2.11 Payment terms Payment terms should generally be in accordance with the normal commercial practice applicable to the goods, works, and market in question and should take into account the provisions governing disbursements under the loan agreement between the OPEC Fund and the recipient. Payment for goods or services financed by the OPEC Fund may be made: (i) to the recipient to reimburse him for amounts paid to suppliers or con tractors, or (ii) at the recipient’s request, directly to a supplier or contractor, or, if the OPEC Fund so agrees, (iii) by means of a revocable or, against payment of a special commitment charge by the recipient to the OPEC Fund, irrevocable agreement made by the OPEC Fund, at the recipient’s request, to reimburse a commercial bank which has issued or confirmed a Letter of Credit to a supplier or contractor, provided the OPEC Fund is satisfied as to the terms and conditions of the Letter of Credit in question. 2.12 Price adjustment clauses Bidding documents should contain a clear statement whether prices are subject to adjustment (upwards or downwards) on the occurrence of specified events. Provision should usually be made for adjustment in the contract prices in the event changes occur in the prices of the major cost constituents of the contract, such as labor, equipment, and important materials, whether resulting from market forces or, where relevant, from changes of legislation. No price adjustment should be pro vided in contracts for the supply of goods to be delivered within one year unless it is necessary to do so in the light of the market situation prevailing at the time. Likewise, price adjustment formulae should start to be applicable not less than one year after the closing date of the bid. There are various methods by which contract prices may be adjusted, but the use of a comprehensive price adjustment formula or formulae related to the basic price indices is to be preferred over the method of documentary evidence pro vided by the contractor. Whatever method is used, preferably including a ceiling, it should be clearly defined in the bidding documents so that the same provisions will apply to all bidders. 2.13 Advance payments Any advance upon signature of the contract for mobilization and similar expenses should be related to the estimated cost of these items. Other advances to be made, as for example, for materials delivered to the site for incorporation in the
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