The proposed $600 million result-based loan (RBL) program aims to support the development of electricity distribution networks to connect businesses and households and to enhance the quality of life in Eastern Indonesia by the sustainable use of electricity as a key driver of increased economic activity. The program will complement a proposed sector loan for small- to mid-sized natural gas-fired power stations to deliver more sustainable energy services to communities across Eastern Indonesia. Natural gas is a much cleaner fuel compared to diesel and the quick-responding nature of gas-fired engines and turbines make them a good match for intermittent renewable energy sources such as solar and wind. It is an appropriate transition fuel to move towards a low-carbon energy system. The two loans will help enhance access to sustainable energy services and contribute to climate change mitigation.
Project Name | Sustainable Energy Access in Eastern Indonesia-Electricity Grid Development Program | ||||
Project Number | 50016-001 | ||||
Country | Indonesia |
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Project Status | Active | ||||
Project Type / Modality of Assistance | Loan |
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Source of Funding / Amount |
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Strategic Agendas | Environmentally sustainable growth Inclusive economic growth |
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Drivers of Change | Governance and capacity development Knowledge solutions Private sector development |
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Sector / Subsector | Energy / Electricity transmission and distribution |
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Gender Equity and Mainstreaming | No gender elements | ||||
Description | The proposed $600 million result-based loan (RBL) program aims to support the development of electricity distribution networks to connect businesses and households and to enhance the quality of life in Eastern Indonesia by the sustainable use of electricity as a key driver of increased economic activity. The program will complement a proposed sector loan for small- to mid-sized natural gas-fired power stations to deliver more sustainable energy services to communities across Eastern Indonesia. Natural gas is a much cleaner fuel compared to diesel and the quick-responding nature of gas-fired engines and turbines make them a good match for intermittent renewable energy sources such as solar and wind. It is an appropriate transition fuel to move towards a low-carbon energy system. The two loans will help enhance access to sustainable energy services and contribute to climate change mitigation. The overall investment needs for the government's generation, transmission, and distribution program are $83.5 billion of which $43.5 billion is to come from the private sector (independent power producers) and the balance of $40 billion from the State Electricity Corporation (Perusahaan Listrik Negara or PLN). The government and PLN will not be able to meet the investment needs on their own. PLN has an estimated funding gap of $30.3 billion which will have to be borne by other financing sources including from development partners. In Eastern Indonesia where there are many isolated grids, PLN is already using its own resources to establish 70 kilovolt (kV) and 150 kV backbone transmission systems while seeking support from ADB and other partners to strengthen and expand local distribution networks. A results-based lending modality will be used for this proposed operation. This will finance a slice of the overall broader program needs as identified in PLN's Electric Power Supply Business Plan (Rencana Usaha Penyediaan Tenaga Listrik or RUPTL) 2015 -2024 for grid development in Eastern Indonesia. 8. A results-based lending modality will be used for this proposed operation for strengthening and developing the electricity distribution network, which involves many small-scale activities and expenditures. This will finance a slice of the overall broader program needs as identified in PLN's RUPTL, 2016 2025 for grid development in Eastern Indonesia. The RBL is a suitable modality for the program as: (i) it allows PLN to use its own program systems, thus providing a platform for institutional strengthening; (ii) it focuses attention on results rather than expenditures, leading to a stronger evaluation culture and in line with the government's intent to move towards performance-based regulation; (iii) it is well-aligned to a broader nationwide PLN program and is, therefore, able to scale up innovations from the RBL program; (iv) it has lower transaction costs associated with program implementation; and (v) it could stimulate cofinancing and donor harmonization with other development partners through a focus on common results. This operation is part of an overall programmatic approach and is embedded within a policy reform framework that is supported by the Sustainable and Inclusive Energy Program policy-based loan and complements the ongoing RBL for grid strengthening in Sumatra. This RBL is included in the Country Operations Business Plan, 2015- 2017 and is integral to the Country Partnership Strategy's goal of closing the energy divide between Western and Eastern Indonesia. |
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Project Rationale and Linkage to Country/Regional Strategy | The Indonesian economy is at a major crossroads. Economic growth has decelerated from its peak of 6.4% in 2010 to 4.8% in 2015 mainly due to the drop in commodity prices. Eastern Indonesia has an enormous potential to spur new sources of inclusive growth, in sectors such as fisheries, agro-industry and tourism, but this potential is held back by a lack of key infrastructure including electricity, ports, roads, and communications. Uneven development across provinces has also contributed towards widening regional income disparities with several provinces in Eastern Indonesia significantly lagging behind Java and Bali. To address this, the government has made it a priority to significantly boost and accelerate investment in infrastructure under the current National Medium-Term Development Plan (Rencana Pembangunan Jangka Menengah Nasional, or RPJMN), 2015- 2019 with _outer_ and Eastern regions explicitly included as geographical priorities. One of the pillars of the government's infrastructure investment plan is to significantly improve access to electricity services, including a nation-wide target of adding 35 gigawatts of new power generation capacity and expand power grids to raise the electrification ratio to 97% by the end of 2019 from a baseline of 84% in 2014. The biggest challenge in meeting these targets is in Eastern Indonesia where power grids across the islands are isolated, of poor quality and underdeveloped. The electrification ratios in some eastern provinces are particularly low West Sulawesi 74%, Southeast Sulawesi 67%, West Nusa Tenggara (Nusa Tenggara Barat, or NTB) 68%, East Nusa Tenggara (Nusa Tenggara Timur, or NTT) 59%, and Papua 44%. |
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Impact | Quality of life in Indonesian society enhanced by sustainable use of electricity as a key driver of increased economic activity |
Project Outcome | |
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Description of Outcome | Access to more reliable electricity services for residential, commercial, and industrial customers in the Eastern Indonesian provinces in Sulawesi and Nusa Tenggara expanded |
Progress Toward Outcome | ongoing |
Implementation Progress | |
Description of Project Outputs | Distribution system strengthened and expanded Innovation and institutional capacity enhanced |
Status of Implementation Progress (Outputs, Activities, and Issues) | Achievements as of 30 June 2019: DLI 1 6.83 million customers connected (exceeds target) DLI 2 6,629 GWh in total electricity sales achieved (partially achieved); 1,290 GWh in commercial energy sales (partially achieved) DLI 3 6.65 interruptions/100 circuit-kilometers (ckm) (within annual target) DLI 4 51,390 units of distribution transformers installed (exceeds target) DLI 5 52,573 ckm of medium voltage (MV) distribution lines installed (of which 6,642 ckm installed in Lombok and Flores) (partially achieved) DLI 6 4 pilot smart grid sites identified in Selayar, Sangihe, Semau and Medang. Selayar smart grid tendered but not yet awarded, project preparation for Sangihe smart grid ongoing, Semau to be operational by end 2019, project design for Medang smart grid not yet started (partially achieved) DLI 7 60.52% of total customers use prepaid/smart meters (partially achieved) DLI 8 2016 inventory of used equipment for disposal approved by PLN and MSOE, inventory of oil spills for 25 warehouses in Eastern Indonesia submitted, soil contamination investigation ongoing for Sungguminasa warehouse in Makassar. Several warehouses have been improved and equipped with oil containment and protection measures. (partially achieved/slow progress) Non-DLI. 84% of distribution contracts were completed on time (exceeds target) Midterm review mission to be fielded in October 2019 to confirm IVA findings. |
Geographical Location | Central Sulawesi, East Nusa Tenggara, Gorontalo, North Sulawesi, South Sulawesi, Southeast Sulawesi, Sulawesi, West Nusa Tenggara, West Sulawesi |
Safeguard Categories | |
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Environment | B |
Involuntary Resettlement | B |
Indigenous Peoples | B |
Summary of Environmental and Social Aspects | |
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Environmental Aspects | The program results area with potential environmental impact is expansion and reinforcement of the low voltage distribution network. The program is categorized B for environment because the potential adverse environmental impacts are site-specific (confined within the sites subject to physical works), mainly occurring during the construction period, few (if any) of them are irreversible, and in most cases, mitigation measures can be readily designed. |
Involuntary Resettlement | The expansion of the distribution network usually involves (i) the installation of concrete poles using no more than 0.2 m2 of land and (ii) the stringing of conductors possibly requiring the cutting/trimming of trees. Impacts of involuntary resettlement will be identified during program implementation. |
Indigenous Peoples | The islands of Sulawesi and Nusa Tenggara are inhabited by a variety of ethnic groups with diverse languages, however they consist only a small proportion of the total population and the program's activities are not expected to have significant impacts on indigenous peoples.While the general areas are known, the specific sites for expansion activities of the distribution network are determined on a rolling basis during program implementation. The program will not specifically target activities in areas (land or territory) occupied, owned, or used by indigenous peoples, and/or claimed as ancestral domain. |
Stakeholder Communication, Participation, and Consultation | |
During Project Design | The stakeholders will be 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 | Interim and Annual verification and review missions ensure discussions with all satakeholders including project beneficiaries. |
Responsible ADB Officer | Palupi, Ira |
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 | |
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Concept Clearance | 21 Jun 2016 |
Fact Finding | 25 Jul 2016 to 04 Aug 2016 |
MRM | 20 Sep 2016 |
Approval | 14 Sep 2017 |
Last Review Mission | - |
Last PDS Update | 24 Oct 2019 |
Loan 3560-INO
Milestones | |||||
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Approval | Signing Date | Effectivity Date | Closing | ||
Original | Revised | Actual | |||
14 Sep 2017 | 10 Oct 2017 | 14 Dec 2017 | 30 Jun 2022 | - | - |
Financing Plan | Loan Utilization | ||||
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Total (Amount in US$ million) | Date | ADB | Others | Net Percentage | |
Project Cost | 1,830.00 | Cumulative Contract Awards | |||
ADB | 600.00 | 14 Sep 2017 | 473.41 | 0.00 | 79% |
Counterpart | 1,230.00 | Cumulative Disbursements | |||
Cofinancing | 0.00 | 14 Sep 2017 | 533.41 | 0.00 | 89% |
Status of Covenants | ||||||
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Category | Sector | Safeguards | Social | Financial | Economic | Others |
Rating | - | 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.
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 |
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Sustainable Energy Access in Eastern Indonesia - Electricity Grid Development Program: Program Safeguard Systems Assessment (Draft) | Program Safeguard Systems Assessments | Aug 2016 |
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.
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$600 Million ADB Loan to Expand Energy Access in Eastern Indonesia
ADB has approved a $600 million loan to help the State Electricity Corporation (PLN), Indonesia’s state-owned power company, expand electricity access and promote renewable energy in eastern Indonesia. The program also includes... -
ADB to Provide Indonesia's Energy Sector with Over $1 Billion in Loans
ADB's Board of Directors approved two loans totaling up to $1.1 billion to strengthen and diversify Indonesia’s energy sector — considered key to promoting inclusive growth and sustainable development in the country.
Tenders
No tenders for this project were found.
Contracts Awarded
Contract Title | Approval Number | Contract Date | Contractor | Contractor Address | Executing Agency | Contract Description | Total Contract Amount (US$) | Contract Amount Financed by ADB (US$) |
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2020 INTERIM ACHIEVEMENT DLI5, DLI6, DLI7 AND DLI8 | Loan 3560 | 11 Dec 2020 | VARIOUS | VARIOUS INDONESIA | P.T. Perusahaan Listrik Negara | OTHERS | 65,230,000.00 | 65,230,000.00 |
2019 ANNUAL ACHIEVEMENT DLI 1, DLI2, DLI3, DLI5 AND DLI 7 | Loan 3560 | 06 Jul 2020 | VARIOUS | VARIOUS INDONESIA | P.T. Perusahaan Listrik Negara | OTHERS | 88,150,000.00 | 88,150,000.00 |
2019 INTERIM VERIFICATION (DLI1, DLI4, DLI5, DLI7 AND DLI8) | Loan 3560 | 23 Dec 2019 | VARIOUS | VARIOUS INDONESIA | P.T. Perusahaan Listrik Negara | OTHERS | 35,300,000.00 | 35,300,000.00 |
YEAR 2018 (DLI2, DLI3, DLI5 AND DLI6) 2018 ANNUAL ACHIEVEMENT | Loan 3560 | 16 Oct 2019 | VARIOUS | VARIOUS INDONESIA | P.T. Perusahaan Listrik Negara | OTHERS | 36,760,000.00 | 36,760,000.00 |
YEAR 2020 (DLI4) 2018 ANNUAL VERIFICATION | Loan 3560 | 16 Oct 2019 | VARIOUS | VARIOUS INDONESIA | P.T. Perusahaan Listrik Negara | OTHERS | 31,570,000.00 | 31,570,000.00 |
YEAR 2019 (DLI1 AND DLI4) 2018 ANNUAL VERIFICATION | Loan 3560 | 16 Oct 2019 | VARIOUS | VARIOUS INDONESIA | P.T. Perusahaan Listrik Negara | OTHERS | 29,650,000.00 | 29,650,000.00 |
YEAR 2017 (DLI6) 2018 ANNUAL ACHIEVEMENT | Loan 3560 | 16 Oct 2019 | VARIOUS | VARIOUS INDONESIA | P.T. Perusahaan Listrik Negara | OTHERS | 2,250,000.00 | 2,250,000.00 |
YEAR 2019 (DLI1 AND DLI4) 2018 INTERIM ACHIEVEMENT | Loan 3560 | 29 Nov 2018 | VARIOUS | VARIOUS INDONESIA | P.T. Perusahaan Listrik Negara | OTHERS | 35,460,000.00 | 35,460,000.00 |
YEAR 2018 (DLI1, DLI4, DLI5, DLI6 AND DLI7) 2018 INTERIM ACHIEVEMENT | Loan 3560 | 29 Nov 2018 | VARIOUS | VARIOUS INDONESIA | P.T. Perusahaan Listrik Negara | OTHERS | 28,070,000.00 | 28,070,000.00 |
YEAR 2017 (DLI5 AND DLI6) 2018 INTERIM ACHIEVEMENT | Loan 3560 | 29 Nov 2018 | VARIOUS | VARIOUS INDONESIA | P.T. Perusahaan Listrik Negara | OTHERS | 4,000,000.00 | 4,000,000.00 |
YEAR 2017 (DLI1, DLI2, DLI3, DLI4, DLI5, DLI7 AND DLI8) | Loan 3560 | 26 Jul 2018 | VARIOUS | VARIOUS INDONESIA | P.T. Perusahaan Listrik Negara | OTHERS | 89,000,000.00 | 89,000,000.00 |
YEAR 2018 (DLI1, DL4, DL7) | Loan 3560 | 26 Jul 2018 | VARIOUS | VARIOUS INDONESIA | P.T. Perusahaan Listrik Negara | OTHERS | 28,000,000.00 | 28,000,000.00 |
ADVANCE FINANCING (DLI4, DLI5, DLI6, DLI7 AND DLI8) | Loan 3560 | 15 Dec 2017 | VARIOUS | VARIOUS INDONESIA | P.T. Perusahaan Listrik Negara | OTHERS | 150,000,000.00 | 150,000,000.00 |
Procurement Plan
None currently available.