ADB's First BIMP-EAGA Project to Bring Clean Energy to West Kalimantan

News Release | 28 August 2013

MANILA, PHILIPPINES - The Asian Development Bank (ADB) and Government of Indonesia will build a cross-border power transmission line linking West Kalimantan with Sarawak, Malaysia, bringing cleaner, greener hydroelectricity to West Kalimantan and adding 8,000 households to its power grid.

"This is a win-win-win situation," said ADB Energy Specialist Sohail Hasnie. "West Kalimantan gets renewable energy and will have the ability to exchange power; Sarawak starts its first export of hydropower; and the region moves one step closer to establishing a regional power transmission link that crosses Brunei Darussalam, Indonesia and Malaysia."

Perusahaan Listrik Negara (PLN), the Indonesian state-owned electricity company, currently uses oil for power generation in West Kalimantan, which has pushed the cost up to $0.25 per kilowatt-hour (kWh). Under the power exchange agreement signed with Sarawak, the cost of power in West Kalimantan could be cut to $0.18/kWh, while carbon dioxide emissions from fossil fuel-based generation could be cut by 400,000 tons each year by 2020.

The project will build a 145-kilometer distribution line, distribution feeder extensions, and a new substation to improve the reliability of power in West Kalimantan. An 83-km cross-border high-voltage transmission line and substation will connect the West Kalimantan power grid to that of neighboring Sarawak, Malaysia. An estimated 230 megawatt-hour of power could be exchanged every hour between the two systems.

"This will make a long-term relationship with our neighbors and a step forward to making the ASEAN interconnection a reality," said PLN's Head of Power System Planning, I Made Ro Sakya.

The interconnection project is expected to save PLN an estimated $100 million annually in avoided oil generation. An estimated 8,000 households will also benefit from training on energy efficiency, provision of energy-efficient lighting, and improved community centers, such as hospitals and schools, which will have access to a reliable power source.

In addition to its $49.5 million loan, ADB will also administer a $49.5 million loan provided by the French development agency Agence Française de Dévelopment, as well as a $2 million grant provided by the Multi-Donor Clean Energy Fund under the Clean Energy Financing Partnership Facility. BIMP-EAGA is the Brunei Darussalam-Indonesia-Malaysia-The Philippines East ASEAN Growth Area.

ADB is currently preparing a second loan project to finance the transmission line on the Malaysia side. Both countries have agreed to complete the construction by December 2014 and power flow will start from 1 January 2015.