Indonesia: SARULLA GEOTHERMAL POWER GENERATION PROJECT

Nonsovereign Project | 42916-014

Summary

SARULLA GEOTHERMAL POWER GENERATION PROJECT

The project will develop the steam resources in the Sarulla concession area and construct, operate, and maintain three geothermal power generation units with a total capacity of about 320 megawatts (MW). The units will be powered by steam from production and injection facilities at the Silangkitang and Namora-I-Langit reservoirs, located in North Sumatra. The project will be developed and implemented under a 30-year energy sales contract (ESC) with PLN, a 30-year joint operating contract (JOC) with Pertamina Geothermal Energy (PGE) and a 20-year guarantee from the Ministry of Finance, as stipulated under a business viability guarantee letter (BVGL).

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Consulting Notices

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Project Name SARULLA GEOTHERMAL POWER GENERATION PROJECT
Project Number 42916-014
Borrower/Company SARULLA OPERATIONS LIMITED
SARULLA OPERATIONS LIMITED CTF
SARULLA OPERATIONS LIMITED CCFPS
Country Indonesia
Location Sarulla Geothermal Working Area, North Sumatra Province
Approval Number 7397/8277, 7397/8278
Type or Modality of Assistance
7397/8277 Loan USD 80.00 million Committed
7397/8277 Loan USD 80.00 million Committed
7397/8277 Loan USD 250.00 million Committed
7397/8278 Loan USD 20.00 million Committed
7397/8278 Loan USD 20.00 million Committed
Strategic Agendas
Drivers of Change
Sector / Subsector Energy - Renewable energy generation - geothermal
Gender Equity and Mainstreaming
Responsible ADB Department Private Sector Operations Department
Responsible ADB Division Portfolio Management Division, PSOD
Responsible ADB Officer Masayuki Kanda
Project Sponsor(s) Ormat International
Medco Power Indonesia
KYUSHU ELECTRIC POWER COMPANY
Itochu Corporation
Description

SARULLA GEOTHERMAL POWER GENERATION PROJECT

The project will develop the steam resources in the Sarulla concession area and construct, operate, and maintain three geothermal power generation units with a total capacity of about 320 megawatts (MW). The units will be powered by steam from production and injection facilities at the Silangkitang and Namora-I-Langit reservoirs, located in North Sumatra. The project will be developed and implemented under a 30-year energy sales contract (ESC) with PLN, a 30-year joint operating contract (JOC) with Pertamina Geothermal Energy (PGE) and a 20-year guarantee from the Ministry of Finance, as stipulated under a business viability guarantee letter (BVGL).

Objectives and Scope

The project will help the government advance towards its renewable energy and climate change mitigation goals. Successful implementation of the project and deployment of concessional cofinacing will lead to: (i) increased geothermal power generation in Indonesia; (ii) more private sector investment in the geothermal sector; and (iii) increased electrification rate in

Indonesia.

Linkage to Country/Regional Strategy

The Project complies with ADB's energy policy supports the development of clean energy with private sector participation. The Project, which is to generate electric power from renewable resources, will reduce greenhouse gas emission from the use of fossil fuels for power generation, to mitigate climate change.

The Project is in line with ADB's Country Strategy and Program for Indonesia 2006-2009, emphasizing physical infrastructure development with private sector investment, strengthening environment and natural resource management, and reducing pollution. As the country's largest single-contract geothermal power project upon completion, the Project is also consistent with ADB's private sector operations in Indonesia, which highlights the development and financing of important infrastructure projects in energy with strong demonstration effect.

Status of Development Objectives To be evaluated upon completion of the Project.
Safeguard Categories
Environment A
Involuntary Resettlement A
Indigenous Peoples A
Summary of Environmental and Social Aspects
Environmental Aspects In compliance with ADB's Safeguard Policy Statement (2009), the project is classified as category A for environment. The potential environmental and social impacts of the project have been identified and effective measures to avoid, minimize, mitigate, and compensate for the adverse impacts are incorporated in the safeguard reports and plans. SOL's institutional capacity to manage the project's social and environmental impacts is deemed adequate. SOL has prepared an environmental and social impact assessment addendum based on (i) supplemental environmental studies and investigation;19 and (ii) an environmental compliance audit report of existing facilities, including a time-bound corrective action plan to meet the Safeguard Policy Statement requirements. An audit of prior land acquisition was conducted and the corrective action plan was prepared to address potential economic impacts on landowners.
Involuntary Resettlement In compliance with ADB's Safeguard Policy Statement (2009), the project is classified as category A for involuntary resettlement. A resettlement plan was prepared to mitigate any potential economic displacement.
Indigenous Peoples In compliance with ADB's Safeguard Policy Statement (2009), the project is classified as category A for indigenous peoples. An indigenous peoples plan has been prepared to mitigate impacts on members of the Batak ethnic group and to maximize project benefits for affected communities.
Stakeholder Communication, Participation, and Consultation Key community concerns raised during consultations included EHS, employment, corporate social responsibility opportunities, and land acquisition impacts. SOL is committed to developing and implementing an EHS management system in line with applicable national legislation and industry codes and standards. Through a contractors' safety management system, SOL has also committed to accord equal priority in the protection of its contractors, vendors, customers, and company employees.
Timetable for assistance design, processing and implementation
Concept Clearance 15 Jul 2013
Due Diligence
Credit Committee Meeting 14 Oct 2013
Approval 05 Dec 2013
PDS Creation Date 15 Jun 2010
Last PDS Update 29 Sep 2014
Title Document Type Document Date
Sarulla Geothermal Power Generation Project Reports and Recommendations of the President Nov 2013
PROYEK PEMBANGKIT LISTRIK PANAS BUMI SARULLA: Lembar Data Proyek Translated PDS Sep 2013

Evaluation Documents

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