fbpx 49080-001: Electricity Grid Strengthening—Sumatra Program | Asian Development Bank

Indonesia: Electricity Grid Strengthening—Sumatra Program

Sovereign (Public) Project | 49080-001 Status: Closed

The Asian Development Bank is working with Indonesia to strengthen the electricity grid in Sumatra. The project is supporting the government's 35 gigawatt power generation expansion program and assisting in efforts to reach the remaining 16% of the Sumatran population with no access to modern energy services.

Project Details

Project Officer
Palupi, Ira Southeast Asia Department Request for information
Country
  • Indonesia
Modality
  • Loan
Sector
  • Energy
 
Project Name Electricity Grid Strengthening—Sumatra Program
Project Number 49080-001
Country Indonesia
Project Status Closed
Project Type / Modality of Assistance Loan
Source of Funding / Amount
Loan 3339-INO: Electricity Grid Strengthening Sumatra Program
Ordinary capital resources US$ 575.00 million
Loan 8297-INO: Electricity Grid Strengthening Sumatra Program
ASEAN Infrastructure Fund US$ 25.00 million
Strategic Agendas Inclusive economic growth
Drivers of Change Governance and capacity development
Knowledge solutions
Partnerships
Private sector development
Sector / Subsector

Energy / Electricity transmission and distribution

Gender Equity and Mainstreaming No gender elements
Description One of the priorities in the Government of Indonesia's National Medium-Term Development Plan (Rencana Pembangunan Jangka Menengah Nasional or RPJMN), 2015 2019 is to enhance domestic energy security. Within the sector, the Electricity Power Supply Business Plan (Rencana Usaha Penyediaan Tenaga Listrik or RUPTL) provides a ten-year plan (2015 2024) which also includes a five-year Electricity Development Plan with specific targets for 2015 2019. The government is now calling for expanding power generation capacity across Indonesia by an additional 35 gigawatts (GW) from 2015 to 2019 to achieve 7% economic growth and alleviate existing grid constraints of which 9 GW is to be installed in Sumatra. The program will contribute to PLN's overarching power development plans for Sumatra as identified in the RUPTL 2015 2024. A stronger transmission system with robust distribution networks will increase reliability of connections with industrial, commercial, and residential customers. At the impact level, the program is aligned with the RUPTL's goal of enhancing the quality of life in Indonesian society by the sustainable use of electricity as a key driver of increased economic activity. The expected outcome of the RBL program is that the adequacy and reliability of power supply are achieved for Sumatra. This adequacy and reliability is defined by the outcome indicators, which are measured against realistically set targets. The outcome is linked to all five Results Areas in the national electricity results framework and the key performance indicators for the RBL program outcome are identical or similar to those used by PLN in their own Results Areas (increase in number of customers, electricity sales, and customer satisfaction). In RBL modality, disbursement-linked results consist of disbursement-linked indicators (DLIs) that can include development outcomes, intermediate outcomes, outputs, and institutional strengthening.
Project Rationale and Linkage to Country/Regional Strategy

Having realized that the energy sector may well become an impediment to the country's future economic prospects, the government is refocusing its efforts on the sector. Expanding energy infrastructure and increasing investments in the sector is a key mandate of the incumbent government which is taking the necessary steps to diversify the country's energy mix, reduce its dependence on imported fuels, move towards cost-reflective electricity and energy prices, rely more on indigenous sources of energy, and lower greenhouse gas emissions. It is also improving the regulatory framework and strengthening the enforcement of existing regulations. This will therefore also require a substantive and sustained multi-year effort to improve and strengthen the country's power transmission and distribution networks and regional grids to deliver the power from its generation points to the load centers across the country and promote industrial development of the regions.

The overall investment needs for the 35 GW program covering generation, transmission, and distribution are $83.5 billion of which $43.5 billion is to come from the private sector and the balance $40 billion to be covered by PLN. The government and PLN will not be able to meet the investment needs on their own. For achieving the expansion targets by 2019, PLN has a funding gap of $30.3 billion of the $40 billion required which will have to be borne by other financing sources such as the private sector, commercial banks, and other development partners. The electric power system is made up of separate island grids comprising eight interconnected networks and 600 isolated grids. Sumatra currently accounts for about 25% of Indonesia's gross domestic product and has the second-largest electricity system in the country with an installed capacity of about 6,000 megawatts (MW) in 2013 but despite that, it suffers from an average power deficit of 250 MW. The government is keen to boost Sumatra's productivity which implies strengthening its existing power grid and increasing the generating capacity to around 15,000 MW.

According to the RUPTL 2015 2024 and PLN's estimates, the total investment needed for this program focusing on the expansion and strengthening of Sumatra's transmission and distribution systems for 2015 2019 is $7.36 billion and adding program management, social and environmental safeguards implementation, and taxes and duties puts the overall Sumatra program expenditure at $10,835 million. In light of the large investment needs, a focused programmatic approach by the Asian Development Bank (ADB) against the backdrop of the government and PLN's strong nationwide 35 GW program will promote a longer and broader engagement and enhance collaboration to achieve the intended results. Due to the size of this program, cofinancing is needed and the World Bank is also stepping in with a $500 million loan for Sumatra using a program for results (PforR) modality to further complement ADB's support. A series of ADB financed results-based loans with a commitment of at least $2 billion focusing on the Sumatra program during 2015 2019 will help achieve the objectives set by the RUPTL 2015 2024, which are to further expand access to electricity in Sumatra and stimulate greater investments in the region. This will contribute to the overall government vision of developing Sumatra as a major industrial center, enhancing regional growth, and connecting it to both Java and Peninsular Malaysia by 2020. Additional RBL loans to support programs for the Java-Bali and Easter Indonesia power grids are also being discussed between ADB and PLN.

The proposed Electricity Grid Strengthening - Sumatra program will take a results-based lending (RBL) programmatic approach in consultation with PLN and government over the five-year RPJMN period with a series of programs anchored to PLN's RUPTL 2015 2024. This will ensure a long-term continuous engagement for the strengthening of the Sumatra power grid and ensuring reliable and uninterrupted provision of electricity. The RBL modality is appropriate, given (i) ADB's long-term assistance to PLN in financing generation, transmission, and distribution; (ii) its capacity for implementation; (iii) the alignment of the RBL with the national planning frameworks RPJMN and RUPTL; (iv) PLN and the government's strong ownership of the 35 GW program; (v) the government's shift to direct lending to state-owned enterprises backed by a government guarantee, in order to increase efficiency and simplify the project approval process; (vi) lower transaction costs associated with program implementation; and (vii) the potential to stimulate cofinancing and donor harmonization with other development partners. The program will be included in the draft country operations business plan 2015 2017 and complements the proposed Sustainable and Inclusive Energy Program Subprogram 1 policy-based loan which will promote a more inclusive and sustainable energy sector in Indonesia with targets for renewable energy and energy efficiency.

Impact The quality of life in Indonesian society enhanced by the sustainable use of electricity as a key driver of increased economic activity.
Project Outcome
Description of Outcome Adequacy and reliability of power supply are achieved for Sumatra
Progress Toward Outcome

The IVA Final report for achievement as of 31 December 2019 shows the following:

- DLI 1, PLN's customer base has reached 14.98 million. This is an overachievement from 2019 target of 13.88 million.

- DLI 2, PLN's annual residential energy sales in Sumatra is 20,102 GWh. This has exceeded 2017 target (19,156 GWh), but below 2018 target (20,496 GWh).

PLN has provided analysis on the low energy sales and has been implementing program to boost electricity sales. The program has shown positive impact to PLN residential energy sales in Sumatra that grew 6.23% in 2019 from 3.56% in 2018, although this was still lower than 2019 target set by ADB. PLN will continue the efforts to increase annual growth of energy sales beyond RBL program implementation.

- DLI 3, Number of MV feeder permanent interruptions is 16.04 per 100 km. This is within 2019 threshold of 21.02 interruptions

per 100 km

- Non DLI 7, number of technical complaints is 8.40 complaints/1000 customers/month. This is above 2019 threshold of below 4.83 complaints/1000 customers/month. PLN will strengthen operation and maintenance of distribution networks to improve power supply reliability.

Implementation Progress
Description of Project Outputs

Existing transmission system strengthened and expanded.

Existing distribution system strengthened and expanded.

Performance management and implementation improved.

Other results (financing for prior results)

Status of Implementation Progress (Outputs, Activities, and Issues)

As of 31 December 2019:

- DLI 4, cumulative length of 150kV transmission line is 2,578.43 ckm. This is an over-achievement from 2019 target of 2,361 ckm.

- DLI 5, additional 5,474 distribution transformers were installed. This is above 2019 target of 4,160 additional transformers.

- DLI 6, additional 4351.52 ckm of MV distribution lines were installed. This is above 2019 target of 3,887 ckm of MV distribution lines.

- Non DLI8, percentage of PLN staff who are competency certified is 75.61% (below 2019 target of above 95%). PLN will further review the annual target set up on staff competency certification against capacity of the Certification Unit.

- Non DLI9, 85% of distribution contracts are timely implemented (above 2019 target of 75%)

- Financing for Prior Results indicators are Achieved in 2015

Geographical Location Sumatra
Safeguard Categories
Environment B
Involuntary Resettlement B
Indigenous Peoples C
Summary of Environmental and Social Aspects
Environmental Aspects Potential construction-related impacts include disturbance of vegetation, soil erosion, sedimentation, noise, dust, vibration, and generation of waste. Potential impacts during operation include trimming of trees within the right-of-way of transmission and distribution lines. The program impacts are site-specific, and can be mitigated and/or managed by PLN's current practices. Gap identified by the assessment include weak management of industrial waste, which is addressed in the Program Action Plan (PAP).
Involuntary Resettlement The program's activities that relate to extension of substations, installation of reactors and capacitors, and expansion of switchgears will take place in the existing substations' premises owned and managed by PLN. They will not require any involuntary resettlement. Expansion of the distribution network (including installation of distribution transformers) will require (i) use of no more than 0.2 square meters of land for installation of concrete poles, and (ii) possible removal of nonland assets (primarily trees) for stringing of conductors. Gap identified by the assessment include procedures for negotiated settlements or voluntary donation, which is addressed in the PAP. Fourteen pilot warehouses in Sumatra have made good progress in terms of conducting inventory, labelling of fixed asset not operating (ATTB) transformers, grouping them based on its manufacturing date, constructing warehouses, and temporary storage of hazardous wastes
Indigenous Peoples Although Sumatra is inhabited by a variety of ethnic groups, the program will not be in areas where indigenous peoples are present.
Stakeholder Communication, Participation, and Consultation
During Project Design The stakeholders have been consulted through meetings, interviews and surveys in order to increase awareness about the program and seek inputs to the program. Consultation with the poor, vulnerable and excluded groups will focus on issues associated with environment, involuntary resettlement, if any, and other social issues that may affect them.
During Project Implementation PPLN has taken efforts to improve the GRM and consultation records. PLN Regional Division issued letters to Regional Units (UIWs) requiring each unit to include the GRM and consultation record in the distribution line contract.
Responsible ADB Officer Palupi, Ira
Responsible ADB Department Southeast Asia Department
Responsible ADB Division Indonesia Resident Mission
Executing Agencies
P.T. Perusahaan Listrik Negara
Jalan Trunojoyo Blok M1/135
Keboyoran Baru, Jakarta 12150
Indonesia
Timetable
Concept Clearance 30 Jun 2015
Fact Finding 19 Aug 2015 to 21 Aug 2015
MRM 18 Sep 2015
Approval 02 Dec 2015
Last Review Mission -
Last PDS Update 24 Jul 2020

Loan 3339-INO

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
02 Dec 2015 04 Dec 2015 01 Feb 2016 30 Jun 2020 - 16 Sep 2020
Financing Plan Loan Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 575.00 Cumulative Contract Awards
ADB 575.00 02 Dec 2015 28.84 0.00 5%
Counterpart 0.00 Cumulative Disbursements
Cofinancing 0.00 02 Dec 2015 567.56 0.00 100%
Status of Covenants
Category Sector Safeguards Social Financial Economic Others
Rating - Satisfactory - Satisfactory - Satisfactory

Loan 8297-INO

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
02 Dec 2015 04 Dec 2015 01 Feb 2016 30 Jun 2020 - 16 Sep 2020
Financing Plan Loan Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 25.00 Cumulative Contract Awards
ADB 0.00 02 Dec 2015 0.00 24.68 100%
Counterpart 0.00 Cumulative Disbursements
Cofinancing 25.00 02 Dec 2015 0.00 24.68 100%
Status of Covenants
Category Sector Safeguards Social Financial Economic Others
Rating - Satisfactory - Satisfactory - Satisfactory

Project Data Sheets (PDS) contain summary information on the project or program. Because the PDS is a work in progress, some information may not be included in its initial version but will be added as it becomes available. Information about proposed projects is tentative and indicative.

The Access to Information Policy (AIP) recognizes that transparency and accountability are essential to development effectiveness. It establishes the disclosure requirements for documents and information ADB produces or requires to be produced.

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Title Document Type Document Date
Electricity Grid Strengthening—Sumatra Program: Completion Report Project/Program Completion Reports May 2021
Electricity Grid Strengthening - Sumatra Program: Audited Project Financial Statements (January-December 2019) Audited Project Financial Statements Mar 2021
Amendments to the Loan Agreements for Loan 3339-INO and Loan 8297-INO: Electricity Grid Strengthening Sumatra Program - Results Based Lending Loan Agreement (Ordinary Resources) Jan 2021
Electricity Grid Strengthening - Sumatra Program: Audited Project Financial Statements (January-December 2018) Audited Project Financial Statements Jul 2019
Amendment to Loan Agreement (Ordinary Operations) for Loan 3339-INO: Electricity Grid Strengthening Sumatra Program - Results Based Lending Loan Agreement (Ordinary Resources) Jul 2018
Electricity Grid Strengthening - Sumatra Program: Audited Project Financial Statements (January-December 2017) Audited Project Financial Statements Jun 2018
Perusahaan Listrik Negara Electricity Grid Strengthening—Sumatra Program: Changes in Program Implementation Document Change in Scope, Amount, and Implementation Arrangements Apr 2018
Electricity Grid Strengthening - Sumatra Program: Audited Project Financial Statements (January-December 2016) Audited Project Financial Statements Jun 2017
Guarantee Agreement for Loans 3339 and 8297-INO: Electricity Grid Strengthening Sumatra Program - Results Based Lending Guarantee Agreements Dec 2015
Loan Agreement (ASEAN Infrastructure Fund) for Loan 8297-INO: Electricity Grid Strengthening Sumatra Program - Results Based Lending Loan Agreement (Special Operations) Dec 2015
Loan Agreement (Ordinary Operations) for Loan 3339-INO: Electricity Grid Strengthening Sumatra Program - Results Based Lending Loan Agreement (Ordinary Resources) Dec 2015
Perusahaan Listrik Negara Electricity Grid Strengthening, Sumatra Program Phase 1: Report and Recommendation of the President Reports and Recommendations of the President Nov 2015
Penguatan Jaringan Kelistrikan—Program Sumatera: Lembar Data Proyek Translated PDS Jul 2015
Electricity Grid Strengthening - Sumatra: Concept Paper Concept Papers Jun 2015
Sumatra Power Grid Strengthening Program: Intial Poverty and Social Analysis Initial Poverty and Social Analysis Jun 2015

Safeguard Documents See also: Safeguards

Safeguard documents provided at the time of project/facility approval may also be found in the list of linked documents provided with the Report and Recommendation of the President.

Evaluation Documents See also: Independent Evaluation

None currently available.

Related Publications

None currently available.


The Access to Information Policy (AIP) establishes the disclosure requirements for documents and information ADB produces or requires to be produced in its operations to facilitate stakeholder participation in ADB's decision-making. For more information, refer to the Safeguard Policy Statement, Operations Manual F1, and Operations Manual L3.

Requests for information may also be directed to the InfoUnit.

Tenders

No tenders for this project were found.

Contracts Awarded

Contract Title Approval Number Contract Date Contractor Contractor Address Executing Agency Contract Description Total Contract Amount (US$) Contract Amount Financed by ADB (US$)
INTERIM 2019 (DLI 5, 6) Loan 3339 08 Oct 2019 VARIOUS VARIOUS INDONESIA P.T. Perusahaan Listrik Negara OTHERS 30,182,454.00 30,182,454.00
ANNUAL 2018 (DLI 1,2,3,4,5,6) Loan 3339 10 May 2019 VARIOUS VARIOUS INDONESIA P.T. Perusahaan Listrik Negara OTHERS 107,168,581.00 107,168,581.00
INTERIM 2018 (DLI 1,4,5,6) Loan 3339 12 Oct 2018 VARIOUS VARIOUS INDONESIA P.T. Perusahaan Listrik Negara OTHERS 78,832,527.00 78,832,527.00
ADVANCE FINANCING(2018) Loan 3339 07 Aug 2018 VARIOUS VARIOUS INDONESIA P.T. Perusahaan Listrik Negara OTHERS 28,740,000.00 28,740,000.00
ADVANCE FINANCING (2019) Loan 3339 07 Aug 2018 VARIOUS VARIOUS INDONESIA P.T. Perusahaan Listrik Negara OTHERS 28,740,000.00 28,740,000.00
YEAR 2017 (DLI 1,2,3,4,5,6) Loan 3339 03 Aug 2018 VARIOUS VARIOUS INDONESIA P.T. Perusahaan Listrik Negara OTHERS 36,950,000.00 36,950,000.00
YEAR 2017 (DLI1, DLI4, DLI5 AND DLI6) JANUARY-JUNE 2017 ACHIEVEMENT Loan 3339 05 Dec 2017 VARIOUS VARIOUS INDONESIA P.T. Perusahaan Listrik Negara OTHERS 55,564,000.00 55,564,000.00
Year 2016 (DLI2 and DLI3) Loan 3339 23 Jun 2017 Various Various, Indonesia P.T. Perusahaan Listrik Negara Others 28,750,000.00 28,750,000.00

Procurement Plan

None currently available.