-
Document of
The World Bank FOR OFFICIAL USE ONLY
Report No: ICR00005098
IMPLEMENTATION COMPLETION AND RESULTS REPORT
IBRD-79400
ON A
LOAN
IN THE AMOUNT OF US$225 MILLION
TO THE
REPUBLIC OF INDONESIA
FOR THE
INDONESIA POWER TRANSMISSION DEVELOPMENT PROJECT
APRIL 30, 2020
Energy and Extractives Global Practice
East Asia And Pacific Region
This document has a restricted distribution and may be used by
recipients only in the performance of their official duties. Its
contents may
not otherwise be disclosed without World Bank authorization.
Pub
lic D
iscl
osur
e A
utho
rized
Pub
lic D
iscl
osur
e A
utho
rized
Pub
lic D
iscl
osur
e A
utho
rized
Pub
lic D
iscl
osur
e A
utho
rized
-
CURRENCY EQUIVALENTS
(Exchange Rate Effective October 31, 2019)
Currency Unit = Indonesian Rupiah (IDR)
IDR 1,000 = US$0.072
US$1 = IDR 13,940
FISCAL YEAR
January 1 – December 31
ABBREVIATIONS AND ACRONYMS
Bappenas State Planning Ministry (Badan Perencanaan Pembangunan
Nasional) CIA Cumulative Impact Assessment
CPF Country Partnership Framework CPS Country Partnership
Strategy
EIRR Economic Internal Rate of Return EMP Environmental
Management Plan ESF Environmental and Social Framework
ESIA Environmental and Social Impact Assessment ESMP
Environmental and Social Management Plan
FS Feasibility Study FM Financial Management
FMR Financial Management Report GoI Government of Indonesia GDP
Gross Domestic Product
HPP Hydroelectrical Power Project ICB International Competitive
Bidding
ICR Implementation Completion and Results Report IFR Interim
Financial Report IFI International Financial Institution
IPP Independent Power Producer IPTDP Indonesia Power
Transmission Development
ISR Implementation Status and Results Report KfW Kreditanstalt
für Wiederaufbau LARAP Land Acquisition and Resettlement Action
Plan
M&E Monitoring and Evaluation MEMR Ministry of Energy and
Mineral Resources
MoF Ministry of Finance NPV Net Present Value PAD Project
Appraisal Document
PDO Project Development Objective PLN State Power Company (PT
Perusahaan Listrik Negara)
-
PMC Project Management Consultant
PMU Project Management Unit PSO Public Service Obligation
QPR Quarterly Progress Report RF Results Framework RUPTL
Electricity Supply Business Plan (Rencana Usaha Penyediaan Tenaga
Listrik)
SAIFI System Average Interruption Frequency Index SCD Systematic
Country Diagnostic
SOE State-owned Enterprise TOC Theory of Change
TROD Transformer Outage Duration TROF Transformer Outage
Frequency WTP Willingness to Pay
Regional Vice President: Victoria Kwakwa
Country Director: Satu Kristiina Jyrintytar Kahkonen
Regional Director: Ranjit J. Lamech
Practice Manager: Jie Tang
Task Team Leader(s): Muchsin Chasani Abdul Qadir, Stephan Claude
Frederic Garnier
ICR Main Contributor: Sathyanadhan Achath
-
TABLE OF CONTENTS
DATA SHEET
............................................................................................................................
1
I. PROJECT CONTEXT AND DEVELOPMENT OBJECTIVES
....................................................... 5
A. CONTEXT AT APPRAISAL
..................................................................................................
5
B. SIGNIFICANT CHANGES DURING
IMPLEMENTATION...........................................................13
II.
OUTCOME.......................................................................................................................16
A. RELEVANCE OF
PDOs......................................................................................................16
B. ACHIEVEMENT OF PDOs (EFFICACY)
.................................................................................18
C.
EFFICIENCY....................................................................................................................20
D. JUSTIFICATION OF OVERALL OUTCOME RATING
................................................................22
E. OTHER OUTCOMES AND IMPACTS (IF ANY)
.......................................................................22
III. KEY FACTORS THAT AFFECTED IMPLEMENTATION AND OUTCOME
.................................24
A. KEY FACTORS DURING PREPARATION
..............................................................................24
B. KEY FACTORS DURING IMPLEMENTATION
........................................................................26
IV. BANK PERFORMANCE, COMPLIANCE ISSUES, AND RISK TO DEVELOPMENT
OUTCOME ...29
A. QUALITY OF MONITORING AND EVALUATION
(M&E).........................................................29
B. ENVIRONMENTAL, SOCIAL, AND FIDUCIARY
COMPLIANCE..................................................30
C. BANK
PERFORMANCE.....................................................................................................31
D. RISK TO DEVELOPMENT
OUTCOME..................................................................................32
V. LESSONS AND RECOMMENDATIONS
...............................................................................33
ANNEX 1. RESULTS FRAMEWORK AND KEY OUTPUTS
............................................................35
ANNEX 2. BANK LENDING AND IMPLEMENTATION SUPPORT/SUPERVISION
..........................44
ANNEX 3. PROJECT COST BY COMPONENT
.............................................................................46
ANNEX 4. EFFICIENCY ANALYSIS
.............................................................................................47
ANNEX 5. BORROWER, CO-FINANCIER AND OTHER PARTNER/STAKEHOLDER
COMMENTS ....50
ANNEX 6. SUPPORTING DOCUMENTS (IF ANY)
.......................................................................62
ANNEX 7. LOCATION OF IPTD
SUBPROJECTS...........................................................................63
-
The World Bank Indonesia Power Transmission Development Project
(P117323)
Page 1 of 64
DATA SHEET
BASIC INFORMATION
Product Information Project ID Project Name
P117323 Indonesia Power Transmission Development Project
Country Financing Instrument
Indonesia Investment Project Financing
Original EA Category Revised EA Category
Partial Assessment (B) Partial Assessment (B)
Organizations
Borrower Implementing Agency
Republic of Indonesia PT PLN
Project Development Objective (PDO)
Original PDO
The development objective of the project is to assist the
Borrower to meet growing electricity demand and improve the
reliability of electricity supply in Java and South-Central Sumatra
by strengthening the power transmission system. Revised PDO
The development objective of the project is to assist PLN to
meet growing electricity demand, improve the reliability
ofelectricity supply, strengthen the power transmission system, and
support the preparation of hydropower projects.
-
The World Bank Indonesia Power Transmission Development Project
(P117323)
Page 2 of 64
FINANCING
Original Amount (US$) Revised Amount (US$) Actual Disbursed
(US$)
World Bank Financing IBRD-79400
225,000,000 205,000,000 182,064,708
Total 225,000,000 205,000,000 182,064,708
Non-World Bank Financing 0 0 0
Borrower/Recipient 29,100,000 29,100,000 8,379,303
Total 29,100,000 29,100,000 8,379,303
Total Project Cost 254,100,000 234,100,000 190,444,011
KEY DATES
Approval Effectiveness MTR Review Original Closing Actual
Closing
08-Jul-2010 30-May-2011 12-Jan-2015 31-Dec-2015 31-Oct-2019
RESTRUCTURING AND/OR ADDITIONAL FINANCING
Date(s) Amount Disbursed (US$M) Key Revisions 16-Dec-2015 87.12
Change in Loan Closing Date(s)
Change in Safeguard Policies Triggered
29-Jun-2016 97.42 Change in Project Development Objectives
Change in Results Framework Change in Components and Cost Change in
Loan Closing Date(s) Cancellation of Financing Change in Safeguard
Policies Triggered Change of EA category Change in Procurement
Change in Implementation Schedule
27-Jun-2018 147.93 Change in Results Framework Change in Loan
Closing Date(s) Change in Implementation Schedule
-
The World Bank Indonesia Power Transmission Development Project
(P117323)
Page 3 of 64
KEY RATINGS
Outcome Bank Performance M&E Quality
Moderately Satisfactory Satisfactory Substantial
RATINGS OF PROJECT PERFORMANCE IN ISRs
No. Date ISR Archived DO Rating IP Rating Actual
Disbursements (US$M)
01 14-Sep-2011 Satisfactory Moderately Satisfactory 0
02 30-Jun-2012 Moderately Satisfactory Moderately Unsatisfactory
0
03 01-Nov-2012 Satisfactory Moderately Satisfactory 0
04 23-Oct-2013 Satisfactory Moderately Satisfactory 27.34
05 27-Jun-2014 Moderately Satisfactory Moderately Unsatisfactory
48.98
06 08-Jan-2015 Moderately Satisfactory Moderately Unsatisfactory
58.40
07 07-Jul-2015 Moderately
Unsatisfactory Moderately Unsatisfactory 69.31
08 30-Oct-2015 Moderately
Unsatisfactory Moderately Unsatisfactory 79.02
09 27-Jan-2016 Moderately
Unsatisfactory Moderately Unsatisfactory 88.03
10 13-Jun-2016 Moderately
Unsatisfactory Moderately Unsatisfactory 97.16
11 28-Dec-2016 Moderately Satisfactory Moderately Satisfactory
107.80
12 27-Jun-2017 Moderately Satisfactory Moderately Satisfactory
111.64
13 28-Dec-2017 Moderately Satisfactory Moderately Satisfactory
129.69
14 25-Jun-2018 Moderately Satisfactory Moderately Satisfactory
147.93
15 19-Dec-2018 Moderately Satisfactory Moderately Satisfactory
166.00
16 18-Jun-2019 Moderately Satisfactory Moderately Satisfactory
170.14
17 16-Dec-2019 Moderately Satisfactory Moderately Satisfactory
176.01
-
The World Bank Indonesia Power Transmission Development Project
(P117323)
Page 4 of 64
SECTORS AND THEMES
Sectors
Major Sector/Sector (%)
Energy and Extractives 100
Energy Transmission and Distribution 100
Themes
Major Theme/ Theme (Level 2)/ Theme (Level 3) (%) Private Sector
Development 13
Jobs 13
Job Creation 13
Urban and Rural Development 86
Urban Development 33
Urban Infrastructure and Service Delivery 13
Services and Housing for the Poor 20
Rural Development 53
Rural Infrastructure and service delivery 53
ADM STAFF
Role At Approval At ICR
Regional Vice President: James W. Adams Victoria Kwakwa
Country Director: Joachim von Amsberg Satu Kristiina Jyrintytar
Kahkonen
Director: John A. Roome Ranjit J. Lamech
Practice Manager: Sonia Hammam Jie Tang
Task Team Leader(s): Leiping Wang Muchsin Chasani Abdul Qadir,
Stephan Claude Frederic Garnier
ICR Contributing Author: Sathyanadhan Achath
-
The World Bank Indonesia Power Transmission Development Project
(P117323)
Page 5 of 64
I. PROJECT CONTEXT AND DEVELOPMENT OBJECTIVES
A. CONTEXT AT APPRAISAL
Country Context
1. A decade after the Asian financial crisis,1 Indonesia emerged
economically and fiscally stronger than many had expected. The real
gross domestic product (GDP) grew at 5 to 6 percent annually since
2003 and reached 6.1 percent in 2008. Despite the global financial
crisis, the country’s GDP growth rate reached 4.2 percent in 2009,
one of the highest in the region. Its fiscal position remained
strong, providing Indonesia with options to respond to the global
financial crisis as well as additional resources to meet
infrastructure development priorities. Successful implementation of
priority infrastructure projects was considered essential for
Indonesia to emerge as a strong middle-income country in the coming
decade.
2. Java and Sumatra are the islands with the densest population,
accounting for 57 percent and 21 percent, respectively, of
Indonesia’s total population of 237.5 million in 2010. These
islands accounted for over 80 percent of the national GDP and 88
percent of the country’s electricity consumption in 2009. Based on
the 2009 statistics of the State Power Company (PT Perusahaan
Listrik Negara, PLN), there were 668,000 customers on the waiting
list, with an estimated demand of an average 1,647 MW, due to
inadequate electricity infrastructure—especially transmission
capacity—in these islands. Expansion of power infrastructure in
Java and Sumatra, including reliability electricity services, is
crucial to maint aining the national economic growth as
targeted.
Sectoral and Institutional Context
3. While the power sector underwent rapid expansion between the
early 1980s and late 1990s, it was significantly weakened by the
Asian financial crisis. For about a decade thereafter, investments
in the power sector were below the level needed to ensure reliable
supply. As a result, Indonesia had the lowest per capita
electricity consumption and electricity access rate among all the
World Bank’s middle-income member countries in the East Asia
region. The power sector faced the following challenges to sustain
economic growth and social development: (a) electrification rates
remained low (as of 2006, 70 million people had no access to
electricity and roughly 2 million new customers needed to be
connected to reach 90 percent electrification target by 20202); (b)
insufficient electricity tariffs to cover the PLN’s financial
viability, made the utility reliant upon the Government’s public
service obligation (PSO) subsidies, which reached US$7.2 billion
(48 percent of the total revenues) in 2008, and was US$5.6 billion
(37 percent of total revenues) in 2009); (c) restructuring and
institutional reform of the PLN remained in flux, weakening the
Government’s ability to provide public financing for power sector
development ; and (d) while the abundant renewable resources were
largely unexploited, it was feared that rapid increase of coal in
the generation fuel mix could expose the country to environmental
risks, both locally and globally (according
1 A period of financial crisis that gripped most of East Asia
and Southern Asia, beginning in July 1997, raised fears of a
worldwide
economic meltdown due to the spread of market downside from one
country to another. 2 Data from the Project Appraisal Document
(PAD).
-
The World Bank Indonesia Power Transmission Development Project
(P117323)
Page 6 of 64
to the PLN’s long-term capital investment plan, the share of
coal in the generation fuel mix was expected to increase from
around 35 percent then, to roughly 51 percent by 20193).
4. Institutionally, the power sector in Indonesia is dominated
by the PLN, the state-owned power utility, which owned and operated
25.6 GW of the 30.9 GW of installed generating capacity (2009).4
Independent power producers (IPPs) represented 5.5 GW of installed
capacity, and the balance was from captive generation. In 2009, the
total electricity produced was 156.8 TWh, of which 120.6 TWh was
produced by the PLN and 36.1 TWh was purchased from IPPs. The PLN
has the monopoly on power transmission and distribution (40,041 km
of transmission lines and 639,517 km of distribution lines). The
sector was and is still regulated by the MEMR, while decisions
relating to the sector’s financial footing are taken at the
Parliamentary level (Commission VII of the House of
Representatives) in discussion with the Ministry of Finance (MoF);
the State Planning Ministry (Badan Perencanaan Pembangunan
National, Bappenas); the Ministry of State-owned Enterprises; and
PLN. Investment loans from multilateral/bilateral development banks
would be approved and channeled by the MoF to the PLN through a
Subsidiary Loan Agreement. The MoF conducted a verification process
before the loan was channeled to the PLN for payment to its
vendors. Bappenas was in charge for the planning and monitoring of
investment loans, including all the PLN’s projects financed by
multilateral/bilateral development banks.
5. After successful completion of the general election in July
2009, the new Government’s focus was on (a) facilitating private
investments and increasing public financing to grow supply
capacity; (b) improving the generation fuel mix by developing coal
fired and renewable energy, especially geothermal and hydropower
generation; (c) rationalizing electricity tariff and subsidy
regime; and (d) further strengthening institutional capacity and
improving the management efficiency of the PLN.
6. The PLN had developed a power system expansion plan called
the RUPTL for 2010–2019 aligned with the Government’s priorities in
the power sector. The RUPTL outlined the expansion plan which
included generation capacity, transmission lines, substation
capacity, and distribution lines. A total of additional 55.5 GW
generation capacity was expected during 2010–2019 with an estimated
total cost of US$70.6 billion, nationally. Table 1 provides
information on the electricity infrastructure expansion plan for
Sumatra and Java islands. The PLN planned to add a generation
capacity of 11 GW for Sumatra and 36 GW for Java in the 10-year
expansion plan. Table 1 also includes the expansion plan for the
transmission lines, substation capacity, and distribution lines, to
support the existing and additional generation plants for these
islands.
3 Refer to the Electricity Supply Business Plan (Rencana Usaha
Penyediaan Tenaga Listrik, RUPTL) PLN 2010–2019 and PLN
Statistics 2008. 4 Statistics of Electricity and Energy 2009,
Ministry of Energy and Mineral Resources (MEMR).
-
The World Bank Indonesia Power Transmission Development Project
(P117323)
Page 7 of 64
Table 1. Summary of RUPTL 2010–2019 for Sumatra and Java
Unit Baseline Forecast
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Sumatra
Island
Economic growth % 5.4 5.6 5.9 6.0 6.0 6.0 6.0 6.2 6.2 6.2 6.2
Electricity sales GWh 17,620 18,602 20,355 22,368 24,772 27,837
31,329 35,247 39,298 43,448 47,987 Electricity sales growth % — 5.6
9.4 9.9 10.7 12.4 12.5 12.5 11.5 10.6 10.4 Electrification ratio %
63.5 64.3 66.3 — 71.3 — 80.5 — 90.4 — 98.00 Additional generation
capacity MW 4,385 285 888 1,149 1,480 2,115 600 1,090 1,230 1,030
1,330 US$ — — 1,328 473 2,430 3,791 921 1,090 1,555 1,665 1,650
Additional transmission line kms 9,232 603 3,374 3,334 1,942 1,588
1,913 1,963 243 1,679 270 Additional substation capacity MVA 5,300
1,020 3,130 4,230 1,915 2,705 1,880 5,900 1,080 6,040 880
(Transmission + Substation) US$ — 79 437 515 220 403 377 578 76
444 55 Additional distribution line kms 1,62,794 5,817 6,710 7,044
7,293 7,669 7,959 8,713 9,122 9,779 10,399
US$ — 155 173 190 200 216 230 256 274 295 313
Java Island
Economic growth % 5.3 6.0 6.3 6.3 6.3 6.3 6.3 6.0 6.0 6.0 6.0
Electricity sales GWh 1,04,110 1,15,199 1,25,199 1,36,807 1,49,618
1,63,688 1,79,053 1,95,314 2,13,020 2,32,167 2,52,547 Electricity
sales growth % — 7.6 8.8 9.3 9.4 9.4 9.4 9.1 9.1 9.0 8.8
Electrification ratio % 69.8 72.2 74.8 77.6 80.5 83.6 86.9 90.1
93.3 96.3 98.2 Additional generation capacity MW 21,601 3,629 4,069
2,833 1,925 5,597 1,030 3,840 3,910 4,718 4,670 US$, millions -
3,997 3,078 4,164 2,350 8,228 2,890 5,312 4,509 4,714 5,677
Additional transmission line kms 17,080 2,130 1,614 1,983 887 1,676
1,019 760 438 140 340 US$, millions — 793 1,109 1,288 616 1,168 751
1,882 581 387 544 Additional substation capacity MVA 47,650 6,490
10,964 11,710 7,050 8,470 5,930 8,460 6,720 5,340 7,720 US$,
millions — 423 732 773 542 674 475 1,343 470 344 473 Additional
distribution line kms 3,40,014 16,372 21,428 19,980 20,014 21,317
24,433 24,602 26,524 25,536 21,415
US$, millions — 453 700 601 545 571 727 699 779 775 695
-
The World Bank Indonesia Power Transmission Development Project
(P117323)
Page 8 of 64
7. To meet the rapidly increasing demand for electricity, the
Government of Indonesia and PLN’s primary focus was on expanding
capacity for power generation. The development of the power
transmission networks, however, did not keep pace and there were
congestion and bottlenecks in a number of regions, including in the
main systems of Java-Bali and South-Central Sumatra.
8. In the Java-Bali power system, some major 500 kV substations
required urgent capacity expansion to accommodate the growing power
demand and the requirement of higher reliability of supply.
According to the data of 2007, 24 out of 35 of 500/150 kV
substations operated at peak loads , over 80 percent of their
capacity. Four of them operated at peak outputs over their full
nameplate capacity.5 Some of the primary 500 kV substations were
unable to pass the reliability test during the PLN’s 2008 operation
planning exercise. The conditions of these substations posed
significant threats to the security of electricity supply in
Java-Bali and impeded efficient operation of the transmission
system. In January 2009, load shedding reached about 110 MW and
lasted 6–14 hours a day. For the Jakarta area, it was reported that
30 MW was being shed daily because of inadequate transmission
capacity.
9. In Sumatra, the transmission backbone from Lahat to
Kiliranjao was built as a 275 kV transmission line in 2003 but has
been operating at 150 kV since. The transmission line links the
South-Central systems of Sumatra and at that time transmitted up to
200 MW from South Sumatra to Central Sumatra to serve demand in
this region. With a rapid increase in the demand and expansion of
the generation capacity in both systems, transfer needs between
them had been increased, exceeding the technical limit of the 150
kV system. Starting from 2006, Central Sumatra experienced
shortages, which resulted in load shedding during the dry season.
The load shedding was increased to around 200 MW in 2008–2009. The
connections to new customers were frozen because of transmission
bottlenecks between South-Central Sumatra. Upgrading the
transmission lines from 150 kV to 275 kV was urgently needed to
address the supply shortage in the Central region, reduce losses,
improve operational efficiency and reliability of the two systems,
and authorize connection of new customers.
10. In line with the Government’s strategic priorities, the
World Bank supported a large investment lending program to finance
(a) public sector power infrastructure projects, especially
renewable energy, to sustain economic growth; (b) development
policy lending programs to support the Government’s efforts to
establish a sustainable policy environment for infrastructure
project development and move the energy sector toward a low-carbon
development path; and (c) technical assistance to rationalize
electricity tariff and subsidy regime, establish incentives for
geothermal resource development, and strengthen capacity of the
national state-owned companies in the energy sector.
11. The Indonesia Power Transmission Development (IPTD) Project
was proposed as an integral part of the World Bank’s support to
finance public sector power infrastructure projects. It was
designed to strengthen the main transmission systems of Java and
Sumatra islands through the expansion of substations’ capacity in
scattered areas of both islands. The incremental substation
capacity will strengthen the transmission system and eliminate
bottlenecks between the load centers with areas rich in primary
energy resources for generation, South to Central and North areas
in Sumatra, and East to West areas in Java. The incremental
substation capacity will also allow the PLN to increase electricity
supply and reliability for existing customers and connect more new
customers to the grid. The proposed project was
5 According to the PLN’s planning criteria for transmission
system planning, the peak output of the transformers should be
less
than 80 percent of the capacity in the Java-Bali system and 70
percent in the outer islands.
-
The World Bank Indonesia Power Transmission Development Project
(P117323)
Page 9 of 64
expected to play a role in supporting the PLN to meet the
growing electricity demands and indirectly supporting economic
growth in both islands over the medium and long term.
12. The IPTD Project was the first large-scale investment
project in the power sector with the PLN since 2003—the year when
the Java Bali Power Restructuring and Strengthening Project was
approved. The IPTD Project was prepared against the backdrop of the
World Bank preparation of two other investment projects—the Upper
Cisokan Pumped Storage Hydroelectrical Power Project (HPP) with the
PLN and the Geothermal Clean Energy Investment Project with
Pertamina Geothermal Energy—which were approved few years later in
FY11 and FY12, respectively. The long interval from the previous
World Bank project (Java Bali Power Restructuring and Strengthening
Project in 2003) caused a capacity gap in the PLN staff regarding
experience in managing the World Bank’s project. Many of the PLN
staff engaged with the previous project had retired or moved to
other positions within the PLN. Most of the staff involved in the
IPTD Project were relatively new to the World Bank-funded
project.
Theory of Change (Results Chain)
13. The project consists of investments for the expansion of
substations ’ capacity to meet its development objective and assist
the borrower in meeting the growing electricity demand and
improving the reliability of electricity supply in Java and
South-Central Sumatra by strengthening the power transmission
system, as referred to the original objective before the
restructuring. Strengthening the power transmission system could be
achieved by increasing the capacity of transmission lines and
substations, reducing transmission losses and therefore increasing
its efficiency, and increasing reliability of the power system. A
strengthened power transmission system will allow the PLN to
provide more reliable electricity to its existing customers,
including businesses and industries, and also connect new customers
to the grid. More supply to new and existing customers will
increase sale of electricity, thus supporting the PLN’s effort to
meet the growing electricity demand in Sumatra and Java islands.
The theory of change (TOC) is illustrated in figure 1 and presents
the activities envisaged under the project components, the
associated outputs, and how they contribute to the achievement of
the intermediate outcomes and development objectives. More
specifically the following:
• The IPTD Project was designed in line with the assumptions
outlined in the PLN’s RUPTL for 2010–2019. The PLN’s plan assumed
that the average annual national economic growth during that period
was 9.1 percent. To translate the economic growth to electricity
supply, the PLN will need to increase electricity supply by an
average of 9.6 percent annually. Specifically, for Java-Bali and
Sumatra, the expected average annual electricity supply growth was
9.4 percent and 11.1 percent, respectively, during 2010–2019. An
increase in tariff will not have a major influence on the PLN’s
electricity sales. The Government provided an annual electricity
subsidy to the PLN ensuring that the electricity tariff to
customers will be affordable.
• The expansion of 500/150 kV and 150/20 kV substations in Java
led to an additional substation capacity of 2,000 MVA for 500/150
kV substations and 1,350 MVA for 150/20 kV substations.
• The expansion of 275/150 kV and 150/20 kV substations in
Sumatra led to an additional substation capacity of 2,000 MVA for
275/150 kV substations and 1,230 MVA for 150/20 kV substations.
-
The World Bank Indonesia Power Transmission Development Project
(P117323)
Page 10 of 64
• The length of transmission lines between two substations is a
key factor, which could cause electricity losses in the
transmission system. The lengthier a transmission line, the higher
transmission losses will be. Expansion of 500/150 kV substations in
Java and 275/150 kV substations in Sumatra will reduce losses of
the transmission system both in Java and Sumatra. The investment in
275 kV substations also allow the PLN to operate the Sumatra
transmission line backbone at 275 kV instead of 150 kV. This would
reduce transmission losses and increase the transmission capacity
of the whole backbone.
• According to the PLN’s planning criteria for transmission
system planning, the peak output of the substation’s transformer
should be less than 80 percent of its capacity in the Java-Bali
system and 70 percent in the outer islands. With growing
electricity demand in the future, if there are no additional
substations, the existing ones will be overloaded, and a higher
electricity demand could not be served. The overloaded substations
will lead to a risk of transmission system outage—a threat to the
security of electricity supply. These conditions were measured from
the indicators of transmission system outage frequency and
duration.
• Increased substation capacity will also mean an increase in
the PLN’s ability to deliver more electricity to existing customers
and connect new customers to the grid, particularly business and
industrial customers. Delivering more electricity, measured from
the increased sales, is the PLN’s effort to meet the growing
electricity demand. The improved PLN grid encouraged participation
of IPPs and contributed to the increased generation capacity as
well. Reducing bottlenecks in the PLN’s grid enables more power
plants to be connected. While the PLN planned to increase the
generation and distribution capacity during the project period, the
design of the project was also assuming that there was adequate
capacity on generation and distribution to be supported by the
project.
• The project would contribute to the increased total of 3,350
MVA substation capacity out of 50,614 MVA capacity increase in the
Java system, which the PLN planned during 2010–2015. Similar to the
Sumatra system, the IPTD Project would contribute to an increase of
3,230 MVA substation capacity from the PLN’s plan of 14,880 MVA
increase during the same period.6
• Considering that the IPTD Project was a new engagement with
the PLN after the 2003 project, the project implementation was also
expected to support the PLN’s capacity building to manage
investment projects financed by international financial
institutions (IFIs).
6 Refer to the PLN’s RUPTL 2010–2019
-
The World Bank Indonesia Power Transmission Development Project
(P117323)
Page 11 of 64
Figure 1. Results Chain
Project Development Objective: To assist the Borrower to meet
growing electricity demand and improve the reliability of
electricity supply in Java and South-Central Sumatra by
strengthening the power transmission system.
Component 1:
Java-Bali Transmission Substation Expansion and
Construction
• Expansion of 4 existing
500/150 kV and 20 to 25
existing 150/20 kV
substations.
• Construction of one new
150/20 kV substation, including two 60 MVA
transformers.
Additional capacity of 500/150 kV substations and 150/20 kV
substations constructed
Project areas in Java-Bali and Sumatra
Objective: to meet growing electricity demand Outcome: increased
sales of electricity Objective: to improve reliability of
electricity supply Outcomes: • Reduced transmission
losses • Reduced transmission
outage frequency for 500/150 kV and 150/20 kV
• Reduced transmission outage duration for 500/150 kV and 150/20
kV
Component 2:
South-Central Sumatra
Transmission Substation
Upgrading and Expansion
• Upgrading of five existing
275/150 kV substations.
• Expansion of 10 to 15
existing 150/20 kV
substations.
Additional capacity of 275/150 kV substations and 150/20 kV
substations constructed
• Improved PLN operational
efficiencies, which will reduce the electricity production
cost
• Increased PLN capacity in managing investment projects
financed by other IFIs
Activities Intermediate Outcomes PDO-level Outcomes Long-term
Outcomes
Assumptions. It was expected that the average annual national
economic growth was 9.1 percent and the increase in electricity
supply was on average 9.6 percent annually. Specifically, for
Java-Bali and Sumatra, the expected average annual electricity
supply growth was 9.4 percent and 11.1 percent, respectively,
during 2010–2019.
-
The World Bank Indonesia Power Transmission Development Project
(P117323)
Page 12 of 64
Project Development Objectives (PDOs)
14. The PDO was to assist the Borrower to meet growing
electricity demand and improve the reliability of electricity
supply in Java and South-Central Sumatra by strengthening the power
transmission system.7
Key Expected Outcomes and Outcome Indicators
15. The IPTD Project financed the expansion and upgrading of the
existing substations as well as construction of new ones to
strengthen the power transmission system in Java and Sumatra
islands with the following key expected outcomes: (a) to meet the
growing electricity demand and (b) to strengthen the power
transmission system. The main outcome to meet the growing
electricity demand will be measured from the electricity sales. The
other main outcome to strengthen the power transmission system will
be measured from (a) transmission losses (improved efficiency of
the system) and (b) transmission outage duration and frequency
(improved reliability of power system). Table 2 describes the
outcome indicators of the project.
Table 2. Outcome Indicators (original)
Indicator Name Baseline (2009)
End Target (2014)
1. Electricity sales in Project areas • Electricity sales in the
Project areas: Java (GWha/year) • Electricity sales in the Project
areas: South-Central Sumatra (GWh/year)
50,442 4,919
77,270 7,770
2. Transmission losses in Project areas • Transmission losses in
Java-Bali system (%)
• Transmission losses in Sumatra system (%)
2.09 3.47
2.03 2.95
3. Reliability of power system in Project areas - Java •
Transformer Outage Frequencyb (times/transformer/year)
500/150 kV 150/20 kV
• Transformer Outage Durationc (hours/transformer/year) 500/150
kV 150/20 kV
0.35 0.19
30.22 4.97
0.20 0.10
4.00 4.86
4. Reliability of power system in Project areas: South-Central
Sumatra • Transmission Outage Frequency
(times/transformer/year)
150/20 kV
• Transmission Outage Duration (hours/transformer/year) 150/20
kV
0.47
1.16
0.35
0.64
Note: a. Gigawatt hours. b. Transmission outage frequency is a
similar indicator to the System Average Interruption Frequency
Index (SAIFI) to assess the reliability of a power system. While
the transmission outage frequency is measured against the
transformer, SAIFI is measured based on the number of interrupted
customers. c. Transmission outage duration is a similar indicator
to the System Average Interruption Duration Index with a
measurement is based on transformer instead of customer.
7 The PDO refers to the formulation in the Loan Agreement, which
is identical to formulation in the PAD.
-
The World Bank Indonesia Power Transmission Development Project
(P117323)
Page 13 of 64
Components
The project supported two components as detailed in the
following paragraphs:
16. Component 1: Java-Bali Transmission Substation Expansion and
Construction: (US$103.5 million at appraisal, of which the World
Bank’s finance was US$91.7 million, and US$108.8 million at project
closure, of which the World Bank’s actual finance was US$101.59
million; the increase was because of the utilization of project
savings which resulted in higher achievement). This component
supported the (a) expansion of four existing 500/150 kV substations
and 20 to 25 existing 150/20 kV substations through the
installation of new transformers and associated equipment and (b)
construction of one new 150/20 kV substation, including two 60 MVA
transformers, and installation of associated equipment. At closure,
the project expanded the four existing 500/150 kV substations and
constructed or expanded 43 150/20 kV substations.
17. Component 2: South-Central Sumatra Transmission Substations
Upgrading and Expansion: (US$150.6 million, of which the World
Bank’s finance was US$133.3 million, and US$79.3 million at project
closure, of which the World Bank’s actual finance was US$78.16
million; the actual cost was lower but still resulted in higher
achievement due to project savings). This included (a) upgrading of
five existing 150 kV substations through the installation of new
transformers and associated equipment and (b) expansion of 10 to 15
existing 150/20 kV substations through the installation of new
transformers and associated equipment. At closure, the project has
five existing 275/150 kV substations and 23 existing 150/20 kV
substations.
B. SIGNIFICANT CHANGES DURING IMPLEMENTATION
18. At the Government’s request the project underwent three
restructurings.
(a) First Restructuring - Level 28 (December 16, 2015)
(i) Change was introduced in the project closing date. As
described in the Restructuring Paper, dated December 15, 2015, the
original closing date of December 31, 2015, was extended in
December 2015 by 12 months to December 31, 2016, to enable
completion of the existing project packages and prepare for a
follow-up Level-19 restructuring. There was an unintended mistake
when updating the datasheet because the first restructuring did not
trigger any change of safeguards policies.
(b) Second Restructuring - Level 1 (June 29, 2016)
(i) Change in the PDO. To enable the use of uncommitted funds
from the project saving, it was decided to add more substations ’
expansion and a new component on hydropower preparation (section
iii). A revised PDO was required to support the broader development
objectives, triggered by the addition of the component related to
the preparation of hydropower projects. To reflect the broader
scope of the project,
8 Level-2 restructuring applies to modifications not involving
changes in the PDO, safeguards category, or any new safeguard
policy (refer to OP/BP 10.00 Investment Project Financing,
effective 2014 and retired in 2017). 9 Level-1 restructuring
applies to modifications involving changes in the PDO or changes in
the safeguards category or triggers a
new safeguard policy (refer to OP/BP 10.00 Investment Project
Financing, effective 2014 and retired in 2017).
-
The World Bank Indonesia Power Transmission Development Project
(P117323)
Page 14 of 64
the PDO was revised to read, “To assist PLN to meet growing
electricity demand, improve the reliability of electricity supply,
strengthen the power transmission system, and support the
preparation of hydropower projects.”10 The original PDO formulated
the strengthening of power transmission system as the high-level
objective, which was the right approach. However, during
restructuring, this high-level objective was formulated at the same
level as reducing transmission losses and improving the reliability
of electricity supply. This change in formulating the PDO does not
change the overall objective of the project, and the outcomes
remain the same: meet growing electricity demand and improve the
reliability of electricity supply. There is therefore no need for a
split assessment, the main change in the PDO was to add a new
component related to the preparation of hydropower projects.
(ii) Change in the Results Framework (RF). The restructured
project contained US$52.06 million for construction and development
related to substation expansion, including the installation and
upgrading of transformers at additional locations in Java and
Sumatra. The indicators for the existing components were revised
because of the increase in target from the loan savings
utilization, change of demand growth assumption, and recent update
on the actual condition of the transmission system. New indicators
were added for the new component on hydropower preparation. The
target dates were also revised to accommodate the extension of
project closing. The RF was revised in line with these changes.
(iii) Change in component and cost. The use of US$60 million,
from a total of US$80 million in project savings, for the following
components: (a) US$52.06 million for construction and development
related to substation expansion, including the installation and
upgrading of transformers at additional locations in Java and
Sumatra according to the scope of work provided in the PLN’s letter
of April 22, 2015; (b) US$8 million to support the preparation of
hydropower projects; and (c) US$20 million of loan funds to be
cancelled as agreed upon with the PLN and MoF.
As a result of these changes, the World Bank will now finance
US$197 million for Components 1 and 2, and US$8 million to be used
for hydropower preparation, bringing the total IBRD loan financing
to US$205 million instead of US$225 million for the original
project.
(iv) Change in the loan closing date. A second extension was
approved for 18 months from December 31, 2016, to June 30, 2018, to
enable completion of the existing project activities.
(v) Cancellation of financing. This is described in the section
‘Key Factor during Implementation’.
10 It refers to the Project Restructuring Paper. The revised PDO
formulation in the amended Loan Agreement is slightly different:
“To assist the Project Implementing Entity to meet growing
electricity de mand, improve the reliability of electricity
supply, strengthen the power transmission system, and support
the preparation of hydropower projects .”
-
The World Bank Indonesia Power Transmission Development Project
(P117323)
Page 15 of 64
(vi) Change in the safeguard policies triggered. The policies
were revised to account for the new component on hydropower project
preparation.
Table 3. Triggered Safeguards Policy at Restructuring
Change in Safeguard Policies Triggered Safeguard Policies
Original Triggered 1 Natural Habitats (OP/BP 4.04) No Yes 2 Forests
(OP/BP 4.36) No Yes 3 Physical Cultural Resources (OP/BP 4.11) No
Yes 4 Indigenous Peoples (OP/BP 4.10) No Yes 5 Safety of Dams
(OP/BP 4.37) No Yes
(vii) Change in the environmental category. The environmental
category was elevated from ‘B’ to ‘A’ to reflect preparation of the
new Poko HPP. Construction of the Poko HPP is expected to have
significant, irreversible, and large-scale potential environmental
and social impacts as the project will involve resettlement and
potential impacts to physical cultural resources, indigenous
peoples (to be confirmed through an Environmental and Social Impact
Assessment [ESIA] survey), and dam safety. Thus, it is a Category
‘A’ project.
(viii) Change in procurement. The procurement of substations and
transformers from savings was to be carried out under the
Procurement Guidelines dated January 2011 and revised July 2014
(instead of the May 2010 Guidelines applicable under the existing
Loan Agreement). Furthermore, the selection of consulting services
for the Poko HPP were to be undertaken under the Consultant
Guidelines dated January 2011 and revised July 2014 (instead of the
May 2010 Guidelines referred to in the existing Loan
Agreement).
(ix) Change in implementation schedule. The project was extended
by 18 months to June 30, 2018, to accommodate the completion of the
following components:
• Construction and development related to substation expansion,
including the installation and upgrading of transformers at
additional locations in Java, Bali, and Sumatra.
• The preparation of hydropower projects.
(c) Third Restructuring - Level 2 (June 27, 2018)
(i) Change in the loan closing date. A third extension was
approved for 16 months, from June 30, 2018, to October 31, 2019, to
enable completion of the Feasibility Study (FS) Stage III and ESIA
of the new Poko HPP. With such an extension the cumulative
extensions of the project would be 46 months.
(ii) Changes in the RF. The indicators’ end targets were
adjusted to reflect the project’s new closing date. Other
adjustments were also made in the description of indicators
-
The World Bank Indonesia Power Transmission Development Project
(P117323)
Page 16 of 64
to reflect low growth in energy sales across Indonesia (annex 1)
and transformer capacity installed (MVA) as part of the project
subprojects.
(iii) Change in implementation schedule. The proposed extension
from June 30, 2018, to June 30, 2019, will enable the completion of
Stage III FS and ESIA of the proposed Poko HPP.
Rationale for Changes and Their Implication on the Original
Theory of Change
19. The rationale for changes is provided in earlier in this
section. The extension of project closing and utilization of
project savings on the existing components did not change the TOC
apart from the additional component on HPP preparation, and
therefore there is no need to replicate the TOC. The outcome of the
hydropower component is the preparation of an HPP with the
completion of the FS and ESIA study as key output deliverables.
There is no impact of adding this component to the original PDO and
achievement of original outcomes. One new outcome indicator was
added to reflect the Poko HPP preparation.
II. OUTCOME
A. RELEVANCE OF PDOs
Assessment of Relevance of PDOs and Rating
20. Relevance of PDO is rated High. The original PDO at
appraisal was still aligned with the Government’s commitment to
rapidly eliminate bottlenecks in the major transmission systems.
The PDO after restructuring remained consistent with the World
Bank’s Country Partnership Strategy (CPS)11 for Indonesia for
FY09–FY12, which contributed to better meeting the increasing
demand for electricity and improving the reliability of power
delivered. The PDO was also perfectly in line with the envisaged
World Bank investment financing program under the CPS which was
seeking to reduce the local and global environmental impacts of the
sector and focus on clean and renewable energy such as geothermal
power investments, pumped storage, and power transmission and
distribution projects. Furthermore, the PDO was also in line with
the Government’s National General Energy Plan 2017 (‘Rencana Umum
Energi Nasional’, RUEN) which emphasized the need of additional
generation capacity, including its supporting infrastructure such
as transmission system, and increase of renewable energy in the
generation mix. The PLN’s RUPTL 2019 also still considers
transmission system as part of its major investment program in the
coming years.
21. Alignment with the current Country Partnership Framework12
(FY16–FY20). The PDO remains aligned with the current CPF which
highlights developing the energy sector as the Government’s top
priority and one of the major bottlenecks to growth, shared
prosperity, and human capital formation. Chronic underinvestment
throughout Indonesia has left the country with a power deficit and
demand that continues to increase at an annual rate of about 8
percent. In 2015, the Government projected that the country would
need at least 35 GW of new generation capacity over the next 10
years. The Government
11
http://documents.worldbank.org/curated/en/513571468268221103/Country-partnership-strategy-for-Indonesia-FY2009-
2012-investing-in-Indonesias-institutions-for-inclusive-and-sustainable-development.
12
http://documents.worldbank.org/curated/en/195141467986374707/Indonesia-Country-partnership-framework-for-the-
period-FY16-20.
-
The World Bank Indonesia Power Transmission Development Project
(P117323)
Page 17 of 64
was looking to simultaneously increase generation capacity
together with associated transmission and distribution capacity to
meet demand and assist growth, substantially increase the share of
renewables in the energy mix and provide universal access to all
Indonesians. Against this background, the main focus areas for the
World Bank Group’s engagement are (a) energy infrastructure to
improve operational efficiencies and reliability of services
(through, among others, transmission and distribution); (b)
renewable energy and low-carbon development to accelerate
penetration of renewable energies in the system, including
geothermal and other renewables complemented with sustainable
development of hydropower and the gas sector; and (c) access to
modern energy services (potentially through grid extension and
possible off-grid solutions).
22. Alignment with the World Bank’s Systematic Country
Diagnostic (SCD13). The PDO was also consistent with the September
2015 SCD which underscores increasing investments in the energy
sector given the need for a rapid supply response to the growing
energy demand. The report emphasizes growth in energy demand by
about 8 percent annually, requiring a rapid supply response to
avoid an energy crisis in the years to come. It is estimated that
meeting the needs of the economy and closing the access gap would
require 66.8 GW of incremental generation capacity and 477 TWh
power supply capacity for a total investment over US$200 billion.
The new Government’s goal is to increase the generation capacity by
35 GW by 2019, an ambitious goal. Increased generation capacity
will simultaneously require the increase of associated transmission
and distribution capacity to meet the electricity demand.
23. As of 2018, the PLN could still not meet the target of
electricity infrastructure development such as generation plants,
transmission and distribution lines, as well as substation
capacity, mainly because of insufficient investment funding to
finance the PLN’s program. The unexpected lower economic growth,
which caused the low increase of electricity demand, eased the
PLN’s constraints on transmission and distribution but the data
demonstrated that the PLN was still behind its national planned
targets for the period and the project remained relevant. Table 3
shows that the PLN was only able to fulfil the target for
distribution lines in Sumatra and transmission lines in Java. Other
types of infrastructure were still below the target. These data
show the relevance and contribution of the IPTD Project to assist
the PLN in developing electricity infrastructures to meet the
fast-growing electricity demand.
Table 4. Comparison of 2018’s Plan and Actual on Electricity
Infrastructure
Unit 2018 Plan Actual Achievement (%)
RUPTL 2010–2019 PLN Statistics Sumatra Island
Generation Capacity MW 13,980 10,192 72.9 Transmission Line kms
25,871 16,339 63.2 Substation Capacity MVA 33,200 22,382 67.4
Distribution Line kms 2,32,899 2,33,852 100.4
Java Island
Generation Capacity MW 50,085 37,872 75.6 Transmission Line kms
27,727 28,626 103.2
13
http://documents.worldbank.org/curated/en/576841467987848690/Indonesia-Systematic-country-diagnostic-connecting-
the-bottom-40-percent-to-the-prosperity-generation.
-
The World Bank Indonesia Power Transmission Development Project
(P117323)
Page 18 of 64
Unit 2018
Plan Actual Achievement (%) RUPTL 2010–2019 PLN Statistics
Substation Capacity MVA 1,18,784 95,183 80.1 Distribution Line
kms 5,40,220 4,79,720 88.8
B. ACHIEVEMENT OF PDOs (EFFICACY)
Assessment of Achievement of Each Objective/Outcome
24. The original PDO at appraisal formulated the strengthening
of power transmission system as the high-level objective and
consisted of two project-level objectives: (a) to meet growing
electricity demand and (b) to improve reliability of electricity
supply. Generally, strengthening the power transmission system
leads to (a) increasing transmission and substation capacity, (b)
reducing transmission losses to increase efficiency of the system,
and (c) increasing reliability of the power system. After
restructuring, with the inclusion of the hydropower component to
the project, the revised PDO consisted of (a) strengthening power
transmission system to (i) meet growing demand and (ii) improve
reliability of electricity supply and (b) supporting the
preparation of hydroelectricity projects (added through
restructuring). The original outcomes remain the same: meet growing
electricity demand and improve the reliability of electricity
supply, apart for the addition of the new component. Assessment
will be made as referenced in the TOC. Assessment will be made as
referenced in the TOC on meeting three objectives—(a) meet the
growing electricity demand, (b) improve reliability of electricity
supply, and (c) support the preparation of hydroelectricity
projects. This assessment will be carried out (as detailed in
following paragraphs) including with their associated outcomes and
targets. Annex 1 provides the link between the objectives,
outcomes, and indicators.
25. Objective 1: to meet growing electricity demand. The
indicator of increased electricity sales in the RF is sufficient to
measure the objective to meet growing electricity demand. The
outcome indicators of increased electricity sales in project areas
are fully achieved, both for Java and Sumatra. At the project
closing, electricity sales were 180,381 GWh per year in Java and
36,294 GWh per year in Sumatra, compared to the revised targets of
170,000 GWh per year and 34,000 GWh per year for Java and Sumatra,
respectively. The original targets for this outcome were 77,270 GWh
per year in Java and 7,777 GWh per year in Sumatra. The revised
electricity sales targets were increased to adjust the new closing
date, from 2015 to 2019, and additional project areas from the
subprojects financed by the project savings. The total number of
customers in Java and Sumatra has increased: 33.5 million in 2009,
49.5 million in 2015, and 85.4 million in 2018.14 The additional
substation capacity has contributed to the increase in the number
of customers and electricity sales, though it could not claim a
full attribution to those increases, because external factors
beyond the project boundary may have played a major role.
26. Objective 2: to improve reliability of electricity supply .
There are three outcome indicators which are relevant to the
project’s objectives and which were used to measure achievement of
this objective.
• 2.a. Reduced transmission losses. The transmission losses at
the project closure were 2.34 percent in the Java system and 2.64
percent in the Sumatra system. The actual level of losses
14 PLN’s Statistics 2009, 2015, and 2018 .
-
The World Bank Indonesia Power Transmission Development Project
(P117323)
Page 19 of 64
in Java was better than the target of 2.40 percent whereas in
Sumatra the losses was slightly less than the target of 2.49
percent. In the Java system, the target and actual losses were
higher than the baseline because more electricity was evacuated
from East and Central Java to supply the demand in West Java and
Jakarta. In contrast with the Sumatra system, the baseline data
were higher than the target and actual losses. The operation of a
new 275/150 kV transmission line connecting South-Central Sumatra
reduced the transmission losses. However, with recent development
of the 275/150 kV transmission line, which started to connect North
Sumatera as well, the actual losses have increased above the target
due to the longer transmission line. The North Sumatra system was
operating independently from the Central-South Sumatra. At
appraisal, it was not expected that the two systems will be
interconnected within the project period. This achievement cannot
be fully attributed to the project because the project is only part
of the bigger power transmission system in Java and Sumatra.
• 2.b. Improved reliability of power system. The reliability of
the power system in project areas was shown in transformer outage
frequency (TROF) and transformer outage duration (TROD). TROF is
measured from the average outage frequency of each transformer in
the project areas each year. TROD which relates to outage duration
is measured in a similar way. The outcome targets for both TROF and
TROD were fully achieved at the project closure. The actual TROF of
500/150 kV and 150/20 kV substations was 0.01 and 0.02 times per
transformer per year at the end of 2019 in the project areas of
Java. Meanwhile, the TROD of 500/150 kV and 150/20 kV substations
was 0.065 and 0.047 hours per transformer per year by the end of
2019. The Sumatra system achieved 0.09 times per transformer per
year of TROF and 0.12 hours per transmission per year of TROD for
150/20 kV transmission system. Similar issue on the project
attribution as in above outcomes because the project is only part
of the bigger power transmission system in Java and Sumatra.
27. Objective 3: to prepare hydropower project. The outcome
indicator for this objective is the number of megawatts of
hydropower prepared with associated outputs on the completion of
two preparatory studies, FS and ESIA, as the intermediate
indicators. The FS was successfully prepared, and assessments were
completed and covered the key technical issues with a
recommendation of 124.5 MW for the development of the Poko HPP and
additional up to 4.3 MW for a mini hydropower station arranged at
the dam toe, with a total potential development of 128.8 MW. From a
technical perspective, the FS is ready to be tendered. However, to
move to the tendering stage, many decisions still need to be made
by the PLN on development/implementation aspects, such as tender
strategy and contract packaging and, most importantly, whether to
develop it publicly or privately. The Environmental and Social
Assessments have been prepared with the completion of the ESIA, an
Environmental and Social Management Plan (ESMP), and a Cumulative
Impact Assessment (CIA), though a few additional works are still
required and are ongoing to make those documents fully acceptable
by the World Bank. Though the objective has been achieved based on
the current indicator, the Poko HPP still needs some decisions and
additional work (preparation of tender documents) to be considered
as fully prepared. Therefore, the outcome target for this objective
is considered almost achieved.
Justification of Overall Efficacy Rating
28. The project achievements are Substantial. The project almost
fully achieved its objectives. The first two objectives on meeting
the growing electricity demand and improving reliability of
electricity
-
The World Bank Indonesia Power Transmission Development Project
(P117323)
Page 20 of 64
supply have been achieved based on their target indicators,
except for the transmission losses of the Sumatra system which,
however, almost achieved the target despite a significant increase
in access (more than 5 million households connected over the course
of the project). The project contributed to achievement of the
development objectives by increasing substation capacity and
preparing the hydropower project. Incremental substation capacity
will lead to reduced transmission losses and improved reliability
which then will strengthen the power transmission system. Increased
capacity and strengthened power transmission system will allow the
PLN to connect more new customers and increase sales of electricity
to meet the growing demand of electricity. Expectational targets
have been substantially met and even exceeded for some of them. On
the third objective, the outcome target was considered almost
achieved (even if key outputs were completed before closing), but
the project may not be considered as fully prepared for the next
stage of development (tendering stage for construction).
C. EFFICIENCY
Assessment of Efficiency and Rating
29. Aspect of design and implementation. The project assisted
the PLN in meeting the growing electricity demand, improving the
reliability of electricity supply, strengthening the power
transmission system, and preparing hydropower projects. These are
challenging tasks, partly because the project ’s subcomponents are
scattered across the country, thus creating difficulties in
manpower deployment and project supervision. Several technical
challenges also unfolded during the construction period, including
the changes in the technical specifications leading to major scope
variations in the contracts , inadequate contract management
capacity, and prolonged internal processes and reviews that
accordingly delayed the project’s implementation up to 46 months
against the original schedule.
30. The overall efficiency is rated Substantial. Albeit with
significant delay, all the planned activities were successfully
completed while project resources and inputs were converted
adequately toward achieving the results. Although the project
implementation period increased substantially, the PLN successfully
minimized the impact of project delay to possible increase in
construction cost. Also, as shown in table 5, the economic internal
rate of return (EIRR) of the project at completion is higher than
at appraisal owing to the good use of project savings.
31. The EIRR of the project at appraisal was assessed for the
five subcomponents of the project using the cost and benefit
approach. The estimated EIRRs range from 25 to 65 percent. Further,
the sensitivity analysis carried out demonstrated that the project
will remain economically viable against a simultaneous 10 percent
drop in benefits, 10 percent increase in investment costs , and 10
percent increase in supply costs.15 The project experienced some
delays during its initial years of implementation and the
activities were adjusted as described earlier.16 A discount rate of
10 percent, approximately twice the country’s
15 The sensitivity analysis of the project at appraisal did not
include a scenario where the project ended up having more
beneficiaries than what was anticipated. In recollection, such
analysis, even if unusual as adverse scenarios are the ones
usually
undertaken, could have been useful in providing a more complete
picture of the project. 16 The impact of the delay in project’s
implementation is assumed to cost proportionally to the annual
interest rate (set at 5
percent). Accordingly, a delay of one year is equal to a 5
percent increase in investment costs. As the project experienced a
delay of 46 months, the costs of the delay are estimated to be
equivalent to a 20 percent increase in costs. As presented in
annex 4, the project remains economically viable against this
scenario.
-
The World Bank Indonesia Power Transmission Development Project
(P117323)
Page 21 of 64
annual GDP growth, is used for sensitivity analysis. Table 5
presents the summary of outcomes indicators at appraisal and
completion.
Table 5. Summary of Outcomes Indicators at Appraisal and
Completion
Scenario Unit
500/150 kV
Substations in Java
150/20 kV Substations in Central
Java
150/20 kV Millennium
substation in West Java
275/150 kV Substations in
Sumatra
150/20kV Substations in Sumatra
At Appraisal Base Scenario NPV @10% US$, millions 335 230 34 185
139 EIRR % 60 65 39 25 55
At Completiona NPV @10% US$, millions 355 242 40 237 149 EIRR %
74 81 49 33 69
Note: NPV = net present value. a. The number of beneficiaries
taken into account at the completion is the same considered at the
appraisal.
32. Direct beneficiaries of the project include people who
directly benefit from electricity supply from all substations
financed by the project. Indirect beneficiaries include people who
are not directly connected to the substations financed by the
project but are connected to the power grids indirectly supported
by the project. The number of beneficiaries of the project at
completion was five times greater than what was expected at
appraisal. While the unpredicted low economic growth had caused a
lower electricity demand, new electricity connections were still
increasing because of the commodities boom17 in Sumatra areas and
also due to the longer implementation period. Because the project
investments provided quantifiable benefits to and served more
people than what was expected at appraisal, accordingly, if these
benefits are considered, the EIRRs of the project at completion
could have been significantly higher than what are presented in
table 5.
33. Despite not affecting the rating proposed, it is worth
noting that the total benefits presented do not fully quantify
various positive externalities resulting from higher electricity
availability and reliability in Java and Sumatra, arguably two most
important islands in Indonesia. Conversely, the figures presented
do not consider the negative externalities that resulted from the
projects. In particular, as the project did not finance evacuation
of power plants, negative externalities from direct connection to
fossil fuel power plants18 are not considered in the economic
analysis. At the same time, the project contributed to reduced
transmission losses, which have a positive impact on reducing
emission.
34. In addition to have effectively achieved nearly all the
targeted goals, the project successfully used savings of US$80
million, nearly 36 percent of the budgeted resources, while
conveniently adding new subprojects to increase substations’
capacity above the initial targets and completing an additional
task of producing the Poko HPP FS and ESIA. The latter, if
completed, would be important in adding supply of electricity in
South Sulawesi through a more environmentally friendly source of
energy. The project
17 Mining and plantation. 18 In the hypothetical case where the
project connects the distributions and the transmissions to the
fossil fuels-powered generation, the total economic benefit of the
project would be adversely adjusted, proportionally to the cost of
emitted local
pollutants and greenhouse gases and potential damaging impact of
these emissions to the local and global economy.
-
The World Bank Indonesia Power Transmission Development Project
(P117323)
Page 22 of 64
estimated a total budget of US$254.1 million for the expansion
of substations under Components 1 and 2. It was concluded with the
actual cost of US$188.1 million or 25.9 percent less than the
initial budget. The total incremental capacity for all substations
is 8,140 MVA compared to 5,740 MVA of the original target or 141
percent higher than what was expected at appraisal. The cost
efficiency resulted from competitive international bidding carried
out by the PLN.
35. The loan closing date was extended by 46 months from the
original date because of (a) additional subprojects to use the
project savings, (b) additional component on hydropower project
preparation, and (c) project delays in the construction of
substations’ expansion and completion of the Poko HPP FS and ESIA
studies. The project delays were considered in the economic
evaluation and the project remains economically viable against the
scenario.
D. JUSTIFICATION OF OVERALL OUTCOME RATING
36. The overall outcome rating is considered Moderately
Satisfactory. Though there were project restructurings, the split
rating for assessing the project outcome is not applied. The PDO
had basically remained the same and the only change was due to the
addition of a new component. The additional component on hydropower
project preparation had no impact on the original PDO outcomes. The
Moderately Satisfactory outcome rating is based on (a) High rating
for the PDO relevance to the CPF at appraisal and the current CPF
(FY16–FY20), (b) Substantial rating for the overall efficacy, and
(c) Substantial rating for Efficiency for the whole Project.
Referring to the Implementation Completion and Results Report (ICR)
guideline on deriving the overall outcome rating, the above ratings
may lead to a Satisfactory rating. However, Moderately Satisfactory
has been considered based on the consideration that achievement of
the outcomes on the objectives to meet the growing electricity
demand and improve reliability of electricity supply cannot be
fully attributed to the project (see M&E section). Rating is
also supported by the fact that the intermediate results indicators
were fully attributed by the project and the outcome indicator for
the objective to prepare hydropower project has been achieved. The
hydropower project will be able to move to the tendering stage,
once a few key decisions are made by the PLN on
development/implementation aspects, such as tender strategy and
contract packaging and, most importantly, whether to develop it
publicly or privately.
E. OTHER OUTCOMES AND IMPACTS (IF ANY)
Gender
37. The project did not specifically target gender inequalities
in the country. Increased access to electricity is considered to
benefit both women and other vulnerable groups, however, regional
and global evidence suggests that women in particular benefit from
electricity as it extended both productive and leisure
activities.19
19 According to the East Asia and Pacific Companion to the World
Development Report 2012, ‘Toward Gender Equality in East Asia and
Pacific’, while lack of electricity affects both female and
male-led enterprises, evidence suggests that such constraints
may be more onerous among small and informal firms than among
larger firms and, therefore, may constrain female -led
enterprises disproportionately. In Indonesia, female-led
enterprises tend to be smaller, more precarious, less capital
-intensive,
and less productive than male-led enterprises (Indonesia Country
Gender Action Plan). Furthermore, having access to electricity
extends the hours available for both productive and leisure
activities, particularly for women and girls (World Bank 2012).
-
The World Bank Indonesia Power Transmission Development Project
(P117323)
Page 23 of 64
Institutional Strengthening
38. The project provided training to the PLN staff on areas such
as environmental safeguards, procurement, FM, and hydropower
project preparation, which significantly improved the PLN’s
capacity in dealing with the preparation and implementation of
investment projects. The trainings and actual works in the
implementation of the IPTD Project have increased the knowledge and
experience of the PLN staff in managing a project financed by an
IFI such as the World Bank. The PLN staff also learned from the
international consultants in preparing the FS and safeguards
documentation on hydropower projects. Increased capacity of the PLN
staff from implementing the IPTD Project was later useful in the
implementation of loan savings and the World Bank’s subsequence
projects with the PLN. For example, it took more than 12 months to
complete the procurement of original scope of works, from the bid
issuance in July 2011 until contract signing in October 2012. The
procurement of subprojects to use savings could be completed only
in six months, from the bid issuance until contract signing. The
PLN staff, particularly young engineers, also indirectly had an
opportunity to learn from the technical/safeguards consultants and
project expert panel members on how to prepare a hydropower
project, through discussion and interactions during the preparation
of the FS and ESIA studies.
Mobilizing Private Sector Financing
39. The IPTD Project contributes to increase the capacity and
improve reliability of the transmission systems enabling additional
generation projects, including renewable energy projects which are
usually developed by the private sector. In addition, there are
some discussions on the financing of the Poko HPP and private
financing solutions are under consideration.
Poverty Reduction and Shared Prosperity
40. Poverty reduction and shared prosperity were supported by
the project, by way of increasing electricity supply to a
population of around 56 million through increased dispatch of
generated power (49 million in Java and 7 million in South-Central
Sumatra). The increased access is likely to be significant given
the increased dispatch. Without the project, the PLN had no option
but to engage in load shedding and curtailing connections of new
consumers. The project positively affected the rural poor, because
the substations would have only served areas where there was
substantial suppressed demand because of long waiting lists for
consumer connection. The project also improved the security of
supply and reduced losses of the power grids as a whole, providing
opportunities to the general public to be more productive and
prosperous.
Other Unintended Outcomes and Impacts
41. The IPTD Project loan was provided to the PLN from the MoF
through a Subsidiary Loan Agreement which created a long payment
process. Annually, the PLN will request approval of budget
allocation from the MoF. There is a requirement to verify payments
by the MoF, through its Investment Management System and State
Treasury Office. The MoF verification process, together with the
internal PLN process, has cumulatively created a long payment
process and delayed payment to contractors. Learning from this
situation, the World Bank team, with the support and direction from
the Country Management Unit, initiated a dialog with the MoF on the
possibility to provide a direct loan to state-owned enterprises
(SOEs), backed up with a sovereign guarantee provided by the MoF.
There would not be requirements to verify payments through the MoF.
SOEs would receive loan payments directly from
-
The World Bank Indonesia Power Transmission Development Project
(P117323)
Page 24 of 64
the World Bank. The Government has issued a Presidential Decree
for direct loans to SOEs. A Minister of Finance decree, which
stipulates detailed procedures for the issuance of Government
guarantees for direct loans to SOEs, was issued in October 2015.
Thus, this could be considered more as the project ’s unintended
impact to a wider multilateral donor lending program in Indonesia
including the World Bank, especially in the power sector. It could
also be credited as the proactivity of the task team.
III. KEY FACTORS THAT AFFECTED IMPLEMENTATION AND OUTCOME
A. KEY FACTORS DURING PREPARATION
42. The PAD covered all the requirements of the World Bank’s
preparation guidelines and was consistent with OP/BP 10.00
(Investment Project Financing).
Lessons Learned from Previous Projects
43. Lessons learned from the then ongoing Java-Bali Power Sector
Restructuring and Strengthening Project and similar projects in
other jurisdictions were reflected in the project design, such as
the following:
(a) The delays with the transmission lines in similar projects
are not unique. It has been known to happen with several other
transmission projects in the country where the land acquisition for
the transmission right-of-way caused or is causing delays in
project implementation. It is therefore important to include
provisions for these safeguard issues in the project design and
allow time either during project preparation or during
implementation to increase the certainty of the time frame of the
project. During the selection of subprojects, prioritization was
made on the substation expansion which would only use the PLN’s
existing land and not require new or additional land acquisition,
and only few substations required land acquisition for the
expansion. This lesson helped the project avoid any potential delay
because of the land acquisition process, though there was a
significant delay during the project implementation because of the
contract management issue.
(b) Organizational changes may lead to delays in project
implementation. Organizational changes therefore need to be
followed immediately by making human resources available for timely
and effective project monitoring during implementation. These
changes in organization might require some changes in the way the
project is implemented (changes in the operation manual) to adjust
implementation arrangements to the new organization of the
implementing entity.
Processing of Project Preparation
44. The project was prepared and appraised in 3.5 months under
an express track (Track 1) with fewer clearances—obtain agreement
at concept stage to proceed with preparation/appraisal, no formal
decision meeting, and no control point until completion of
appraisal—and simpler documentation (simpler PAD with fewer
annexes). The decision to use the Track 1 process was taken during
the Project Concept Note Review Meeting after considering that the
IPTD Project had low to moderate overall preparation risk. The PAD
is considered short compared to a normal PAD under the Track 2
process. For
-
The World Bank Indonesia Power Transmission Development Project
(P117323)
Page 25 of 64
example, there was no descriptive information on the analysis
and assumptions to design the RF. Short time of preparation had
caused some implementation issues as described in para. 46.
Flexibility of Project Design
45. The project has very little flexibility in adding new
subprojects of similar nature compared with other World Bank
projects of similar design. Any additional subprojects during
implementation would prompt a project restructuring. This issue was
raised by peer reviewers at appraisal, but the team decided to
stick to its decision. However, the project had developed selection
criteria on technical, safeguards, and economics which were defined
in the Project Agreement to allow inclusion of new subprojects
during the implementation. These criteria were later used for the
selection of subprojects to use the project savings.
Readiness for Implementation
46. The project preparation commenced in end-2009 and appraisal
was completed in March 2010. The Loan Agreement was signed on
November 18, 2010, and was declared effective on May 30, 2011. The
selection of subprojects and drafting of the bidding document were
carried out during project preparation for implementation
readiness. The bid was launched on July 6, 2011, and the contracts
were signed in October 2012, or about two years after the loan
signing. Due to the short project preparation period, the project
was not fully ready (according to World Bank standards in similar
projects) at appraisal and it had impacts and created delays in
implementation. In particular, there could have been potential
timesaving if the PLN had commenced the bidding process before
signing the loan through retroactive procurement and signing the
contracts only after loan effectiveness. This approach was applied
for the bidding of subprojects to use the project savings.
Procurement started in January 2016 before the amendment of loan
agreement on June 30, 2016. The contracts were signed in July 2016,
just a month after the amendment of the loan agreement.
Risks and Mitigation Measures Considered During Project
Preparation
47. The project was considered technically simple and was
implemented by an established power utility which had implemented
many similar projects under its own budget. The overall project
risks were considered Moderate. Preparation risk was rated Low
because the project design was considered simple and ready for
implementation. Implementation risks are rated Moderate in case of
unanticipated delays in International Competitive Bidding (ICB)
procurement, financial reporting, and payments to the contractors,
as well as the possible failure to implement the safeguards
policies. Appropriate mitigation measures were in place to address
these risks which will be monitored throughout implementation. The
team had adequately identified the most relevant risks to the
project through an Operational Risk Assessment Framework tool,
which was prepared during appraisal. Implementing agency risk and
project safeguards risk was rated medium whereas other risks, such
as project stakeholder, design, program and donor, and delivery
quality risks, were rated Low.
48. Procurement risk was rated Moderate, as described in the
PAD. The PLN was considered to be familiar with the World Bank
procurement procedures through its experience with implementing
past projects financed by the World Bank. Only one type of
procurement (ICB) was envisaged, and all contracts were subject to
prior review. Mitigation measure for procurement risk: The PLN
would include the World Bank guidelines in its Procurement Manual
for procurement using loan funds. A Procurement Committee
-
The World Bank Indonesia Power Transmission Development Project
(P117323)
Page 26 of 64
would be established with qualified and adequate members. A
Procurement Plan will be submitted by the PLN for progress
monitoring.
49. Reassessment of the project’s risks was carried out during
the implementation. The risks related to the PLN’s capability to
deliver the project were rated higher compared to the assessment
during appraisal. Institutional capacity for implementation was
rated Substantial. The risk on technical design of project was
rated Moderate. The increased rating was because of the additional
scope of the hydropower project preparation. Higher risk on
institutional capacity for implementation was mitigated by the task
team by conducting informal supervisions, between two formal
implementation support missions. During the last 12 months before
the project closure, the team conducted monthly meetings with the
PLN to monitor and ensure that implementation progress was on track
and that the payments to contractors were being processed on time.
Specific monitoring on disbursement by the team was also carried
out to make sure that all payments would be processed in time
before the disbursement deadline date.
B. KEY FACTORS DURING IMPLEMENTATION
50. The project was approved in May 2010 and was made effective
with a one-year delay in May 2011. Compared with other projects of
similar nature and given the fact that it was the PLN’s first
project with the World Bank after long period, this gap between
approval and effectiveness dates was not unusual. Delays to
effectiveness were also due to the provision of legal opinion which
was obtained from the Ministry of Law. Since its effectiveness, the
project continued to face implementation challenges, including
significant delays in the delivery of all the contracts. Key
factors affecting implementation are detailed in the following
paragraphs.
Factors Subject to PLN Control
51. Changes to technical specifications and scope of works
during early implementation caused significant delays. There was
nearly a two-year gap between preparation of the technical design
and bidding documents during project preparation and the contracts
signing. During that time, to anticipate high and unpredictable
electricity demand growth, the PLN was forced to upgrade and
install new transformers for the substations which reached critical
capacity, including in some substations which were selected as
subprojects under the IPTD Project. When the contractors commenced
the works, they found out that the actual condition of the
substations was different from the technical and bidding document
because the PLN has installed equipment or modified the
substations. A survey of recent existing conditions was carried out
by the PLN and contractors, followed by a contract amendment to
accommodate changes in technical specifications and scope of works.
It caused the first delay in the construction of substations
expansions for both the Java and Sumatra components. Considering
the urgency for the PLN to take immediate actions to meet the
growing electricity demand and the time needed for the procurement
process, the selection of subprojects did not include any
substation that had nearly reached its critical capacity. This
lesson was taken into consideration during preparation of
subproject selection to use the loan savings. Before issuing the
bid document, a final check was carried out by the PLN to ensure
that the recent substations ’ condition was reflected in the
technical design and bidding document.
52. The completion time of various contracts was routinely
underestimated for which numerous extensions were granted only to
be replaced by another after several months. Also, the delays were
only
-
The World Bank Indonesia Power Transmission Development Project
(P117323)
Page 27 of 64
highlighted when the ‘time for completion’ had exceeded. The
previous quarterly progress reports (QPRs) prepared by the client
did not provide sufficient indications or warnings of impending
completion delays.
53. Contract validity. Because the contracts are considered
valid and do not cease at the expiry of the ‘time for completion’,
payments were withheld, and work was stopped at the sites when the
time for completion was exhausted. This was based on a mistaken
notion by the PLN’s Treasury Division, which is in charge of
payment to vendors, that the contract had expired even though the
‘General Conditions of Contract’ under the World Bank’s bidding
documents (GEC 26.2) lays down steps that could have been taken
when the time for completion ended. This issue was identified for
the first time in 2014 when the first contract extension was
required. The PLN and the task team routinely monitored the status
for each contract and tried their best to start processing the
contract amendment for time extension before the expiry of contract
validity.
54. Delays in custom clearances. Though it was a standard
procedure, the preparation of a ‘Master List’20 of all imported
items to be issued by the customs authority caused delays. The PLN
was responsible for obtaining approval of the Master List with the
supporting documentation to be prepared by the contractors. It took
a while for the PLN and the contractors to prepare the required
documentation to obtain the approval.
55. Delays in contracting a firm for the ESIA. Because of the
delay in contracting a firm to carry out the ESIA for the Poko HPP
development, the project had to be given an additional extension of
the closing date to carry out the ESIA and various baseline
studies.
56. Uninterrupted payments to contractors. The payments to
contractors were not processed even after delivery of satisfactory
work. The average number of days from invoice submission by vendors
until payments were made by the World Bank was high, in the range
of 42–133 days.21 Many factors contributed to this issue: (a) delay
of the annual project budget approval from the MoF, which was
partly beyond the PLN’s control; (b) incomplete documentation
submitted by contractors; (c) delays in submission of the
supporting documents from project office in the regional area to
Treasury Division in the headquarters office; (d) delays in getting
the regional director’s clearance for payments (the Treasury
Division would not process without clearance from the regional
directorate, which supervises the implementation of each contract);
(e) delays in completing the Government’s document requirements;
and (f) delays in verification by th