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GC-40
 
ADVANCE PAYMENT

The NIA shall, upon a written request of the Contractor, which shall be submitted as a contract document, make an advance payment to the Contractor in the amount equal to fifteen percent (15%) of the total contract price to be made in two (2) equal instalments. This should be exclusive of price escalations and provisional items.

The first instalment of fifty percent (50%) of the advance payment shall be made only upon the submission to and acceptance by he NIA of an irrevocable standby Letter of Credit of equivalent value from a commercial bank or a guarantee payment bond, callable on demand, issued by a surety or insurance company duly licensed by the office of the insurance commissioner and confirmed by the NIA, and the balance thereof shall be paid only after the Contractor has fully mobilized the initial equipment required for the project as specified in Item 7, Appendix 2-A, Volume II of these Bid Documents. (A format of the irrevocable standby Letter of Credit is appended in these Bid Documents.)

The advance payment shall be repaid by the Contractor by deducting twenty percent (20%) from his periodic progress payments, with the first repayment to be made when contract value of the work executed and materials delivered shall equal or have exceeded twenty percent (20%) of the contract price, and further refunds shall be done thereafter at monthly intervals until the full amount of the Advance Payment shall have been refunded.

The first work accomplishment equivalent to 20% of the contract price shall not be subject to the 20% deduction.

The Contractor may reduce his Standby Letter of Credit or guarantee instrument by the amounts refunded by the monthly certificates in the Advance Payment.