plantation, orchard or farm. Any project involving activities that impinge on the rights and claims over lands and forests by 9 indigenous or customary communities, without full documented consent of such peoples. Any project related to trade in endangered species of wildlife or wildlife products regulated 10 under Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES), or products derived thereof. 11 Any project in production of or trade in tobacco. Any project supporting the construction of coal power plants or other fossil-fuels as the 12 primary energy source. 62

63 Annex 20 Non-Eligible Entities The Applicant must not fall under the Non-Eligible Project Partners as listed below. This CfP and its associated and pertinent documents can be downloaded from upon registration. Table 2: List of Non-Eligible Entities Individuals are not eligible to apply and be considered for GP Facility support. Political parties, groups or institutions, or their subsidiaries and affiliates are not eligible to apply for funding; Organizations that advocate, promote or espouse anti-democratic policies or illegal activities under Indonesian law are not eligible to apply for funding. Any person or entity that has been blacklisted in participation in procurements funded with the World Bank assistance or debarred or suspended from participations in procurements funded by the US Federal Government or otherwise prohibited by applicable United States law or Executive Order or United States policies including under any then-existing antiterrorist policies are not eligible to apply for funding. Entities in which Key Parties in the selection process, as well as members of their immediate families or their business partners, have a financial interest are not eligible to apply for funding. For the purposes of this document Key Parties are defined as employees of MCA- Indonesia, MCC, members of MWA or the staff or affiliates of the PMC, Grant Administrative Support Team and the Investment Committee. 63

64 Annex 21 Conflict of Interest An Applicant may be considered to have a Conflict of Interest affecting the RE Co-financing Grant process, if: 1. an Applicant or any of its Associates have participated (or will participate) as a consultant or an evaluator in the preparation of the design or technical specifications or appraisal or evaluation related to this CfP; or 2. an Applicant or any of its Associates has been hired (or is proposed to be hired) by MCA- Indonesia as project manager or consultant for the GP Project; or 3. an Applicant shall be liable for disqualification if any legal, financial or technical adviser of MCA-Indonesia in relation to the RE Co-financing Grant process is engaged by the Applicant, its Member or any Associate thereof, as the case may be, in any manner for matters related to or incidental to the CfP. For the avoidance of doubt, this disqualification shall not apply where such adviser was engaged by the Applicant, its Member or Associate in the past but its assignment expired or was terminated 1 year or more prior to the date of issue of this CfP document. Nor will this disqualification apply where such adviser is engaged after a period of 3 years from the date of commercial operation of the IPP supported through this CfP. 64

65 Annex 22 Eligible Project Costs Before entering into a Grant Agreement, MCA-Indonesia shall determine the estimated Project Costs for the Project that is the subject of the agreement. To assist MCA-Indonesia in making that determination, the Applicant must estimate, calculate and record all such costs incurred in the design, engineering, financing, construction, startup, commissioning and shakedown of the Project in accordance with generally accepted accounting principles and practices. Among other things, the Applicant must calculate the sum of necessary, reasonable and customary costs that it has paid and expects to pay, which are directly related to the Project, including costs for escalation and contingencies, to estimate the Total Project Costs. Project Costs include: (1) Costs of acquisition, lease, or rental of real property, including engineering fees, surveys, title insurance, recording fees, and legal fees incurred in connection with land acquisition, lease or rental, site improvements, site restoration, access roads, and fencing; (2) Costs of engineering, architectural, legal and bond fees, and insurance paid in connection with construction of the facility; and materials, labor, services, travel and transportation for facility design, construction, startup, commissioning and shakedown; (3) Costs of equipment purchases; (4) Costs to provide equipment, facilities, and services related to safety and environmental protection; (5) Financial and legal services costs, including other professional services and fees necessary to obtain required licenses and permits and to prepare environmental, social & gender reports and data; (6) The cost of issuing Project debt, such as fees, transaction and legal costs and other normal charges imposed by Eligible Lenders and other Holders; (7) Costs of necessary and appropriate insurance and bonds of all types; (8) Costs of design, engineering, startup, commissioning and shakedown; (9) Costs of obtaining licenses to intellectual property necessary to design, construct, and operate the Project; (10) Cost for conducting additional environmental, social and gender studies, along with any cost related to mitigation and management costs for environmental and social impact mitigation and managements, which includes for social and gender inclusion activities. (11) A reasonable contingency reserve for cost overruns during construction; (12) Capitalized interest necessary to meet market requirements, reasonably required reserve funds and other carrying costs during construction; (13) Other necessary and reasonable costs; and 65

66 (14) First 12 months of operating and maintenance costs from COD (part of EPC contractor s warranty as part of their capacity building services). Project Costs do not include: (1) Parent corporation or other affiliated entity s general and administrative expenses, and non-project related Parent Corporation or affiliated entity assessments, including organizational expenses; (3) Goodwill, franchise, trade, or brand name costs; (4) Dividends and profit sharing to stockholders, employees, and officers; (5) Research, development, and demonstration costs of readying the technology for employment in a commercial project; (6) Costs that are excessive or are not directly required to carry out the project, as determined by MCA- Indonesia, including but not limited to the cost of hedging instruments; (7) Expenses incurred after startup, commissioning, and shakedown but before the facility has been placed in service; (8) Administrative Costs of Issuing Debt at Parent Company; (9) Operating costs incurred any time after 12 months from COD; and (10) VAT or any taxes that are excluded from the Compact including Import Duty as applicable to the goods or services purchased by the RE Co-Financing Grant funds. 66

67 Annex 23 Project Ownership and Structure All IPPs that receive Co-Financing Grants will be implemented on a commercial basis through a project enterprise incorporated under Indonesia s company law (Refer No.1 in Figure 1). Note that to avail the fiscal incentives of MoF 21_PMK.011_2010, the SPV must be established as an Investment Company (PMDN or PMA as appropriate). The project SPV will be managed by a lead investor (main promoter or sponsor), along with other shareholders. (Refer No.2 in Figure 2). Besides the lead investor, other shareholders could include strategic investors (such as EPC or O&M providers). The shareholding will also need to comply with government directives to restrict the foreign shareholding to 49% in order for the applicable FiT of PLN to apply. Figure: Project Structure To support sharing of benefits with the community, a condition of MCA-Indonesia s RE Co-Financing Grant shall be that the project enterprise (IPP) apportions a percentage profit share towards Corporate Social Responsibility (CSR) and/or Environmental Services (ES) activities. It is stressed that a passive revenue interest is envisioned. The percentage of profit share shall NOT be deemed as part of the CSR and/or ES responsibilities of Applicant as required under Law No 40/2007 regarding Company Law, Law No. 32/2009 regarding Protection and Environmental Management or other prevailing laws and regulations. The percentage of profit share for CSR and/or ES will be determined and set during Grant Agreement finalization and will take into consideration the findings of the required Lifescape Analysis that will be conducted for the Project. For purposes of evaluation on an equivalence basis, Applicants should set the 67