Tue, 13 Jul 2010

Washington DC, July 8, 2010 The World Bank is set to help Indonesia meet its growing electricity demand and make electricity supplies in Java and south-central Sumatra more reliable, through a newly approved financing package worth US$ 225 million. The project entails direct cooperation with Indonesia’s state electric company, PLN, and once successfully implemented, is expected to benefit over 56 million people in Java and Sumatra. It is also expected to play an important role in supporting economic growth in both islands over the medium to long term

“A reliable and sustainable supply of electricity is essential for Indonesia to realize its potential as a large middle-income economic power. At present however, Indonesia’s economy is growing at a pace that exceeds its ability to provide electricity. To keep up with demand, electrification rates would need to grow at a rate of around seven percent per year,” said Chris Hoban, Acting Country Director for the World Bank in Indonesia. “This project to help strengthen electricity supply in Java and Sumatra is expected to have a very positive impact on the business climate in the long run..”

For the Java-Bali Transmission System, the project involves:

* Expanding four existing 500 / 150 kV substations and up to twenty-five existing 150 / 20 kV substations
* Constructing one new 150 / 20 kV substation

Whereas for the South-Central Sumatra Transmission System the project involves:

* Expanding and upgrading five existing 150 kV substations to 275 kV
* Expanding up to fifteen 150 / 20 kV substations

“These various expansions and upgrades are expected to boost PLN subscriptions and in turn help the Indonesian government reach its target to electrify more than 90 percent of the population by 2020. This means connecting to roughly two million new subscribers each year,” said Leiping Wang, the World Bank’s Senior Energy Specialist in charge of the project team. “Strengthened transmission systems in Java and south-central Sumatra would also lead to a reduction in transmission interruptions and transmission losses.”

Over the next few years, the World Bank’s power sector strategy will follow three major themes:

* Financing public sector power infrastructure projects to sustain economic growth and increase electricity access for the poor.
* Ensuring the financial sustainability and improving the efficiency of the national power companies.
* Moving the sector towards an environmentally friendly and low-carbon development path.