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Indonesia: Muara Laboh Geothermal Power Project

Nonsovereign (Private) Project | 50156-001 Status: Active

The project will develop geothermal steam resources through production and injection facilities in the Liki Pinangawan Muaralaboh concession area and construct, operate, and maintain a single power generation unit with a total capacity of approximately 80 megawatts (MW). The concession is located in the South Solok Regency, 150 kilometers (km) southeast of Padang, West Sumatra. The project will be developed and implemented under a 30-year power purchase agreement (PPA) with PLN (the off-taker) and a 20-year support from the Ministry of Finance, as stipulated under a business viability guarantee letter (BVGL). It is intended for base load operation. PLN will build 80 km of transmission lines from the plant site to two 150 kilovolt (kV) substations near Muara Laboh and Sungai Rumbai. The substations will connect power from the generation unit to the Sumatra grid through an existing 275 kV transmission line.

Project Details

Project Officer
Nath, Kiron Private Sector Operations Department Request for information
Country
  • Indonesia
Sector
  • Energy
 
Project Name Muara Laboh Geothermal Power Project
Project Number 50156-001
Borrower/Company PT Supreme Energy Muara Laboh
Country Indonesia
Location Kabupaten Solok Selatan
Type or Modality of Assistance
3487 Loan Ordinary capital resources USD 70.00 million Committed
8315 Loan Clean Technology Fund USD 19.25 million Committed
8316 Loan Leading Asia's Private Infrastructure Fund (LEAP) USD 20.00 million Committed
Strategic Agendas Environmentally sustainable growth
Inclusive economic growth
Drivers of Change Partnerships
Private sector development
Sector / Subsector

Energy / Renewable energy generation - geothermal

Gender Equity and Mainstreaming No gender elements
Responsible ADB Department Private Sector Operations Department
Responsible ADB Division Infrastructure Finance Division 2
Responsible ADB Officer Nath, Kiron
Project Sponsor(s) Engie Electrabel SA
PT Supreme Energy
SUMITOMO CORPORATION
Description The project will develop geothermal steam resources through production and injection facilities in the Liki Pinangawan Muaralaboh concession area and construct, operate, and maintain a single power generation unit with a total capacity of approximately 80 megawatts (MW). The concession is located in the South Solok Regency, 150 kilometers (km) southeast of Padang, West Sumatra. The project will be developed and implemented under a 30-year power purchase agreement (PPA) with PLN (the off-taker) and a 20-year support from the Ministry of Finance, as stipulated under a business viability guarantee letter (BVGL). It is intended for base load operation. PLN will build 80 km of transmission lines from the plant site to two 150 kilovolt (kV) substations near Muara Laboh and Sungai Rumbai. The substations will connect power from the generation unit to the Sumatra grid through an existing 275 kV transmission line.
Objectives and Scope

The project will help the government advance towards its renewable energy and climate change mitigation goals. Successful implementation of the project and deployment of concessional cofinacing will lead to: (i) increased geothermal power generation in Indonesia; (ii) more private sector investment in the geothermal sector; and (iii) increased electrification rate in

Indonesia.

Status of Development Objectives To be evaluated upon completion of the Project.
Status of Operation/Construction Construction is on-going.
Linkage to Country/Regional Strategy

The project aligns with ADB's Midterm Review of Strategy 2020 by promoting environmentally sustainable growth and private sector development through the expansion of geothermal baseload power generation. The project will displace and offset greenhouse gas and other harmful emissions generated by coal-fired or diesel-fired power stations. The project is also consistent with the interim country partnership strategy 2015 for Indonesia by supporting the expansion of infrastructure and environment-friendly technologies for clean energy generation and energy efficiency.

The project contributes to the objectives of Indonesia's National Energy Policy (2014) and to the commitment submitted in 2015 by the government to the Paris Agreement under the United Nations Framework Convention on Climate Change. The project also aligns with ADB's Energy Policy and complements recent technical assistance to MEMR and PLN for renewable energy development (including geothermal resources), as well as other ADB public sector initiatives to review geothermal tariff incentives. ADB is also providing support to the government to strengthen and expand Sumatra's transmission and distribution network. The project further builds on ADB's private sector operating experience with and support to recent geothermal project financing, such as Sarulla geothermal power and Rantau Dedap exploration finance.

Safeguard Categories
Environment A
Involuntary Resettlement B
Indigenous Peoples C
Summary of Environmental and Social Aspects
Environmental Aspects The project is classified as category A for environment. The sponsors carried out an audit of the existing facility and committed to a corrective action plan in accordance with ADB's Safeguard Policy Statement. The audit found that the project is complying with ambient environmental standards. The project location is adjacent to a national park and because threatened species have been observed in the area, the project is considered to be located in a critical habitat. However, the project has a very small footprint (70 hectares) compared with the overall area of the species' discrete management unit (672 square km). A biodiversity action plan was prepared, which includes both long-term biodiversity conservation actions and on-site mitigation measures linked to the construction and operation activities of the project. Threats to biodiversity primarily result from community exploitation of forest fauna and flora. Given the small project footprint and the conservation actions to be taken, which include community socialization, the project has the potential to make a positive biodiversity contribution. ADB will closely monitor the remaining construction and operational activities with a particular focus on the implementation of the biodiversity action plan.
Involuntary Resettlement The project is classified as category B for involuntary resettlement. A resettlement framework was prepared to guide PLN's land procurement process for the 3.2 km transmission line, and is expected to be carried out in 2017 through negotiated land acquisition with nontitled users cultivating on state-controlled free lands.
Indigenous Peoples The project is classified as category C for indigenous peoples. The audit confirms that the affected households, mostly belonging to Minang ethnic group, fully support the project.
Stakeholder Communication, Participation, and Consultation
Timetable for assistance design, processing and implementation
Concept Clearance 11 Apr 2016
Credit Committee Meeting 17 Oct 2016
Approval 07 Dec 2016
Last PDS Update 04 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.

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Title Document Type Document Date
Muara Laboh Geothermal Power Project: Initial Poverty and Social Analysis Initial Poverty and Social Analysis Dec 2016
Muara Laboh Geothermal Power Project: Report and Recommendation of the President Reports and Recommendations of the President Nov 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.


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