WB approves loan of $373m to Indonesia

WB approves loan of $373m to Indonesia

WASHINGTON (Reuter): Indonesia won approval for a US$373 million loan from the World Bank to help expand the country's electricity grid, compensate people affected by power projects, and support reform of the power sector, the bank said on Wednesday.

The loan, repayable in 20 years, will help finance a $649 million project to build new transmission lines in Java, ease electricity bottlenecks in Jakarta and Central Java and connect 420,000 new consumers in Java and Bali in 1997.

State electricity corporation PLN will have to double its high power transmission lines and triple its medium-voltage distribution lines to meet rapidly growing electricity demand by 2010, the World Bank said.

The new Java power lines will be crucial for Indonesia's first private power plant, Paiton I, which is due to start up in September 1998.

The bank said it would provide technical assistance in engineering design and construction, training for PLN to meet international standards, and advice on restructuring PLN into transmission and distribution units.

The World Bank is reviewing PLN's new policy to ensure that people who have to make way for power line construction projects are compensated or resettled to ensure their standard of living is improved or at least maintained.

About $2 million of the World Bank's loan will go to Indonesia's Ministry of Mines and Energy to help it set up a new regulatory framework for electricity and train staff.