The proposed $635 million sector loan aims to help improve access to electricity services in Eastern Indonesia (Kalimantan, Maluku, Nusa Tenggara, Papua, and Sulawesi) by supporting a cluster of new small- to mid-sized power stations fueled by natural gas which is a clean burning fuel that has lower power generation costs and less local pollutants and carbon dioxide (CO2) emissions compared to diesel-fired units. The project also plans to include pilot-scale gas and solar hybrid units that can help enhance the borrower''s operational know-how and position them well for future scale up of renewable energy use.
|Project Name||Eastern Indonesia Sustainable Energy Access Sector Project|
|Project Type / Modality of Assistance||Technical Assistance
|Source of Funding / Amount||
|Strategic Agendas||Inclusive economic growth
|Drivers of Change||Knowledge solutions
|Sector / Subsector||
Energy / Energy utility services - Oil and gas transmission and distribution - Renewable energy generation - solar
|Gender Equity and Mainstreaming||No gender elements|
|Description||The proposed $635 million sector loan aims to help improve access to electricity services in Eastern Indonesia (Kalimantan, Maluku, Nusa Tenggara, Papua, and Sulawesi) by supporting a cluster of new small- to mid-sized power stations fueled by natural gas which is a clean burning fuel that has lower power generation costs and less local pollutants and carbon dioxide (CO2) emissions compared to diesel-fired units. The project also plans to include pilot-scale gas and solar hybrid units that can help enhance the borrower''s operational know-how and position them well for future scale up of renewable energy use.|
|Project Rationale and Linkage to Country/Regional Strategy||
The recently adopted Sustainable Development Goals (SDGs) include targets to ensure universal access to affordable, reliable, and modern energy, increase substantially the share of renewable energy in the global energy mix, and double the global rate of improvement in energy efficiency by 2030. The SDGs also call for urgent action to combat climate change and its impacts. These efforts are essential to eradicate poverty and promote inclusive and sustainable growth.
Indonesia, as the country with the world's fourth largest population with many of its people living on small islands and other remote areas, has significant challenges in providing equitable access to modern energy services. In 2014, the electrification ratios in some provinces of Eastern Indonesia were particularly low -- Nusa Tenggara West 68.1%, Nusa Tenggara East 58.9%, and Papua 43.5% against a national average rate of 84.3%. Moreover, these areas are mainly serviced, if at all, by diesel-fired generators that are inefficient, polluting, and expensive. Power disruptions due to supply shortages are common and household consumption levels remain suppressed.
The proposed loan aims to help improve access to electricity services in Eastern Indonesia by supporting a cluster of new small- to mid-sized natural gas-fired power stations that have lower power generation costs and are cleaner compared to diesel-fired units. An added advantage of gas-fired generators is that they can respond very rapidly to fluctuating power demand. This characteristic can be tapped to integrate intermittent renewable energy systems while reducing the need for expensive battery storage and help make the use of solar and wind resources more affordable and reliable to the local communities.
The project is part of an innovative effort by the government to expand the share of natural gas use in the country by establishing small scale distribution networks for liquefied natural gas (LNG). It is in line with the government's National Medium-term Development Plan 2015-2019 (RPJMN) and is included in the National Power Development Plan (RUPTL 2015-2024) of the State Electricity Company (PT Perusahaan Listrik Negara or PLN). The project is (i) consistent with ADB's Energy Policy (2009), (ii) incorporated in the draft Country Partnership Strategy (2016-2019) and energy sector assessment, strategy, and roadmap; and (iii) part of ADB's programmatic approach in Indonesia's energy sector, complementing the Sustainable and Inclusive Energy Program (SIEP) policy-based loan, the results-based lending (RBL) for grid strengthening, and technical assistance projects to expand renewable energy use.
ADB has financed 23 projects in Indonesia's energy sector with total lending of $3.91 billion. In the gas sub-sector, ADB has supported a gas pipeline between Sumatra and Singapore and BP's Tangguh LNG project through its sovereign and private sector operations, respectively. ADB is currently coordinating with the World Bank to support gas sub-sector regulatory development under SIEP.
PLN plans to add 2,696 megawatts (MW) of generation capacity by 2019 from small- to mid-scale gas-fired power plants across Eastern Indonesia and to establish a LNG distribution system via small scale vessels with a capacity of several thousand cubic meters of LNG per day. Beyond 2019, PLN has already identified sites for 1,420 MW of additional capacity by 2025. PLN has requested ADB's support for its mid-sized plants (30 MW and above) first, and ADB can scale up its assistance through a subsequent loan focused on small gas-fired and gas-solar hybrid generation units (5-20 MW). This can be combined with the planned RBL to expand and strengthen local distribution grids in Eastern Indonesia in order to deliver sustainable energy services to the island communities.
|Description of Outcome|
|Progress Toward Outcome|
|Description of Project Outputs|
|Status of Implementation Progress (Outputs, Activities, and Issues)|
|Summary of Environmental and Social Aspects|
|Stakeholder Communication, Participation, and Consultation|
|During Project Design||Stakeholders were consulted through public consultation and focus group discussions.|
|During Project Implementation||Meaningful consultation is being carried out. Views and concerns of affected parties will be elicited with regard to project potential impacts, resettlement, social risk, and mitigation measures. The methods to be used for consultations will vary and may include (i) public consultation meetings and FGDs with potential affected people; (ii) limited household surveys; (iii) meetings and interviews with government officials both at national and local levels; and (iv) meetings with informal leaders/groups in all project areas and customary council in Papua. The PPTA will facilitate social and environmental impacts assessment and promote participatory planning to enable local communities to voice their opinions on the project and its potential impacts, and appropriate mitigation measures.|
|Consulting Services||Fifteen (15) consultants (9 international and 6 national) for 55 person-months (PM) of consulting services (27 international and 28 of national) were engaged on 7 June 2016 through an international firm in accordance with the ADB's Guidelines on the Use of Consultants (2013, as amended from time to time) following Quality- and Cost-Based Selection (QCBS) (90:10). In addition, an international gas sector and power specialist (4 PM), national gas sector specialist (3 PM), international environmental safeguards specialists (1PM and 1.5PM), and a national environment specialist: marine biologist (10 WD) were recruited under the individual consultant selection (ICS).|
|Responsible ADB Officer||Kubo, Toru|
|Responsible ADB Department||Southeast Asia Department|
|Responsible ADB Division||Energy Division, SERD|
|Approval||02 Mar 2016|
|Last Review Mission||-|
|Last PDS Update||27 Mar 2019|
|Approval||Signing Date||Effectivity Date||Closing|
|02 Mar 2016||29 Apr 2016||29 Apr 2016||15 May 2017||31 Dec 2018||-|
|Financing Plan/TA Utilization||Cumulative Disbursements|
|100,000.00||1,400,000.00||0.00||0.00||0.00||0.00||1,500,000.00||02 Mar 2016||1,488,930.16|
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.
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|Title||Document Type||Document Date|
|Eastern Indonesia Sustainable Energy Access Sector Project: Project Preparatory Technical Assistance Report||Project Preparatory Technical Assistance Reports||Mar 2016|
|Eastern Indonesia Sustainable Energy Access Sector Project: Initial Poverty and Social Analysis||Initial Poverty and Social Analysis||Mar 2016|
|Proyek Sektor Akses Energi Berkelanjutan Indonesia Timur: Lembar Data Proyek||Translated PDS||Mar 2016|
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.
None currently available.
Evaluation Documents See also: Independent Evaluation
None currently available.
None currently available.
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|Contract Title||Approval Number||Contract Date||Contractor||Contractor Address||Executing Agency||Contract Description||Total Contract Amount (US$)||Contract Amount Financed by ADB (US$)|
|Project Preparatory||Technical Assistance 9082||06 Jun 2016||Fichtner GmbH and Co. KG (Germany) in association with Kwarsa Hexagon, PT (Indonesia)||Sarweystrasse 3 Stuttgart 70191 Germany||Persoroan PT Perusahaan Listrik Negara||1,160,000.00||—|
None currently available.