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1 Republic of Indonesia Transmission Line Construction Project in Java-Bali

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1 Republic of Indonesia Transmission Line Construction Project in Java-Bali Republic of Indonesia Transmission Line Construction Project in Java-Bali (I), (II), and (III) External Evaluator: Kenji Momota (IC Net Limited) Field Survey: February 2009 1. Project Profile and Japan’s ODA Loan Map of project area Depok III substation 1.1 Background In 1995 at the Java-Bali Grid, which supplies power to Java Island and Bali Island in Indonesia, growth in annual power demand was at a record high—well over 10%—as a result of rapid economic development. Power demand has increased to about 80% of the entire power demand in Indonesia, and the country had previously planned to enhance their power generating infrastructure to 20,000MW by 2005 in order to meet this growth. Nearly 50% of the power demand distribution for the Java-Bali Grid is concentrated in West Java, where Jakarta, the capital city of Indonesia, is located. However, the power source in the West is incapable of supplying sufficient power to the area, while the capacity of the power source in the East is more than enough.1 It was thought that this geological imbalance would continue or even worsen in the future. Until now, the Java-Bali Grid has used an ultrahigh voltage transmission system that crosses east-west on the Northern Coast. Nonetheless, it is vital to further expand the capacity of the power grid in considering power-generating infrastructure improvement projects and the growth in power demand. This project aims to ensure an effective power transmission system for the area of power consumption that lies in the East/Central region and Western region of Java Island. This would be done by reinforcing the 500kV transmission line installed east to west along the South coast of Java Island, thereby boosting the stability and reliability of the transmission system. 1 Major power sources have been constructed in Eastern and Western Java, including the country’s largest power plants: Paiton Coal-Fired Power Plant (4,720MW) and Tanjung Jati Coal-Fired Thermal Power Station (2,640MW). 1 1.2 Objective The objective of this project is to secure efficient and stable transmission of power and improve the geological imbalance in power supply and demand, and thereby contribute to cover the rapid growth of power demand at the project site. The project consists of construction of a 500 kV transmission line between the Paiton substation on the east coast of Java and the Depok III on the outskirts of the state capital, in addition to construction of related substations. The east coast of Java Island has abundant power sources and Jakarta is in the major power-consuming area. This project shall thereby help promote industrial development in the area and improve living conditions for local residents. Fig 1 Overview of the Java-Bali Grid and project area SLAYA LNT AR 2010 BLRJA ID MYU CLGON KMBNG MRTWR 20 0 9 CWANG 2009/10 Tanjung Jati Power Station(2,640MW) TJ AT I.A /C LBUAN 20 1 4 /1 5 CB A TU 2009 LKONG 2015 BK AS I Java GNDUL CRATA Island TJATI CIBNG PMLN G D EPOK 20 1 4 /1 5 SGLN G MDCAN PMLN G TAWAR CS KA N BDSLN 2014 20 1 0 20 1 3 LGDAR RC KE K GRSIK 2010 UNGAR PR AT U 2010 Paiton Power Station(4,720MW 2010 SBBR T NGB NG SBLTN Depok III substation RWALO 2010 2010/11 2011 CLCAP GRATI 20 1 1 PI TON Bali New Tasikmalaya Island KDBRU 2011 PCTAN 20 1 0 KA PA L 2011 Project Area New Klaten Source: Created based on data provided by the State Electricity Company (PT. PLN) 1.3 Borrower/Executing Agency Borrower: Republic of Indonesia Executing agency: State Electricity Company (Perusahaan Listrik Negara, PT. PLN) 1.4 Outline of the Loan Agreement Approved Amount/Disbursed Total: 30,795 million yen/20,563 million yen Amount Phase I: 17,037 million yen /16,261 million yen Phase II: 2,840 million yen/1,638 million yen Phase III: 10,918 million yen /2,664 million yen Exchange of Notes/Loan Phase I: December 1995/ December1995 Agreement Phase II: December 1996/December 1996 Phase III: November 1997/January 1998 2 Terms and Conditions Phase I: Interest rate: 2.5% Phase II: Interest rate: 2.7% Phase III: Interest rate: 2.7% Consultant Services: Interest rate: 2.3% Repayment period (Grace Period): 30 years (10 years), General untied Final Disbursement Date Phase I: June 2006 Phase II: June 2005 Phase III: November 2005 Main Contractors (Over 1 billion Asea Brown Boveriaktiengesellschaft (Germany) yen) /Balfour Beatty Group Ltd. (UK), PT. Balfour Beatty Sakti (Indonesia) / PT. Multifabrindo Gemilang (Indonesia), Alstom T&D SA (France), and Mitsubishi Electric Corporation Main Consultant (Over 100 million Newjec Inc., PB Power Ltd. (UK), PT. Connyusa yen) Energindo (Indonesia), PT. Trimitra Nusa Engineering (Indonesia) Feasibility Studies, etc. 2. Evaluation Results (Rating: B) 2.1 Relevance (Rating: a) 2.1.1 Relevance at Appraisal For the sixth Five-Year Development Plan (1994-1998), the original target was to improve the reliability of the power supply and develop power sources based on state policy, which aimed to create a post-petroleum paradigm. Consequently, power source development and construction of a transmission line were planned based on the abundance of resources in each area. Actually, power demand for the Java-Bali Grid at the time of appraisal was increasing by 10% annually (1991-1995); therefore, development of power sources and improvement of the distribution grid were indispensable to meet rapidly increasing power demand. Further, the Java-Bali Grid suffered from an imbalance in supply and demand between the Eastern/Central region and Western region (See 1.1 “Background” for details). Therefore, improvement and expansion of an efficient power grid between east and west was urgent. This project was therefore highly relevant. 3 2.1.2 Relevance at Ex-Post Evaluation The current Yudhoyono administration is carrying out a policy to improve investment conditions and build infrastructure under the National Mid-term Development Plan (RJPM Nasional 2004-2009), which calls for state development through economical, political, social, and legal reform. As part of this policy, the administration has also prioritized infrastructure development as a key policy for stabilizing power supply. The ongoing policy of the General National Power Plan (RUKN), designed to put the RJPM Nasional in more concrete terms, emphasized the necessity of further expansion in power generation and the power grid. Actually, the government of Indonesia plans to invest 7.68 billion dollars over the next decade to expand power generation capacity and the power grid in order to meet ever-increasing power demand. As a matter of fact, growth in power demand for the Java-Bali Grid, although the growth turns slower, has continued to grow at an annual rate of 3 to 5% since project appraisal. Table 1 Trend in power demand for the Java-Bali Grid 2004 2005 2006 2007 2008* Installed capacity MW 19,466 19,466 22,126 22,236 22,296 Net capacity MW 15,741 15,741 17,960 20,309 20,369 Gross peak load MW 14,920 15,359 15,954 16,840 16,892 Net peak load MW 14,398 14,821 15,396 16,251 16,301 Growth rate % 5.2 2.9 3.9 5.6 0.3 Source: The Electrical Power Supply Business Plan (RUPTL) 2009-2018 Further, imbalances in power supply and demand between the Eastern and Western regions still remain. Although the power source distribution ratio is balanced between the Eastern/Central region and the Western region, power demand in the Jakarta metropolitan area and West Java is believed to account for more than 60% of the entire Java-Bali Grid, even looking ahead to the period up to 2015. Fig. 2 shows the ratio between power demand and installed capacity allocated in the metropolitan area, West Java, Central Java, and Eastern Java. In contrast to the metropolitan area and Western region (which accounts 63% of whole consumption), installed capacity is nearly balanced between the metropolitan/Western region and Central/Eastern Java, suggesting an imbalance in supply and demand. Also, as Fig. 3 shows, the outlook for power demand through 2015 assumes that this imbalance will continue for quite a while. 4 Fig 2 Supply/demand balance between regions Fig 3 Outlook for power demand for the Jakarta/Western Java Central/East Java Java-Bali Grid by region 100% 2% 3% 3% 90% 20% 20% 20% Power demand 63% 37% 80% 70% 14% 14% 15% 60% 50% 34% 34% 34% 40% 30% 20% Installed capacity 52% 48% 10% 29% 29% 28% 0% 2009 2010 2015 Source: Created based on data provided by PLN Jakarta West Java Central Java East Java Bali Source: The Electrical Power Supply Business Plan (RUPTL) 2009 - 2018 As described above, the imbalance between power source distribution and power demand remains unsolved in the face of ever-increasing power demand. Therefore, the importance of a trunk power grid remains high for supplying power from the Eastern region to the Western region.2 This project has been highly relevant with Indonesia’s national policies and development needs at the time of both appraisal and ex-post evaluation. 2.2 Efficiency (Rating: b) 2.2.1 Project Outputs Table 2 shows the plan and actual output of this project. Major changes are as described below: (1) Installation of a 500kV transmission line: total length of the transmission line was changed and additional materials were procured. This was due to a change in the installation route. (2) Construction of Rawalo Baru substation: cancelled (3) Construction of 150kV transmission line: cancelled 2 According to a PLN deputy director in charge of construction management, power supply to Western Java is a one of the most pressing issues for the Java-Bali Grid.
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