fbpx 49203-002: Sustainable Energy Access in Eastern Indonesia-Power Generation Sector Project | Asian Development Bank

Indonesia: Sustainable Energy Access in Eastern Indonesia-Power Generation Sector Project

Sovereign (Public) Project | 49203-002 Status: Proposed

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 Details

Project Officer
Toru Kubo Southeast Asia Department Request for information
Country
  • Indonesia
Sector
  • Energy
 
Project Name Sustainable Energy Access in Eastern Indonesia-Power Generation Sector Project
Project Number 49203-002
Country Indonesia
Project Status Proposed
Project Type / Modality of Assistance Loan
Source of Funding / Amount
Loan: Sustainable Energy Access in Eastern Indonesia-Power Generation Sector Project
Ordinary capital resources US$ 475.00 million
ASEAN Infrastructure Fund US$ 25.00 million
Strategic Agendas Environmentally sustainable growth
Inclusive economic growth
Drivers of Change Knowledge solutions
Partnerships
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.

Impact The quality of life in Indonesian society will be enhanced by the sustainable use of electricity as a key driver of increased economic activity.
Outcome Expanded access to modern and cleaner energy services in Eastern Indonesia
Outputs

Gas-fired generation capacity in Eastern Indonesia installed.

Pilot-scale gas and solar hybrid units with energy management systems installed.

Know-how and project implementation capacity within PLN for providing policy feedback to the government for expansion of gas use in Eastern Indonesia, sourcing LNG and utilizing gas for small- to mid-scale power generation, and operating gas-solar hybrid units enhanced.

Geographical Location
Safeguard Categories
Environment A
Involuntary Resettlement B
Indigenous Peoples B
Summary of Environmental and Social Aspects
Environmental Aspects The proposed project needs to carefully assess environmental issues including biodiversity, air emissions, waste, and noise. Identified environmental risks will be properly mitigated.
Involuntary Resettlement Some of the proposed and potential project sites may require land acquisition and possible resettlement, although the required land area for gas-fired power generation is small and resettlement will be avoided to the extent possible.
Indigenous Peoples The proposed project may affect the indigenous peoples living in or near a subproject area. Further due diligence will be conducted and alternative options including project designs will be explored to avoid or minimize physical displacement.
Stakeholder Communication, Participation, and Consultation
During Project Design

Provincial and district government agencies, local communities, customary councils will be consulted. The affected people, if any, will be integrated in the project planning, implementation, and monitoring through various ways including public consultation and focus group discussions (FGDs) with communities to get their views and suggestions on the project potential impacts and mitigation measures.

Meaningful consultation will be 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.

During Project Implementation All necessary consultations will be conducted and appropriate safeguard measures will be established.
Business Opportunities
Consulting Services A supervision consulting firm will be recruited using the quality and cost-based selection method (quality: cost weighting of 90:10), following the ADB Procurement Policy: Goods, Works, Nonconsulting and Consulting Services (2017, as amended from time to time) to assist the EA in implementing the project.
Procurement Turnkey contracts will likely be used and subprojects with compatible characteristics may be clustered together. The indicative procurement method will be open competitive bidding whereby nationally advertised open competitive bidding may be applied for small subprojects (e.g. below 40 MW). All procurement will be conducted in accordance with the Procurement Regulations for ADB Borrowers: Goods, Works, Nonconsulting and Consulting Services (2017, as amended from time to time).
Responsible ADB Officer Toru Kubo
Responsible ADB Department Southeast Asia Department
Responsible ADB Division Energy Division, SERD
Executing Agencies
P.T. Perusahaan Listrik Negara
Jalan Trunojoyo Blok M1/135
Keboyoran Baru, Jakarta 12150
Indonesia
Timetable
Concept Clearance 02 Mar 2016
Fact Finding 06 Mar 2017 to 17 Mar 2017
MRM 13 Mar 2018
Approval -
Last Review Mission -
Last PDS Update 27 Mar 2019

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.

The Accountability Mechanism provides a forum where people adversely affected by ADB-assisted projects can voice and seek solutions to their problems and report alleged noncompliance of ADB's operational policies and procedures.

In preparing any country program or strategy, financing any project, or by making any designation of, or reference to, a particular territory or geographic area in this document, the Asian Development Bank does not intend to make any judgments as to the legal or other status of any territory or area.

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.

Title Document Type Document Date
Sustainable Energy Access in Eastern Indonesia-Power Generation Sector Project: Kaltim Peaker 2 Core Subproject Updated Environmental Impact Assessment Environmental Impact Assessments Feb 2019
Sustainable Energy Access in Eastern Indonesia - Power Generation Sector Project: Kupang Peaker 2 Core Subproject Updated Environmental Impact Assessment Environmental Impact Assessments Feb 2019
Sustainable Energy Access in Eastern Indonesia - Power Generation Sector Project: Kupang Peaker 2 Core Subproject Environmental Impact Assessment Environmental Impact Assessments Mar 2018
Sustainable Energy Access in Eastern Indonesia - Power Generation Sector Project: Kaltim Peaker 2 Core Subproject Environmental Impact Assessment Environmental Impact Assessments Mar 2018
Sustainable Energy Access in Eastern Indonesia - Power Generation Sector Project: Environmental Assessment and Review Framework Environmental Assessment and Review Framework Feb 2018
Sustainable Energy Access in Eastern Indonesia - Power Generation Sector Project: Resettlement and Customary Communities Development Framework Resettlement Frameworks Feb 2018
Sustainable Energy Access in Eastern Indonesia - Power Generation Sector Project: Kupang Peaker 2 (Nusa Tenggara Timur) Resettlement and Customary Communities Development Plan Resettlement Plans Feb 2018
Sustainable Energy Access in Eastern Indonesia - Power Generation Sector Project: Kaltim Peaker 2 Core Subproject Social Due Diligence Report Safeguards Due Diligence Reports Feb 2018
Sustainable Energy Access in Eastern Indonesia - Power Generation Sector Project: Kupang Peaker 2 Core Subproject Social Due Diligence Report Safeguards Due Diligence Reports Feb 2018
Sustainable Energy Access in Eastern Indonesia - Power Generation Sector Project: Kaltim Peaker 2 Core Subproject Environmental Due Diligence Report Safeguards Due Diligence Reports Oct 2017

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.

Contracts Awarded

No contracts awarded for this project were found

Procurement Plan

None currently available.