Indonesia: West Kalimantan Power Grid Strengthening Project

Sovereign Project | 41074-013

Summary

The proposed project is perfectly aligned with ADB's Energy Sector Assessment Strategy and Roadmap, which supports investment in strategic transmission assets that connects regions or countries across seas or international boundaries to optimize power networks by reducing the overall need for reserve capacity, improving system reliability, removing transmission bottlenecks, and transmitting cheaper power from one area to the other, addressing overall regional socio-economic and environmental improvement.

Latest Project Documents

Consulting Notices

See also: CMS

No notices are currently available for this project.

Procurement Notices

See also: Operational Procurement

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Procurement Documents


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Project Name West Kalimantan Power Grid Strengthening Project
Project Number 41074-013
Country Indonesia
Project Status Approved
Project Type / Modality of Assistance Loan
Source of Funding / Amount
Grant 0354-INO: West Kalimantan Power Grid Strengthening Project
Clean Energy Fund - Multi-Donor US$ 2.00 million
Loan 3015-INO: West Kalimantan Power Grid Strengthening Project
Ordinary capital resources US$ 49.50 million
Loan 8272-INO: West Kalimantan Power Grid Strengthening Project
Agence Francaise de Developpement US$ 49.50 million
Strategic Agendas Environmentally sustainable growth
Inclusive economic growth
Regional integration
Drivers of Change Governance and capacity development
Partnerships
Sector / Subsector

Energy - Electricity transmission and distribution

Gender Equity and Mainstreaming Some gender elements
Description The proposed project is perfectly aligned with ADB's Energy Sector Assessment Strategy and Roadmap, which supports investment in strategic transmission assets that connects regions or countries across seas or international boundaries to optimize power networks by reducing the overall need for reserve capacity, improving system reliability, removing transmission bottlenecks, and transmitting cheaper power from one area to the other, addressing overall regional socio-economic and environmental improvement.
Project Rationale and Linkage to Country/Regional Strategy

In West Kalimantan, Sumatera and the other outer islands of Indonesia, most of the power generation is either oil or diesel based, and, as a result, cost of power generation is more than 25 cents/kWh. Large numbers of customers also do not have access to grid connected power supply in those areas, and the power grid will need strengthening to accommodate new customer connection. In addition to strengthened network, supply to new customers will need new generation capacity, especially low cost power generation to reduce the overall cost of power generation. The proposed project will address all these issues in West Kalimantan.

PLN, the state owned power utility in Indonesia, plans to reduce its cost of power generation in West Kalimantan by importing hydropower generated electricity from neighboring Sarawak, Malaysia by building about 83 km 275 kV transmission line from its Bengkayang substation to the border with Sarawak, Malaysia. On the other side of the border, in Sarawak, PLN's counterpart, SESCO, the state owned power utility in Sarawak will build about 42 km 275 kV transmission line from Mambong substation to the border with West Kalimantan. Together, these transmission lines in the two countries will form the first regional BIMP-EAGA flagship project and the first leg of the Trans Borneo Power Grid that aims to connect West Kalimantan across Sarawak, and Brunei, to Sabah (Malaysia) enabling power trading between the BIMP-EAGA countries.

PLN's investment in West Kalimantan is part of its nationwide plan to connect about 10 million new customers between 2011 and 2015 to support Government's commitment to 90% electrification by 2020 from about 62% in 2009. This national plan will need large investments and PLN will have to increase its operational income for it. Currently, PLN's income from its operation is insufficient to cover its cost of operation as the tariffs have been set low by the Government (average of 6.9 cents/kWh) for social reasons. As the cost of generation is much higher than the average tariff, PLN's operations are subsidized by the Government through a public service obligation (PSO) program that is approved by the Parliament each year. For 2011 PLN subsidy, the Government has allocated about $7.3 billion from the 2010 level of $6.46 billion ($82 million for West Kalimantan). PLN's cost reduction will reduce the need for larger subsidy by PLN.

The proposed strengthening of the 150 kV distribution network, and PLN's import of cheaper power will also avoid emissions of about 400,000 tons of CO2 that would have been generated by the old rental oil fired that PLN currently uses in West Kalimantan.

This is a priority project for strengthening distribution network in rural areas and for regional cooperation. It is consistent with ADB's country strategy and program for 2006-2009 and country operations business plan 2009-2011 that support the Government's economic growth target rate of 6.3%-6.8% per annum in 2010-2014 to reach at least 7% by 2014. They highlight the importance of removing infrastructure bottlenecks and promoting regional cooperation.

Impact Sustainable power supply in West Kalimantan
Project Outcome
Description of Outcome Cost of operating West Kalimantan power system reduced
Progress Toward Outcome

The loan and grant were declared effective as of 4 April 2014.

The recruitment of the Project Implementation Consultant (PIC) was undertaken under advance action, with the contract signed on 30 July 2013 with effective date of 12 November 2013. Procurement of the four (4) turnkey contracts under Parts 1 and 2 were undertaken under advance action and completed in mid-2013, with all contracts awarded. The 4 turnkey contracts are now ongoing and in various stages of implementation, with target completion dates by the 2nd quarter of 2015 and first quarter of 2016.

The scope and timeframe for the CEFPF grant component were discussed with PLN West Kalimantan Region in March 2014. The proposal for the scope and allocations for the grant component was submitted by PLN in February 2015. Formulation of the Bidding Document is underway and it is expected to completed by the end of 2nd quarter of 2015.

Implementation Progress
Description of Project Outputs

1. Construction of Sarawak-West Kalimantan interconnection network

2. Construction of new distribution network in West Kalimantan

3. New connections to households in West Kalimantan

Status of Implementation Progress (Outputs, Activities, and Issues) Ongoing. The project reached a substantial progress of 60%, whereas the elapsed time is still about 25%.
Geographical Location
Safeguard Categories
Environment B
Involuntary Resettlement B
Indigenous Peoples B
Summary of Environmental and Social Aspects
Environmental Aspects

This is classified as a Category B project for environment. The projects poses no significant environmental risks. The draft IEE prepared shows the proposed 275 kV transmission line: (i) passing through flat to hilly country, with scattered villages and associated small farms and gardens mainly along the roads including shifting cultivation and re-growth; (ii) does not pass through any protected areas, areas with rare or endangered species, or areas of high ecological diversity; (iii) requires 9.04ha land in West Kalimantan area for tower sites; and (iv) requires tall trees to be cleared on land of 30m width, from the centre line, in West Kalimantan

In the project area, the vegetation is already highly modified by human activity through shifting and permanent cultivation. The area involves no protected areas, no primary forest, no cultural heritage sites, 30% of land occupied by crops and grassland, 68% is high canopy vegetation such as plantations and forest, and only 2% other land use.

Involuntary Resettlement Project has separate resettlement plans (RPs) for the 275kV section from Benkayang to the Malaysian border and for the 150kV section from Benkayang through Ngabang to Tayan. Both draft RPs include specific actions to address gender and ethnic minority issues.
Indigenous Peoples The ethnic minority plans are incorporated in the resettlement plan.
Stakeholder Communication, Participation, and Consultation
During Project Design Stakeholders meetings were conducted in West Kalimantan; near the border area in Bengkayang and in other areas along the proposed route of the transmission line.
During Project Implementation

ADB and AFD fielded a loan review mission from 6 January - 6 February 2015.

PLN and ADB confirmed that internal monitoring will be conducted semi-annually, and external monitoring will be conducted twice (three months after compensation payment for 50% of towers, and once 30% of ROW compensation has been provided, for 275 kV TL and 150 kV TL each), according to the updated RCCDP for 275 kV and draft RCCP for 150 kV. All the monitoring reports will be submitted to ADB for web posting, and internal monitoring report will be made available to the affected people as well. PLN will submit the first internal monitoring report in June 2014 both for 275 kV TL and 150 kV TL.

During construction, PLN is required to submit the progress of EMP implementation and monitoring twice a year which will be uploaded to the ADB website.

A joint ADB-AFD loan review mission will be fielded on August 2015.

Business Opportunities
Consulting Services

An international consulting firm will be engaged to manage the implementation of the Project, especially the 275 kV cross-border transmission component. The firm will deliver a total of 206 person-months of consulting services (28 person-months of international and 178 person-months of national consulting inputs) following ADB's quality- and cost-based selection (QCBS) method with 80:20 ratio and using a full technical proposal. The CEFPF grant will have a total of 24 person-months consulting services (10 person-months of international and 14 person-months of national consultants) to be engaged intermittently. Consultants will be selected and engaged under the Project in accordance with the Guidelines on the Use of Consultants by Asian Development Bank and its Borrowers (2010, as amended from time to time).

The recruitment of the Project Implementation Consultant (PIC) was undertaken under advance action, with the contract signed on 30 July 2013 with effective date of 12 November 2013. The PIC, Joint Venture of Tractebel Engineering GDF Suez (TE) (Thailand) and Powergrid International Limited (Thailand) in subconsultancy with PT Caturbina Guna Persada (Indonesia), mobilized in mid-January 2014 and has commenced construction supervision of ongoing works under Packages 1 and 2.

Procurement

The proposed package contracts will be jointly financed by the ADB and Agence Francaise de Developpement (AFD). The eligibility rules and procedures of the ADB will govern the bidding process. Procurement of contracts financed by the loan will be conducted through the procedures specified in ADB's Procurement Guidelines (2010, as amended from time to time), and is open to all bidders from eligible source countries as defined in the guidelines. Specific Procurement Notices for tenders under international competitive bidding procedures will be announced in ADB website (http://adb.org), in newspapers of the Borrower's country, and in internationally known and freely accessible website. The proceeds of the Loan and Grant are intended to be used for the procurement of the following: (i) through international competitive bidding (ICB), a) Package 1: Design, Supply, Installation, Testing and Commissioning of 275kV Overhead Transmission Lines Bengkayang Substation - Jagoibabang; b)Package 2: Design, Supply, Installation, Testing and Commissioning of 275/150kV Bengkayang Substation; c) Package 3: Design, Supply, Installation, Testing and Commissioning of 150kV Transmission Lines Bengkayang - Ngabang - Tayan; d)Package 4 : Design, Supply, Installation, Testing and Commissioning of 150/20kV Substation at Ngabang and Tayan; e) Package 5: Supply, Transportation and Installation of Electricity Household Connection Kits (Grant component)

ADB has approved Advance Procurement Action for goods and related services on 19 August 2011. This will cover tendering and bid evaluation up to the stage of ADB'ss approval of PLN'ss recommendation for award of contract before the effective date of the loan and project agreements. The Government and PLN have been advised that ADB's approval of advance contracting does not commit ADB to approve the proposed loan and that ADB financing will be dependent upon the Government's compliance with all aspects of ADB's procedural requirements, including compliance with the relevant provisions of the loan agreement and ADB's guidelines.

The four ICB packages have been bidded out in August 2012 and were awarded in 2013.

All four contractors have commenced work and all contract works will be completed between January and June 2015. PLN expects the 275 kV transmission line and the Benkayang Substation to be energized by February 2015.

Responsible ADB Officer Bagus Mudiantoro
Responsible ADB Department Southeast Asia Department
Responsible ADB Division Indonesia Resident Mission
Executing Agencies
P.T. Perusahaan Listrik NegaraKepala Dinas Rencana Pendanaan
Gd.Timah Lt.III,Jl. Gatot Subroto Kav.18
Jakarta Selatan, Indonesia
Timetable
Concept Clearance 28 Aug 2010
Fact Finding 14 Feb 2011 to 17 Feb 2011
MRM 09 Aug 2011
Approval 27 Aug 2013
Last Review Mission -
Last PDS Update 31 Mar 2015

Grant 0354-INO

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
27 Aug 2013 20 Oct 2013 04 Apr 2014 31 Jul 2016 - -
Financing Plan Grant Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 2.00 Cumulative Contract Awards
ADB 0.00 27 Aug 2013 0.00 0.00 0%
Counterpart 0.00 Cumulative Disbursements
Cofinancing 2.00 27 Aug 2013 0.00 0.00 0%

Loan 3015-INO

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
27 Aug 2013 17 Oct 2013 04 Apr 2014 31 Jul 2016 - -
Financing Plan Loan Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 78.50 Cumulative Contract Awards
ADB 49.50 27 Aug 2013 33.23 0.00 67%
Counterpart 29.00 Cumulative Disbursements
Cofinancing 0.00 27 Aug 2013 21.13 0.00 43%

Loan 8272-INO

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
16 Nov 2011 08 Feb 2013 08 Feb 2013 31 Jul 2016 - -
Financing Plan Loan Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 49.50 Cumulative Contract Awards
ADB 0.00 16 Nov 2011 0.00 32.26 65%
Counterpart 0.00 Cumulative Disbursements
Cofinancing 49.50 16 Nov 2011 0.00 0.00 0%

Evaluation Documents

See also: Independent Evaluation

No documents found.


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