Indonesia : Sustainable Energy Access in Eastern Indonesia-Electricity Grid Development Program

Sovereign Project | 50016-001

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 Details

  • Project Officer
    Palupi, Ira
    Southeast Asia Department
    Request for information
  • Country/Economy
    Indonesia
  • Modality
  • Sector
    • Energy
Project Name Sustainable Energy Access in Eastern Indonesia-Electricity Grid Development Program
Project Number 50016-001
Country / Economy Indonesia
Project Status Closed
Project Type / Modality of Assistance Loan
Source of Funding / Amount
Loan 3560-INO: Sustainable Energy Access in Eastern Indonesia-Electricity Grid Development Program
Ordinary capital resources US$ 600.00 million
Loan: Sustainable Energy Access in Eastern Indonesia-Electricity Grid Development Program
KfW Bankengruppe US$ 310.00 million
Strategic Agendas Environmentally sustainable growth
Inclusive economic growth
Drivers of Change Governance and capacity development
Knowledge solutions
Private sector development
Sector / Subsector

Energy / Electricity transmission and distribution

Gender 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, 20162025 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.

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 lowWest 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%.

Impact

Quality of life in Indonesian society enhanced by sustainable use of electricity as a key driver of increased economic activity

Project Outcome
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

All outcome indicators have been achieved as follows:

(i) 7.15 million costumers against 2020 target of 6.99 million customers in the 2019 annual verification. As of 30 June 2022, the total number customers was 8.36 million;

(ii) 14,482.80 GWh against 2020 target of 13,964 GWh in the 2020 annual verification. As of 31 Dec 2021, total electricity sales was 15,570.37GWh. This DLI 2 is only for annual assessment;

(iii) 2,621.83 GWh in 2021 annual, lower than 2019 target of 2,704 GWh and lower than the last 2019 achievement of 2,675 GWh, which was already disbursed to PLN. This was due to Lombok earthquake, Palu tsunami and earthquake and Manado's flood disaster in 2018 that affected commercial sales in 2019. This DLI 2a is only for annual assessment;

(iv)10.17/100 ckm below 2020 threshold of 15.82/100 ckm permanent interruption in the 2020 annual verification. As of 31 Dec 2021, 8.70/100 ckm permanent interruption. This DLI 3 is only for annual assessment.

Implementation Progress
Description of Project Outputs

Distribution system strengthened and expanded

Innovation and institutional capacity enhanced

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

Output 1

(i) The number of distribution transformer units installed increased was achieved with 51,390 units against 2020 target of 50,721 units in the 2019 interim verification. As of 30 June 2022, there was 58,508 units of distribution transformers installed;

(ii) The additional length of medium-voltage distribution lines installed was achieved late with 59,601.17 ckm against 2020 target of 58,764 ckm additional MV distribution line in 2021 annual verification. As of 30 June 2022, total MV distribution lines installed (excluding MV line passing the protected and biodiversity areas) was 60,377.85 ckm.

(iii) The additional length of medium-voltage distribution lines installed, with an equal or higher growth rate in Lombok and Flores combined was achieved with 7,746.65 ckm against 2020 target of 7,388 ckm additional MV distribution line in Lombok and Flores in the 2020 annual verification. As of 30 June 2022, total additional MV distribution lines installed in Lombok and Flores (excluding MV line passing the protected and biodiversity areas) was 8,340.70 ckm.

Output 2.

(i) The new pilot-scale smart grid projects as of 30 June 2022 (a) 2020 target was achieved with at least 2 pilot SG projects operational in the 2021 annual verification, Semau COD was on 17 November 2020, and Selayar COD was on 23 December 2021, (b) 2021 target was achieved with additional 2 SG projects operational during 2021 annual verification, Medang COD was on 28 June 2022, and Sangihe COD was on 30 June 2022.

(ii) The Operational efficiency and resource optimization enhanced and the use of digital prepaid meters or smart meters was achieved with 69.30% in Q2 2022, lower than 2020 target (70%) and 2021 target (75%) of total customers use digital pre-paid meters or smart meters.

(iii) The Asset and waste management as of 30 June 2022: PLN has achieved 2017 (i) target on 2016 inventory of used equipment for disposal approved by PLN and achieved 2017 (ii) target on issuance of asset management guidance in February 2021. PLN achieved 2018 (i) the same 2016 inventory approved by MSOE, and 2018 (iii), 2019 (ii), 2020 and 2021 targets with 93% of PLNs used equipment in the 2016 inventory safely disposed against target of 90% by 2021. PLN partially achieved 2018 (ii) target on clean-up of the existing oil spills according to Government Regulation no. 101/2014 for 7 out of 15 locations and partially achieved 2019 (i) target of oil containment or protection measures for 24 out of 25 warehouses.

Geographical Location Central Sulawesi, East Nusa Tenggara, Gorontalo, North Sulawesi, South Sulawesi, Southeast Sulawesi, Sulawesi, West Nusa Tenggara, West Sulawesi
Safeguard Categories
Environment B
Involuntary Resettlement B
Indigenous Peoples B
Summary of Environmental and Social Aspects
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 stakeholders including project beneficiaries.
Responsible ADB Officer Palupi, Ira
Responsible ADB Department Southeast Asia Department
Responsible ADB Division Indonesia Resident Mission (IRM)
Executing Agencies
P.T. Perusahaan Listrik Negara
Timetable
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 31 Oct 2022

Loan 3560-INO

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
14 Sep 2017 10 Oct 2017 14 Dec 2017 30 Jun 2022 - 07 Aug 2023
Financing Plan Loan Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 1,830.00 Cumulative Contract Awards
ADB 600.00 04 Oct 2023 583.74 0.00 100%
Counterpart 1,230.00 Cumulative Disbursements
Cofinancing 0.00 04 Oct 2023 583.74 0.00 100%
Status of Covenants
Category Sector Safeguards Social Financial Economic Others
Rating - Satisfactory 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
Sustainable Energy Access in Eastern Indonesia—Electricity Grid Development Program: Completion Report Project/Program Completion Reports Sep 2023
Sustainable Energy Access in Eastern Indonesia-Electricity Grid Development Program: Audited Project Financial Statements (January-December 2022) Audited Project Financial Statements Aug 2023
Sustainable Energy Access in Eastern Indonesia-Electricity Grid Development Program: Audited Project Financial Statements (January-December 2021) Audited Project Financial Statements Jun 2022
Sustainable Energy Access in Eastern Indonesia-Electricity Grid Development Program: Audited Project Financial Statements (January-December 2020) Audited Project Financial Statements Jun 2021
Amendment to the Loan Agreement for Loan 3560-INO: Sustainable Energy Access in Eastern Indonesia-Electricity Grid Development Program Loan Agreement (Ordinary Resources) Jun 2021
Sustainable Energy Access in Eastern Indonesia - Electricity Grid Development Program: Updated Program Implementation Document Project/Program Administration Manual May 2021
Amendment to the Loan Agreement for Loan 3560-INO: Sustainable Energy Access in Eastern Indonesia-Electricity Grid Development Program Loan Agreement (Ordinary Resources) Jan 2021
Sustainable Energy Access in Eastern Indonesia-Electricity Grid Development Program: Program Implementation Document Documents Produced Under Grant/Loans/TA Nov 2020
Amendment to the Loan Agreement for Loan No. 3560-INO: Sustainable Energy Access in Eastern Indonesia - Electricity Grid Development Program Loan Agreement (Ordinary Resources) Aug 2020
Sustainable Energy Access in Eastern Indonesia-Electricity Grid Development Program: Audited Project Financial Statements (January-December 2019) Audited Project Financial Statements Jun 2020
Sustainable Energy Access in Eastern Indonesia-Electricity Grid Development Program: Program Implementation Document Project/Program Administration Manual Sep 2019
Sustainable Energy Access in Eastern Indonesia-Electricity Grid Development Program: Audited Project Financial Statements (January-December 2018) Audited Project Financial Statements Sep 2019
Amendment to the Loan Agreement for Loan No. 3560-INO: Sustainable Energy Access in Eastern Indonesia - Electricity Grid Development Program Loan Agreement (Ordinary Resources) Sep 2019
Sustainable Energy Access in Eastern Indonesia-Electricity Grid Development Program: Audited Project Financial Statements (January-December 2017) Audited Project Financial Statements Jun 2018
Guarantee Agreement for Loan 3560-INO: Sustainable Energy Access in Eastern Indonesia - Electricity Grid Development Program Guarantee Agreements Nov 2017
Loan Agreement for Loan 3560-INO: Sustainable Energy Access in Eastern Indonesia - Electricity Grid Development Program Loan Agreement (Ordinary Resources) Oct 2017
Energy Access in Eastern Indonesia - Electricity Grid Development Program: Report and Recommendation of the President Reports and Recommendations of the President Aug 2017
Akses Energi Berkelanjutan di Indonesia Timur-Program Pembangunan Jaringan Listrik: Lembar Data Proyek Translated PDS Sep 2016
Sustainable Energy Access in Eastern Indonesia - Electricity Grid Development Program: Concept Paper Concept Papers Jun 2016
Sustainable Energy Access in Eastern Indonesia - Electricity Grid Development Program: Initial Poverty and Social Analysis Initial Poverty and Social Analysis Jun 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.


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 | Address Executing Agency Total Contract Amount (US$) Contract Amount Financed by ADB (US$)
2020 INTERIM ACHIEVEMENT DLI5, DLI6, DLI7 AND DLI8 Loan 3560 11 Dec 2020 VARIOUS | VARIOUS INDONESIA P.T. Perusahaan Listrik Negara 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 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 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 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 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 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 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 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 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 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 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 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 150,000,000.00 150,000,000.00

Procurement Plan

None currently available.