Document of

The World Bank

FOR OFFICIAL USE ONLY

Report No.: 17606

IMPLEMENTATION COMPLETION REPORT

INDONESIA

POWER TRANSMISSION PROJECT

(LOAN 3349-IND)

March 30, 1998

Energy and Mining Sector UnitEast Asia and Pacific Region

This document has a restricted distribution and may be used by recipients only in theperformance of their official duties. Its contents may not otherwise be disclosed withoutWorld 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

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

Currency Unit = Indonesian Rupiah (Rp)US$ 1.00 = Rp 8,000Rp 1,000 = US$ 0.125

WEIGHTS AND MEASURES

1 metric ton (t) = 1.00 kilograms (kg)

1 liter (1) = 0.0063 barrels (bbi)1 kilometer (km) = 0.6215 miles (mi)1 kilovolt (kV) = 1,000 volts (V)1 Megavolt-ampere (MVA) = 1,000 kilovolt-amperes (kVa)1 Megawatt (MW) = 1,000 kilowatts (kW)1 Gigawatt hour (GWh) 1 million kilowatt hours (kWh)

FISCAL YEAR OF BORROWER

April 1 - March 31

FISCAL YEAR OF IMPLEMENTING AGENCY

January 1 - December 31

ABBREVIATIONS AND ACRONYMS

ADB Asian Development BankGOI Government of IndonesiaDSC Debt Service CoverageEIRR Economic Internal Rate of ReturnICCF Industrial Consumers Connection FundIDC Interest During ConstructionIMF Intemational Monetary FundPLN State Electrcitv Corporation [PT PLN(Persero)]ROR Rate of Return

Regional Vice President: Jean-Michel Severino, EAPCountry Director: Dennis De Tray, EACIFSector Manager: Yoshihiko Sumi, EASEGTask Manager: Yuling Zhou, EASEG

FOR OFFICIAL USE ONLY

Table of Contents

Preface .............. iEvaluation Summary ............. ii

Part I Project Implementation Assessment

A. Statement/Evaluation of Objectives .B. Achievement of Objectives .2C. Major Factors Affecting the Project .7D. Project Sustainability .8E. Bank Performance .9F. Borrower Performance .................. 9G. Assessment of Outcome .0H. Future Operations .10I. Key Lessons Learned .10

Part II Statistical Tables

Table 1: Summary of Assessments .13Table 2: Related Bank Loans/Credits .14Table 3: Project Timetable .17Table 4: Loan Disbursements .17Table 5: Key Indicators for Project Implementation .18Table 6: Key Indicators for Project Operation .18Table 7: Studies included in the Project .19Table 8A: Project Costs .20Table 8B: Project Financing .21Table 9: Economic Costs & Benefits (EIRR) .21Table 10: Status of Legal Covenants .22Table 11: Compliance with Operational Manual Statements .23Table 12: Bank Resources: Staff Inputs .23Table 13: Bank Resources: Missions .24

AnnexesAnnex 1. Mission's Aide Memoire .25Annex 2. Operations Plan .29Annex 3. Borrower's Evaluation Report .31Annex 4. Ex-post Calculation of Economic Internal Rate of Return .34Annex 5. PLN's Key Financial Indicators .36

Map: IBRD No. 22597

This document has a restricted distribution and may be used by recipients only in theperformance of their official duties. Its contents may not otherwise be disclosed withoutWorld Bank authorization.

i

IMPLEMENTATION COMPLETION REPORT

INDONESIA

POWER TRANSMISSION PROJECT

(LOAN NO. 3349-IND)

PREFACE

This is the Implementation Completion Report (ICR) for the Power TransmissionProject in Indonesia, for which Loan No. 3349-IND, in the amount of US$ 275 millionequivalent was approved on June 19, 1991 and made effective on November 4, 1991.

The loan closing date was extended by nine months, to September 30, 1997(original closing date was December 31, 1996). A partial loan proceeds cancellation in theamount of US$ 103.4 million was made in November 1994. The loan account was closedin March 1998, with an undisbursed balance of US$ 8.9 million canceled.

The ICR was prepared by Yuling Zhou, Operations Officer, and Kurt Schenk,Power Specialist", EASEG, and endorsed by Yoshihiko Sumi, Sector Manager, EASEG,and Dennis De Tray, Country Director, EACIF.

Preparation of this ICR was begun in August 1997 prior to the Bank's ICRmission to Indonesia in November 1997. It is based on materials in the project file, and oninformation and comments provided by the implementing agency, PT PLN (Persero). Theaide memoire of the ICR mission is attached as Annex A. The borrower's own evaluationreport is attached as Annex C.

ii

INDONESIA

POWER TRANSMISSION PROJECT

(LOAN NO. 3349-IND)

EVALUATION SUMMARY

Introduction

1. Bank involvement in the electricity subsector in Indonesia began in 1968. For thefirst two decades, the focus was first on the creation of a national electric utility (whichoccurred in 1972) and then on system expansion. By the time of the late eighties,attention was lbeginning to shift more to sectoral efficiency. The Power TransmissionProject supported not only the traditional objective of system development by financingPLN's transmission network expansion needs, but also the institutional developmentobjective through technical assistance. The total amount of the loan was US$ 275.0nmillion. The loan was signed on August 8, 1991, and became effective on November 4,1991. The loan closing date was extended by nine months to September 30, 1997.

Project Objectives

2. The overall objective of the project was to expand, strengthen and upgrade thetransmission facilities for the Java-Bali system to supply electricity to new consumers andto meet increases in electricity demand arising from existing and new consumers. Tosupport this overall objective, the project had three specific objectives:

(i) Physical objective: to ensure that investments in power transmission facilitiesproceed at an appropriate level to supply electricity to new consumers and tomeet increase in electricity demand in Java, by strengthening and upgradingthe Java-Bali transmission system.

(ii) Institutional objective: to improve PLN's capability in long-term planning oftransmission systems, by providing technical assistance in long-termdevelopment of the transmission system in Java-Bali.

(iii) Financial objective: to promote measures for strengthening PLN's financialposition by establishing an institutional mechanism to review and advise theGovernment on all price adjustments in the energy sector.

iii

3. The objectives remained unchanged for the duration of the project. They wereimportant, clear and, for the most part, realistic.

Implementation Experience and Results

4. The project's outcome was satisfactory. It was successful in substantiallyachieving physical and institutional objectives. These achievements would seem to belikely sustainable. Physical program targets were generally met, though not on time insome cases. The technical assistance components were in general successful. The re-estimated economic internal rate of return (EIRR) is 17.7 percent, slightly above theSAR's estimate of 17 percent.

5. The actual cost of the project (excluding Interest During Construction -- IDC) wasUS$ 240.0 million, compared to the appraisal estimate of US$ 355.9 million. The maincost difference was on the transmission investment component, where much-lower-than-expected contract prices were obtained after bidding. This cost savings resulted in a largecancellation of the loan in the amount of US$ 103.4 million in December 1994 upon therequest of the Borrower. The remaining undisbursed balance of about US$ 8.9 million wascanceled in March 1998 when the loan account was closed.

6. Project implementation experienced a delay of about one and a half yearscompared to the SAR estimate of time for physical completion in March 1996. This delaywas mainly caused by procurement delays and difficulties in acquisition of land fortransmission substations and obtaining of right of ways for transmission lines.

7. Both the Bank's and the Borrower's performance under the project has generallybeen satisfactory.

Summary of Findings, Future Operations, and Key Lessons Learned

8. The outcome of the project is satisfactory. The project met most of its physical,institutional objectives and the benefits from the project are likely to be sustainable.

9. It is expected that the project will be operated as planned. The physicalcomponents have been taken over by PLN's various operational departments, become anintegrated part of PLN's operations and will be productive for many years. Results andrecommendations from the technical assistance have already been or are beingincorporated into PLN's planning practices. The Bank will continue to monitor theproject's operation through its on-going lending and institutional development programsand policy dialogue with GOI/PLN. Operational plans to ensure the sustainability of theoutcome achieved under the project were discussed with PLN during the ICR mission andare attached to this ICR.

10. Several specific key lessons, which have operational implications for the design offuture power sector projects, can be drawn from this project:

iv

(a) Establishment of a central Project Management Unit (PMU) at PLN headoffice could have benefited the overall project coordination and accountability.

(b) Cumbersome procurement processes are a leading cause of projectimpleimentation delays: PLN's procurement process results in a lengthyprocurement cycle adding delays and unnecessary costs to projects that itundertakes. Speedier procurement processing and more efficient inventorymanagement and materials handling are key to increasing the efficiency of itsinvestment program.

(c) Action on land acquisition should be taken early on during projectpreparation stage: To ensure smooth project implementation, land acquisitionshould be completed before the project implementation starts, or a realistic andconcrete time-bound action plan should be developed and followed throughwith close monitoring from both the Bank and the implementing agency.

(d) Performance targets: While the output targets were satisfactorily achieved, theproject did not have any outcome or impact indicators to measure theperformance of PLN's power transmission system in Java. Explicit performancemonitoring has since built in the Bank's most recent transmission project, theSecond Power Transmission and Distribution Project, which includes broaderoutcorne targets, such as transmission losses and outages, in addition to theconventional output or construction targets.

(e) Focus on organization rather than just on studies or planning: Theproject's focus on institutional development solely through a system planningstudy can in hindsight be viewed as overly narrow. The importance of broaderorganizational issues for transmission performance was recognized under therecent Second Power Transmission and Distribution Project which is supportingthe establishment of an "investment center" within PLN to have overall

-- responsibility for PLN's transmission planning, construction and operation inJava. This arrangement is expected to lead to major improvement in PLN'stransmission development coordination and performance.

(f) More attention should be given on accurate cost estimate: A large portionof the loan (about 40%) was canceled. Given that the physical constructionactivities have been basically completed, the substantial cancellations do raisequestions on the accuracy of cost estimates. While international competitivebidding may have resulted in lower-than-expected contract prices, overconservative cost estimate may have been the main reason for the cancellations.More attention should therefore be given in future projects on the accuracy ofcost estimate and on application of contingencies. Furthermore, projectdescriptions in the legal agreements should be more flexible to allow utilizationof cost savings towards meeting the broad project objectives.

POWER TRANSMISSION PROJECT(LOAN 3349-IND)

PART I. PROJECT IMPLEMENTATION ASSESSMENT

A. STATEMENT/EVALUATION OF OBJECTIVES

1. The main objective of the project was to meet the increasing electricity demand inthe Java island of Indonesia by strengthening and upgrading the Java-Bali transmissionsystem. The project had three main objectives:

(I) Physical objective: to ensure that investments in power transmission facilitiesproceed at an appropriate level to supply electricity to new consumers and tomeet increases in electricity demand in Java, by strengthening and upgradingthe Java-Bali transmission system:

(a) by extending about 41 existing substations of 150 kV and 70 kV,;including addition of transforming capacity of about 1,870 MVA;

(b) by constructing about 18 new substations of 150 kV, includingtransforming capacity of about 1,150 MVA;

(c) by installing reactive power compensation equipment of about 350MVAR in about 29 substations;

(d) by acquiring about two mobile substations of 150/20 kV, with totalcapacity of about 40 MVA;

(e) by reconductoring about 6 route-km of 70 kV and about 51 route-km of150 kV transmission lines;

(f) by constructing about 241 route-km of 150 kV transmission lines,including about 14 km of underground lines;

(g) by constructing new substations and transmission lines for supplyingnew industrial consumers at 150 kV; and

(h) by establishing a special fund -- the Industrial Consumers ConnectionFund (ICCF) to finance the construction of new transmission facilitiesfor supplying industrial consumers.

- 2 -

(i) by providing technical assistance in engineering, design and constructionsupervision of substations and transmission lines included in the project.

(2) Institutional objective: to improve PLN's capability in long-term planning oftransmission systems, by providing technical assistance in long-termdevelopment of the transmission system in Java-Bali.

(3) Financial objective: to promote measures for strengthening PLN's financialposition.

2. The objectives remained unchanged for the duration of the project. They wereimportant, clear and, for the most part, realistic.

3.- Financial covenants: The Loan Agreement included financial covenants. Ofthese, the most important ones were to achieve annually an eight per cent rate of return onPLN's Java operations and to achieve break-even on PLN's outside-Java operationsbeginning FY1991/92. In 1994, both covenants were replaced under Loan 3761-IND(Sumatera and Kalimantan Power Project) by a single eight percent rate-of-returncovenant for PLN's entire operation in Indonesia.

B. ACHIIEVEMENT OF OBJECTIVES

Overall Project Objective

4. Overall objective: The overall objective of the project was to expand, strengthenand upgrade the transmission facilities for the Java-Bali system to supply electricity to newconsumers and to meet increases in electricity demand arising from existing and newconsumers. With the successful completion of the physical investment components of theproject, this overall objective has been substantially achieved.

5. Internal rate of return: For practical purposes, it is impossible to separate outthe benefits attributable to the individual power projects that form a part of a least-costinvestment plan. Project justification was therefore based in the SAR on PLN's entireinvestment program for Java for the time period, 1990/91-1994/95, of which the project'sinvestment component was envisaged to be a part. This delivered a forecast economicinternal rate of return (EIRR) of 17 percent. This EIRR has been recalculated usingupdated data for the period 1990/91-1996/97 which, due to implementation delays, is theperiod the project ended up covering. The re-estimated EIRR is 17.7 percent. Thedetailed ex-post EIRR calculation is presented in Annex D.

In addition, the project was also to provide technical assistance to PLN in identification and construction of newpower plants, including (i) engineering, design and construction supervision of Units 5, 6, and 7 of the Suralayacoal-fired power plant in West Java; and (ii) site selection and feasibilitv study for a new thermal power plantin West Java.

-3 -

Review of Physical Objectives

6. Extension of Existing Substations: A total of 52 existing substations of 150 kVand 70 kV were extended by adding new equipment and increasing transforming capacity.This has exceeded the SAR target of 41 substations. The transforming capacity addedwas 1,740 MVA, which fell a little short of the SAR target of 1,870 MVA.

7. Construction of New Substations: A total of 19 new substations of 150 kVwere built with a total transforming capacity of 1,270 MVA. They included 2 mobilesubstations of 150/20 kV with a total capacity of 40 MVA. This meets the original SARtargets.

8. Reactive Power Compensation Equipment: Reactive power compensationequipment (capacitors) of 350 MVAR was installed in 40 substations in Java. The originalSAR targets have been met.

9. Transmiission Lines: A total of 297.5 route-km of 150 kV transmission lines(including some underground lines) was planned to be constructed in 19 locations in Java.This length was based on a rough estimate after preliminary survey. Due to cancellationof three planned transmission lines during project implementation, the actual transmissionlines constructed accounted for 182 route-km (including 12 km 150 kV undergroundcables).

10. Industrial Consumers Connection Fund (ICCF): The project was also tosupport establishment of a special fund -- the Industrial Consumers Connection Fund(ICCF) -- of about US$20 million to finance construction of new transmission facilities forsupplying large industrial consumers at 150 kV. At the time of project appraisal, PLNrequired a lead time of about three years (from location of sources of finance,procurement of equipment and materials, to construction and erection of transmissionfacilities) to respond to requests from large industrial consumers for power supply. Theconcept behind the ICCF was to reduce or eliminate the time taken for location of fundsand procurement of equipment, so as to enable PLN to respond to consumer needs muchfaster. To this end, a portion of the fund was to be utilized for maintaining a revolvingstock of standard equipment and the balance of the fund was to be used for non-standardequipment and urgent requirements.

11. Implementation of the ICCF was not satisfactory. Out of the US$15 millionallocated from the Bank loan for setting-up of the ICCF, only US$6.6 million was utilizedmainly in West Java area and the balance was canceled upon the request of PLN.Although PLN also carried out a Large Consumer Connection Program (PKB) using itsown financing, the original idea of establishing a revolving stock of standard equipmentand materials was in fact not implemented. There are only about 50 150 kV customers inJava. These customers all require customized equipment so the helpfulness of establishinga revolving stock is questionable. Moreover, given the delays associated withprocurement under Bank financing, it is not clear that utilizing Bank financing would

-4 -

speed up customer connections. Finally, since a high-voltage connection is usuallyassociated with the construction of new facilities by the applicant, such as a new factory,its implementation period is typically a matter of years rather than months. Such a timeperiod should provide ample time for the procurement of the required equipment, whichagain calls into question the utility of the proposed revolving stock. It is noticeable thatthe SAR contained only one paragraph on the ICCF, and no reference to any studyproviding a justification or design.

12. It should be noted, however, that US$6.6 million spent under the ICCF componentwas not wasted. It was used to purchase equipment and materials which have beenutilized for connecting to large industrial consumers.

13. Compared to the original loan size (US$275 million, including US$30 millionunallocated, and US$220 million allocated for the physical components), a very largeportion (US$103.4 million, or 38percent of the total loan) was canceled, due to much-lower-than-expected contract prices after bidding and conservative cost estimates at theproject appraisal. Notwithstanding this large cancellation, the original physicalcomponents have been completed successfully.

14. A substantial delay (about one and a half years) was experienced duringimplementation, which led to an extension of the loan closing date by nine months. Thedelay was mainly caused by procurement delays and difficulties that PLN encountered inland acquisition -and obtaining right of ways in particular in the most populated anddeveloped West Java and Jakarta area. Another factor contributed to the delay wasinsufficient commissioning personnel (both in terms of quantity and quality) on projectsites.

15. The main shortcoming of the project design with regards to its physical objectiveswas the lack of any outcome or impact indicators as distinct from output indicators. Thus,while the output objectives of the project were all very satisfactorily achieved, it is verydifficult to say if the broader objective of strengthening and upgrading the Java-Balitransmission system was satisfactorily achieved. More recent analysis shows that whilethe transmission system has been expanded and significantly improved over the lastdecade, bottlenecks and overloading are still common, not surprisingly for a system withdemand growing at close to 15percent p.a. The Bank's more recent transmission project,the Second Power Transmission and Distribution Project, includes broader outcometargets such as transmission losses and outages to enable better tracking of performance.The loading of transformers and lines is also now being monitored.

-5 -

Review of Technical Assistance/Institutional Development Objectives

16. Engineering, design and construction supervision of substations andtransmission lines financed under the project: Three consulting contracts weresigned and executed in this connection respectively for the three subcomponents of WestJava/Jakarta, Central Java and East Java. All the contracts were started in late 1992 orearly 1993 but were terminated at different times. For the East Java subcomponent, theconsultants completed their work in end 1994 according to the original schedule, and theremaining construction supervision work (only for installation of transformers) wascontinued and completed by PLN staff. The West Java/Jakarta consultant contract wasextended once and ended in June 1997, while- the Central Java consultant contract wasextended twice- and finished in end September 1997. The consultants played an overallsupervisory and coordination role which was critical to the successful completion of thephysical invest:ment activities financed under the Project.

17. Engineering, design and construction supervision of several units of SuralayaThermal Power Plant: The consultant contract financed under the Project forengineering, design and construction supervision of Units 5, 6 and 7 of the Suralaya Coal-fired Power Plant was completed successfully. The remaining engineering activities aswell as construction were financed under Bank Loan No. 3501-IND for Suralaya ThermalPower Project. The Suralaya Power Plant is now commissioned and in operation.

18. Site selection and feasibility study for a new thermal power plant in WestJava: The feasibility study was successfully completed in March 1994. The outcome ofthe study was a recommendation for a 4800 (8x600) MW coal fired power plant inPangkalan, West Java. Prior to the recent financial crisis, this plant was included in PLN'sexpansion program to be constructed in four phases commencing in 2005.

19. Study for long-term development of the transmission system in Java-Bali:The study was completed with a final report submitted in February 1995 and revised inJanuary 1996. Under the study, the existing system operation, engineering and loadforecast were reviewed, network expansion was studied and preliminary project packagesand investment plans were developed. The consultant also conducted training of PLNstaff in transrnission and engineering techniques. Consequently, PLN's capability intransmission long-term planning was improved.

20. The study's recommendations are being taken into account particularly in finalizingthe 500 kV backbone (both the northern and the southern lines) in the PLN Java system.The study recommended not only the construction of 2 circuits for the entire northernroute in Java but also the construction of the 500 kV southern route (Paiton-Kediri-Klaten-Tasikmralaya-Jakarta) for improving East-West Java power transfers, voltagestability as well as voltage profiles in the southern reaches of the line. The Paiton-Kediri-Klaten portion of the southern line is being built under the Bank financed Second PowerTransmission and Distribution Project (Loan 3978-IND), while the rest is being builtunder Japanese OECF financing.

- 6 -

21. The Project's focus on institutional development solely through a planning studycan in hindsight be viewed as overly narrow. The importance of broader organizationalissues for transmission performance was recognized during preparation of the recentSecond Power Transmission and Distribution Project (Loan 3978-IND, approved inFebruary 1996) which is supporting the establishment of the Java-Bali ElectricityTransmission Unit (JABETU) within PLN to have overall responsibility for PLN'stransmission development and operation in Java. The combining of transmission planning,construction and operation into a single body is expected to lead to major improvementsin PLN's transmission development coordination and performance.

Review of Financial Objective

22. One of the objectives of the project was to promote measures for strengtheningPLN's financial position. However, it should be noted that the project did not include anyspecific component to achieve this objective. The idea was initiated during the projectpreparation and was pursued as part of the Bank's sectoral policy dialogue with GOI andPLN by the implementation of an automatic, quarterly electricity tariff adjustmentmechanism (ETAM). ETAM was designed by ADB-financed consultants, with the Bank'ssupport, and came into effect through a Presidential Decree in late 1994. This projectobjective has only been partially achieved. Although PLN's financial position showedimprovement over the project period (before it started to sharply deteriorate after loanclosing in late 1997 due to the sharp devaluation of the local currency, Rupiah), itsprofitability never reached target levels. ETAM delivered only small tariff increases (onlySpercent up to the end of 1997), and it became evident that reliance on ETAM will notavoid the need for substantial basic tariff increases. This is partly because of factors neverintended to be covered by ETAM (e.g., over-optimistic demand forecasts) and partlybecause of faulty design in ETAM itself (e.g., it provides only partial cost pass-throughand then only with a long lag).

23. It is now widely understood that ETAM alone will not be able to solve PLN'sfinancial difficulties. Also, a basic tariff increase but no revision to ETAM will onlypostpone the financial crisis for a year or two. Therefore, the Bank, during its sectordialogue, has been pursuing with the Government a revision to ETAM through a newPresidential Decree (Keppres). Such revision, being still under consideration, wouldembody the following assumptions:

* clear definition of base prices as prices in PLN budget of a selected referenceyear;

* clear definition of weights as derived from annual PLN budget;* weights to add to one to allow full cost pass-through;* clear definition of base price of IPP plants not in service at time of basic tariff

increase: base price for such plants should equal to an average IPP price.

- 7 -

Compliance wiith Financial Covenants

24. The Loan and Project Agreements provide essential legal covenants to facilitatesuccessful implementation of the project and successful operations of the implementingagency, PLN. Among the covenants were important financial covenants. Of these, themost important ones were to achieve annually an eight per cent rate of return on PLN'sJava operations and to achieve break-even on PLN's outside-Java operations beginningFY1991/92. The latter covenant was successively rolled-over. In 1994, both covenantswere replaced under Loan 3761-IND (Sumatera and Kalimantan Power Project) by asingle eight percent rate-of-return (ROR) covenant for PLN's entire operation inIndonesia. Another important financial covenant under the project was that PLN shouldnot incur any debt unless it achieves a forecast debt service coverage (DSC) ratio of atleast 1.5 times.

25. PLN has for some time not been in compliance with the rate of return covenant.The Government's reluctance to increase tariffs in the run-up to the Presidential election inMarch 1998 resulted in PLN's ROR for 1997 falling to 3.Opercent (6.8 percent for PLN'sJava operations), far below the covenanted 8.0 percent. Up to 1997, PLN was at least incompliance with the DSC ratio. However, in that year, the DSC ratio was estimated at1.3 times, below the covenanted 1.5 times. PLN's key financial indicators in recent yearsare given in Annex E.

26. With the collapse since November 1997 in the value of the Rupiah, PLN's financialposition has further deteriorated significantly. As part of the rescue package negotiatedwith the RMF, the Government has agreed to remove all electricity subsidies over thecoming three years, starting with sizable tariff increase on April 1, 1998. Implementationof this agreement will be crucial to restoring PLN's financial health, and will be closelymonitored by Bank staff.

C. MAJOR FACTORS AFFECTING THE PROJECT

Implementation Record

27. The implementation of the project was satisfactory. Physical and technicalassistance project components were completed, and the original targets were met.Implementation was, however, characterized by substantial delays (one and a half years).To accommodate the implementation delays, the loan closing date was extended in end1996 by nine months.

Major Factors Affecting the Project

28. Procurement of goods and consulting services: The Borrower's procurementpractices and consultant selection procedures substantially delayed procurement of bothgoods and consultants. This was one of the key contributing factor in the nine-month loanextension. There were lengthy delays between bid closing date and bid evaluation, and

- 8 -

between receipt of Bank's no objection letter (NOL) and preparation of final contractdocument.

29. Land acquisition: Another key contributing factor to the project implementationdelays was lengthy and cumbersome process for acquisition of land for transmissionsubstations and obtaining of right of ways for transmission lines, especially in thepopulated and developed areas such as West Java and Jakarta.

30. It should be noted that the above mentioned factors were identified at the time ofproject appraisal and recorded in the SAR as the main risks to cause implementationslippage. The SAR mentioned "The risk of slippage will be kept to a minimum throughcareful planning and attention to procurement to avoid protracted procurement actionsand decision-making, to supervision of contracts ...". However, procurement delaysresulting in implementation slippage still took place under the project as well as underother Bank financed power projects in Indonesia. It appears then that "careful planningand attention" are certainly not enough to minimize procurement delays, and the keyfactor behind procurement delays is the Government's and PLN's bureaucratic practices.One of the aims of the process of sectoral commercialization, corporatization andunbundling embarked on since the commencement of this project is precisely to reducebureaucracy and improve implementation.

31. With regard to land acquisition, this is an issue which has received much moreattention in recent years. With Bank assistance, PLN has now formulated and officiallyadopted a policy paper on land acquisition for transmission projects ("PLN's GeneralPolicy Concerning the Establishment of Overhead Transmission Lines", December 1995).Land acquisition is also now much more closely supervised, allowing potential delays tobe noted and acted on more quickly.

D. PROJECT SUSTAINABILITY

32. The achievements and benefits of the project are sustainable. The physicalfacilities will be productive for many years. Although PLN is now facing financialdifficulties, normal operation of the physical facilities (transmission lines and substations)financed under the project should nct be affected, because these new facilities, equippedwith modern technologies, do not need much maintenance and in certain cases are evenmaintenance free.

33. Results and recommendations from the technical assistance should also besustainable. For example, the Suralaya Thermal Power Project, designed under theproject, has now been built. The study for long-term development of the transmissionsystem has facilitated improvement of PLN's long-term planning capabilities, and thestudy recommendations are being implemented particularly in finalizing the 500 kVbackbone in Java.

- 9 -

34. Operational Plans to ensure the sustainability of results achieved under the projectwere discussed with PLN during the ICR mission. These plans are presented in Annex B.

E. BANK PERFORMANCE

35. Overall, the Bank's performance has been satisfactory. The identification andpreparation of the project were carried out smoothly. The project's design was straightforward and the objectives were clear. It was basically an investment project with somesimple and straight forward technical assistance activities. However, in hindsight, theIndustrial Consumers Connection Fund (to establish a revolving stock of equipment andmaterial for large industrial consumers) component was not well prepared. No priordocuments were prepared relating to its justification and design.

36. Appraisal was also carried out successfully. The major risks were correctlyidentified, namely procurement delays and difficulties in land acquisition. Attempts (suchas action plan and supervision follow-up) were made to mitigate these risks, though theseproved insufficient. The implementation plan for the project components was simple, butsufficiently clear to quantify the extent of the delays which occurred. Performanceindicators were provided for the physical components of the project.

37. The project supervision arrangements were adequate. During projectimplementation, the Bank successfully maintained good working relations with PLN. Atotal of seven supervision missions were fielded during the project implementation period.Most of the field supervision activities were carried out in conjunction with thesupervision of other ongoing power projects. The project was supervised by three taskmanagers, wit:h no discernible negative impact on project continuity and outcome.

38. Project implementation involved no deviations from Bank policies and procedures.

F. BORROWER PERFORMANCE

39. PLN's and GOI's performance was overall satisfactory. Macroeconomicconditions and sectoral policies were generally favorable. The project was carried outsuccessfully and the physical construction targets were met. Counterpart funds wereavailable and audit requirements were satisfied. Ownership was generally taken of thetechnical assistance, close cooperation ensured knowledge-transfer, and ongoingutilization is now being made of the consultants' work. Against this overall satisfactoryrating, three less positive aspects of the borrower's performance should also be noted.First, as mentioned previously, the project suffered from delays in implementation due tolengthy and inefficient procurement procedures and practices, as well as due tocumbersome process for land acquisition. Second, although compliance with covenantswas satisfactory in general, financial covenants were not complied with (see paras. 24-26).Third, substantial delays were experienced in submission of progress reports for thephysical investment components and final reports of studies under the technical assistancecomponent.

- 10-

G. SUMMARY ASSESSMENT OF OUTCOME

40. The outcome of the project is satisfactory. The project met most of its physical,and institutional objectives and the benefits from the project are likely to be sustainable.

41. The EIRR for the project has been re-estimated at 17.7 percent, compared to the17 percent estimated at the appraisal.

H. FUTURE OPERATIONS

42. It is expected that the project will be operated as planned. The physicalcQmponents have been taken over by PLN's various operational departments and havebecome an integrated part of PLN's entire operations. Proper training has been conductedand comprehensively documented operation and maintenance procedures have been put inplace.

43. Plans for future operations are presented in Annex B. The Bank will continue tomonitor PLN's operations and performance through its on-going lending and institutionaldevelopment programs and policy dialogue with GOI/PLN.

L KEY LESSONS LEARNED

44. Several specific key lessons, which have operational and strategic implications forthe design of future power sector projects, can be drawn from this project. These arediscussed in the following.

45. Establishment of a central Project Management Unit (PMU) could benefitoverall project coordination and accountability: The project did not require PLN, theimplementing agency, to establish a central project management and implementationsupervision unit at the head office level. As a result, no senior PLN manager wasresponsible for monitoring progress and the outcome of the project, and for initiatingcorrective actions in a timely manner. This also made it difficult for the Bank to supervisethe project while adding to the time and financial resources devoted to the supervisionactivity. Establishment of a PMU could have reduced delay. This lesson has been takenon board by subsequent Bank financed projects, such as Second Rural Electrificationproject (Loan 3845-IND), which is already in operation with a PMU, and the Java PowerDistribution Project, which is under preparation but which has a PMIU designed into it.

46. Cumbersome procurement processes are a leading cause of projectimplementation delays: PLN's procurement process results in a lengthy procurementcycle adding delays and unnecessary costs to projects that it undertakes. Speedier

- I1 -

procurement processing and more efficient inventory management and materials handlingare key to increasing the efficiency of its investment program.

47. Action on land acquisition should be taken early on during projectpreparation stage: To ensure smooth project implementation, land acquisition should becompleted before the project implementation starts, or a realistic and concrete time-boundaction plan should be developed and followed through with close monitoring from boththe Bank and the implementing agency. Under the project, although agreement seemed tohave been agreed during appraisal and loan negotiations that land acquisition should becompleted by end 1992, it did not actually happen in some cases (resulting in transmissionline rerouting) which caused implementation delays.

48. Performance targets: While the output targets were satisfactorily achieved, theproject did not have any outcome or impact indicators to measure the performance ofPLN's power transmission system in Java. Explicit performance monitoring has since builtin the Bank's most recent transmission project, the Second Power Transmission andDistribution Project, which includes broader outcome targets, such as transmission lossesand outages, in addition to the conventional output or construction targets.

49. Focus on organization rather than just on studies or planning: The project'sfocus on institutional development solely through a system planning study can in hindsightbe viewed as overly narrow. The importance of broader organizational issues fortransmission performance (such as coordination between planning, construction andoperation) was recognized under the recent Second Power Transmission and DistributionProject which is supporting the establishment of an "investment center" within PLN tohave overall responsibility for PLN's transmission planning, construction and operation inJava. This arrangement is expected to lead to major improvement in PLN's transmissiondevelopment coordination and performance.

50. More attention should be given on accurate cost estimate: A large portion ofthe loan was canceled (US$103.4 million in 1994 and US$8.9 million in 1998 at loanclosing, in total about 40percent of the original loan amount). Given that the physicalconstruction activities have been basically completed, the substantial cancellations do raisequestions on the accuracy of cost estimates. While international competitive bidding mayhave resulted in lower-than-expected contract prices, over conservative cost estimate mayhave been the main reason for the cancellations. More attention should therefore be givenin future projects on the accuracy of cost estimate and on application of contingencies.Furthermore, project descriptions in the legal agreements should be more flexible to allowutilization of cost savings towards meeting the broad project objectives.

- 12 -

PART II. STATISTICAL TABLES

Table 1: Summary of AssessmentTable 2: Related Bank Loans/CreditsTable 3: Project TimetableTable 4: Loan/Credit Disbursements: Cumulative Estimated and ActualTable 5: Key Indicators for Project ImplementationTable 6: Key Indicators for Project OperationTable 7: Studies Included in ProjectTable 8A: Project CostsTable 8B: Project FinancingTable 9: Economic Costs and BenefitsTable 10: Status of Legal CovenantsTable 11: Compliance with Operational Manual StatementsTable 12: Bank Resources: Staff InputsTable 13: Bank Resources: Missions

- 13 -

Table 1: Summary of Assessments

A. Achievement of Obiectives Substantial Partial Netgligble

Macro Policies E a E 0Sector Policies E E E 0Financial Objiectives ] 0 E EInstitutional Development E n E EPhysical Objectives 0 n G EPoverty Reduction Q E El 0Gender Issues E E El 0Other Social Objectives E E E 0Environmental Objectives E E E 0Public Sector Management E E E 0Private Sector Development E El 0 EOther (specify) E E E 0

B. Project Sustainability Likely Unlikely Uncertain(/) (1') (1)

HighlyC. Bank Performance satisfactorg Satisfactory Deficient

(V) (V) (V)

Identification E 0 ElPreparation Assistance E 0 EAppraisal El 0 ElSupervision El 0 El

HighlyD. Borrower Performance satisfactorv Satisfactory Deficient

(1) (1) (V)

Preparation E E EImplementaition - Physical E 0 E

El 0 EInstitutional

Covenant Compliance E E 0Operation (if applicable) E 0 E

Hip,hlv Hip-hlvE. Assessment of Outcome satisfactory Satisfactory Unsatisfactory unsatisfactory

E] 0 El El

- 14 -

Table 2: Related Bank Loans/Credits

Loan/credit title Purpose/Description Year of Statusapproval

Loan 2506-IND Comprising: (a) a cistribution system for Jakarta and 1981 Completed inEleventh Power the regencies of Bogor, Tangerang and Bekasi 1988Project (Jabotabek) in West Java, involving about 450 km of

kV cables, 760 km of 20 kV overhead lines; (b) a 150kV voltage system, involving 5 new substations inJakarta, 46 km of underground double-circuit 150 kVcables and 980 MBA of transformers; (c) engineeringof the next base-load thermal power unit (at Paiton) inJava; (d) engineering of the Extra High Voltage(EHV) Central-East Java transmission line; and (e)management consultancy for further improvements inPLN's financial planning and control systems.

Loan 2214-IND Comprising: (a) construction of 110 (2 x 55) MW 1982 Completed inTwelfth Power extension of Kamojang geothermal power station in 1991Project West Java; (b) construction of the third 400 MW

thermal generating unit at Suralaya, includingengineering services for the third and fourthgenerating units; (c) distribution system improvementsin Java, North Sumatra and South Sulawesi; (d) amini-hydro development program in North Sumatra;and (e) training facilities and services to assist PLN'smanpower development program.

Loan 2300-IND Comprising: (a) construction of Cirata hydroelectric 1983 Completed inThirteenth Power power project (4xl25 MW); (b) construction of 500 1990Project kV switchyard and 25 km 500 kV transmission line;

(c) consultant services for Cirata project and an energysector support program to support engineering anddesign for major thermal stations, an informationmanagement system study, and feasibility studies forhydro, thermal and transmission and distributionschemes.

Loan 2443-IND To construct and install the third and fourth 400 MW 1984 Completed inFourteenth Power thermal generating units at Suralaya in West Java; to 1992Project extend the distribution network in Jakarta, Bogor,

Tangerang and Bekasi (Jabotabek), East Java andCentral Java; and to provide consulting services forengineering and construction supervision oftransmission lines and substations in Java and forengineering and design of hydro projects.

- 15 -

Table 2: Related Bank Loans/Credits (Cont'd)

Loan/credit title Purpose/Description Year of Statusapproval

Loan 3097-IND The project included: (a) diesel power units 1989 Completed inPower Sector rehabilitation and relocation; (b) small hydropower 1995.Efficiency Project renovation; (c) distribution investment; (d) expansion

of PLN's telecommunication facilities; (e) trainingprogram; (f) distribution management program; (g)technical assistance for general accounting/cashmanagement and financial/corporate planning; (h)institutional mechanism to advise GOI on energy priceadjustments; (i) information system to provide costsfor PLN's rural electrification program; and (j)utilization by PLN of captive generating capacity.

Loan 3098-IND To provide for the construction of the Paiton coal-fired 1989 Completed inPaiton Thermal power plant with an initial capacitv of 800 MW and 1995.Power Project an ultimate capacity of 4,000 MW in East Java;

associated 500 kV and 150 kV transmission system;and technical assistance to strengthen capacity ofMinistry of Mines and Energy in environmentalmatters and train PLN personnel in power planttechnology.

Loan 3501-IND The project includes: (a) the construction of three 1992 ImplementationSuralaya Thermal coal-fired units of 600/MW each at Suralaya, underway; closingPower Project including associated works and a 500 kV transmission in 1999.

line from Cilegon to Cibinong, with associatedsubstations; (b) consulting services for engineering,design and construction supervision of the proposedunits; (c) feasibility study for a high voltage submarinecable link between Java and Sumatra; (d) engineeringand design of a thermal power p-ant at Banjarmasin inSouth Kalimantan; (e) consulting services forinstitutional development; and (f) training of PLN'sstaff in public utility practices.

- 16 -

Table 2: Related Bank Loans/Credits (Cont'd)

Loan/credit title Purpose/Description Year of Statusapproval

Loan 3602-IND Its components are: (a) implementation of Phase II of 1993 ImplementationCirata the Cirata hydroelectric development on the Citarum underway; closingHydroelectric River in West Java; (b) consulting services for the in 1999.Phase II Project engineering and construction supervision; (c) studies

to upgrade hydrological and environmental data bases,and improve data collection practices; (d) studies toupdate PLN's hydroelectric inventories, and determinepre-feasibility of selected schemes; (e) studies toidentify options to enhance environmental conditionsin the existing PLN reservoirs on the Citarum River,and training of PLN staff in environmentalmanagement; (f) training of PLN's staff in dam safetyand instrumentation monitoring; (g) power sectorinstitutional and regulatory framework studies for theGovernment of Indonesia (GOI); (h) studies aimed atassisting GOI to determine a long-term strategy forfinancing power sector investments; and (i) pre-construction stage engineering services.

Loan 3978-IND To improve customer service by (a) increasing the 1996 ImplementationSecond Power physical capacity, efficiency, and reliability of the underway; closingTransmission and Java-Bali transmission svstem and distribution in 2000.Distribution network; and (b) promoting sector efficiency,Project competition, and private sector participation by

implementing functional decentralization of StateElectricity Corporation (PLN) operations in Java-Baliand developing effective regulatory oversight andinstitutions. The project has two principalcomponents: (a) the restructuring of and investment inPLN's operations; and (b) the development ofregulatory oversight.

- 17-

Table 3: Project Timetable

Steps in Project Cycle Date Planned Date Actual/Latest Estimate

Identification (Executive Project Summary) 01/30/87 01/30/87

Preparation 02/09/89 10/02/89

Appraisal 09/05/90 06/11/90

Negotiations 01/28/91 03/11/91

Board Presentation 03/26/91 06/19/91

Signing 08/08/91

Effectiveness 11/04/91

Midterm review (if applicable) 04/21/94

Project Completion 03/31/96 09/30/97

Loan Closing 12/31/96 09/30/97

Table 4: Loan/Credit Disbursements: Cumulative Estimated and Actual(US$ million)

FY92 FY93 FY94 FY95 FY96 FY97 FY98 Total

Appraisal Estimate 5.0 50.0 165.0 220.0 264.0 275.0 - 275.0Actual 2.4 16.5 71.4 136.4 151.0 160.9 162.7 162.7 "Actual as % of Estimate 48.0 33.0 43.3 62.0 57.2 58.5 - 59.2

Date of Final is February 23, 1998Disbursement (An undisbursed balance of US$ 8.9 million was canceled.)

" US$ 103.4 million was canceled upon borrower's request effective November 7, 1994.

- 18 -

Table 5: Key Indicators for Project Implementation

Number MVA MVAR Route (km)Target Actual Target Actual Target Actual Target Actual

SubstationNew 20 19 1,190 1,270Extension 41 52 1,870 1,740 - - - -

Total substation 61 71 3,060 3,010

Reactive Power 33 40 - - 350 350 - -

Compensation Equipment(Capacitors)

Transmission Lines 19 16 - - - - 297.5 182.0

Note: a! Target figures were from SAR;b/ Actual figures were from PLN Proyek Induk and PCRs prepared by PLN's consultants.

Table 6: Key Indicators for Project Operation

Non indicators for project operations were included in SAR/President's Report.

- 19 -

Table 7: Studies Included in Project

Purpose as Defined at Impact ofStudy Appraisal/Redefined Status Study

Site Selection To select a suitable site for Completed The feasibility study wasand Feasibility a large steam power station successfully completed inStudy for a in West Java of about 4000 March 1994. The selectedThermal Plan in MW ultimate capacity at 4800 (8x600) MW coal firedWest Java the selected site, and to power plant in Pangkalan was

compare its economic and included in PLN's expansiontechnical merits against program and to be constructedother alternate sites in in four phases commencing inWest Java. 2005.

Study of the To prepare a transmission Completed The study was completed withLong-Term system master plan for a final report submitted inDevelopment of Java-Bali integrated system February 1995 and revised inthe Transmission to meet forecast electric January 1996. Under theSystem in Java- load growth up to year study, the existing systemBali 2003/04; to prepare a operation, engineering and

detailed investment load forecast were reviewed,program for the initial five network expansion was studiedyears of the study period; and preliminary projectand to train PLN personnel packages and investment plansin transmission planning were developed. Theand engineering technique. consultant also conducted

training of PLN staff intransmission and engineeringtechniques. Consequently,PLN's capability intransmission long-termplanning was improved.

- 20 -

Table 8AM Project Costs

Appraisal Estimate (USSM) ActualVLatest Estimate(USSM)

Item Local Foreign Total Local Foreign Total

Costs Costs Costs Costs

Transmission Component

Substations 33.9 150.5 184.4 38.3 81.4 119.7

Transmission lines 17.9 53.8 71.7 36.6 60.4 97.0

Industrial Consu. Conn. Fund (ICCF) 2.0 15.0 17.0 Cost included in "substation"item.

Subtotal Transmission 53.8 219.3 273.1 74.9 141.8 216.7

Technical Assistance Component

Project eng., design & construction 2.2 8.0 10.2 3.2 5.4 8.6spn.

Eng.&designforSuralayaUnits 1.1 10.0 11.1 1.2 8.3 9.5516/7

Plant Site selection & feasibility study 0.6 4.0 4.6 1.7 2.3 4.0

Java-Bali long-term trans. dev. study 0.2 1.6 1.8 0.3 0.9 1.2

Subtotal Technical Assistance 4.1 23.6 27.7 6.4 16.9 23.2

Owner admin., eng. and supervision 10.0 - 10.0 n.a. n.a. n.a.

Total Base Cost 67.9 242.9 310.8 81.3 158.7 240.0

Physical contingencies 5.8 16.0 21.8 - - -

Price contingencies 7.2 16.1 23.3 - - -

Total Project Cost 80.9 275.0 355.9 81.3 158.7 240.0

Interest during construction 18.2 41.6 59.8 12.7 29.6 42.3

Total Financing Required 99.1 316.6 415.7 94.0 188.3 282.3

- 21 -

Table 8B: Project Financing

Appraisal Estimate (USSM) Actual/Latest Estimate(USSM)

Source Local Foreign Total Local Foreign Total

Costs Costs Costs Costs

IBRD - 275.0 275.0 - 162.7 162.7

PLN 99.1 41.6 140.7 83.7 35.9 119.6

TOTAL 99.1 316.6 415.7 83.7 198.6 282.3

Table 9: Economic Costs and Benefits

Appraisal Estimate Re-estimate

Economic Internal Rate of Retum 17 Percent on PLN's investment 17.7 percent on PLN's(EIRR) program in Java from investment program from

1990/91 - 1994/95. 1990/91 - 1996/97.

For detailed calculations, see Annex D.

- 22 -

Table 10: Status of Legal Covenants

Original RevisedAgreement Section Covenant Present fulfillment fulfillment Description of covenant Comments

type status date dateLoan 3.01(b) 3 C Subsidiary loan agreement between GOI and Condition of

PLN. effectiveness4.01(a) 9 C Review annually PLN's investment plan.

4.01(b) 11 C Review annually PLN's development plan andassociated financial forecast and financingplan.

6.01 3 C Subsidiary loan agreement executed

Prolect 2.06 5 C PLN to carry out action plans for efficiencyimprovements for all its operations.

2.07 10 CD - PLN to acquire land for substations and right With delays.of way for transmission lines.

2.08 10 CP PLN to maintain adequate revolving stock of Initial loan allocationmaterials for supplying industrial consumers. for setup of revolving

stock was only partiallyused. However, stockmaterials andequipment for largeconsumer connectionare being funded byPLN's intemalresources.

2.09 10 C PLN to fumish proposals for supplyingindustrial consumers for review and approval.

4.01 1 C PLN to submit audited accounts, and otherfmancial information, including segregatedRE accounts.

4.02 2 C PLN to review periodically with Bank itsLRMC and tariff structure.

4.03 1 C PLN to revalue fixed assets and accumulateddepreciation.

4.04 5 CP PLN to maintain projected debt-servicecoverage of at least 1.5.

4.05 5 C PLN to (a) prepare ten-year financial forecastand review with Bank; (b) test each proposeddevelopment plan for feasibility, (c) developfinancing plan for first 5 years; (d) ensurerecommended development plan reviewed andapproved by its Board (and GOI/Bank).

4.06(a) 2 PLN to achieve an annual ROR of at least 8% Not applicable.(i) for Java-Bali from FY91/92. Covenant modified

under Ln 376 1-IND torequire ROR not lessthan 8% for PLN as awhole, commencingfrom FY94/95.

4.06(a) 2 PLN to achieve break-even for outside-Java Not applicable, as(ii) from FY93/493. described above.4.06(b) 2 C PLN to annually review adequacy of tariffs to

meet 4.06(a) targets and fumish to Bankresults of such review.

Covenant types:I. = Accounts/audits 8. = Indigenous people2. = Financial performance/revenue generation from beneficiaries 9. = Monitoring, review. and reporting3. = Flow and utilization of project funds 10- = Project implementation not covered by categories 1-94. = Counterpart funding 11. = Sectoral or cross-sectoTal budgetary or other resource altocation5. = Management aspects of the project or executing agency 12. = Sectoral or cross-sectoral policy/ regulatory/institutional action6. = Environmental covenants 13. = Other7. Involuntary resettlemnent

Present Status:C = covenant complied withCD = complied with after delayCP = complied with partiallyNC = not complied with

- 23 -

Table II: Compliance with Operational Manual Statements

Statement Number and Title Describe and comment on lack ofcompliance

There are no OMS relevant to the Project that have not been complied with and/or been acted against.

Table 12: Bank Resources: Staff Inputs

Planned Revised ActualStage of___________________________

Project Cycle Weeks US$ Weeks US$ Weeks US$

Preparation to appraisal n.a. n.a. n.a. n.a. 38.58 71,447

Appraisal n.a. n.a. n.a. n.a. 41.55 86,863

Negotiation through Board approval n.a. n.a. n.a. n.a. 17.53 44,232

Supervision n.a. n.a. 24.0 58,922 27.23 55,040

Completion 11.0 27,669 11.0 27,592 10.50 16,290

TOTAL n.a. n.a. n.a. n.a. 131.89 273,872

- 24 -

Table 13: Bank Resources: Missions

Performance RatingStage of Month/ Number Days in Specialhzed Implemen- Develop- Types of

Project Cycle Year of Field Staff Skldls tation ment ProblemsPersons Represented Status Objectives

Through Appraisal 02/89 3 7 Power Eng. Preparation n/aFit. Analyst

10/89 4 7 Power Eng. Preparation n/aFin. Analyst

02/90 5 7 Power Eng. Pre-appraisal n/aEnergy Econ.Fin. Analyst

06/90 5 6 Power Eng. Appraisal n/a A tariff increase needed toEnergy Econ. reach 8% ROR in 91/92; on-Fin. Analyst lending terms to be

determined.

Appraisal though 11/90 3 10 Power Eng. Post- n/a A tariff increase needed toBoard Approval Fin. Analyst appraisal reach 8% ROR in 91/92.

Board Approval - - - -throughEffectiveness

Supervision 10/91 4 5 Power Eng. 1 1Fin. Analyst

10/92 2 5 Power En& 1 I Some cost savings expectedFin. Analyst due to lower-than estimnated

contract prices.04/94 2 6 Power Eng. 2 1 Implementation delays; cost

Fin. Analyst savings of about $100 m.11194 3 5 Power Eng. S S Implementation delays mainly

Op. Officer due to land acquisitionproblems.

03/96 2 4 Power Eng. S S Implementation delays; lateOp. Officer submission of reports.

11/96 1 5 Op. Officer S S Implementation delays; non-compliance with financialcovenants.

07/97 2 5 Power Eng. S S Implementation delays inOp. Officer some components; non

compliance with financialcovenants.

Completion 11/97 2 5 Power Eng. S SOp. Officer

Note: Preparation, appraisal and supervision of the project were conducted in combination with that ofother power projects, therefore, the days spent in the fields were estimates.

- 25 - ANNEX 1

ANNEX 1: AIDE MEMOIRE

Introduction

1. This Aide Memoire records the findings of a World Bank Mission comprisingMessrs. Yuling Zhou and Kurt Schenk, who visited Indonesia from November 3 to 7,1997, for preparation of the Implementation Completion Report (ICR) for the PowerTransmission Project (Loan 3349-IND). The mission records its thanks to PLN staff andthe consultants for the assistance provided in the ICR preparation and acknowledges thecourtesies and cooperation extended to it during its visit.

Activities Undertaken by Mission

2. The mission: (i) collected the data necessary to prepare the statistical tables in theICR; and (ii) reviewed other background data to develop its analysis. Discussions wereheld with PLN staff and the consulting engineers to better understand and interpret theavailable data. The project was assessed with regard to the degree of achievement of theobjectives, prospects of its sustainability, Bank and Borrower performance, and thelessons learned. In addition, the mission provided advice and support to the Borrower forpreparing its own evaluation report which is to be attached to the ICR.

Overall Project Objective

3. The overall objective of the project was to expand, strengthen and upgrade thetransmission facilities for the Java-Bali system to supply electricity to new consumers andto meet increases in electricity demand arising from existing and new consumers. With thesuccessful comipletion of the physical investment components of the project (as discussedbelow), this overall objective has been generally achieved.

Review of Transmission Component

4. This coimponent included investments in extension and construction of substations,installation of reactive power compensation equipment and construction of transmissionlines. As shown in the table below, the appraisal targets have either achieved orsurpassed:

- 26 - ANNEX 1

Number . MVA MVAR Route (km)

Target Actual Target Actual Target Actual Target Actual

Substations

New 20 20 1,190 1,190

Extension 41 41 1,870 2,210

Total substation 61 61 3,060 3,400 - -

Reactive Power 33 36 - - 350 350CompensationEquipment(Capacitors)

Transmission Lines 19 23 - - - - 297.5 287.2

5. However, a substantial delay (about one and a half years) was experienced duringimplementation. The delay was mainly caused by procurement delays and difficulties thatPLN encountered in land acquisition and obtaining right of ways in particular in West Javaand Jakarta area, as well as insufficient commissioning personnel on site.

6. The project was also to support establishment of a special fand -- the IndustrialConsumers Connection Fund (ICCF)--of about US$20 million to finance the constructionof new transmission facilities for supplying industrial consumers at 150 kV. The Bankloan allocated US$15 million for this purpose. However, only US$6.6 million was utilizedmainly in West Java area and the balance was canceled. Although PLN also carried out aLarge Consumer Connection Program (PKB) using its own financing, the original idea ofsetting up a revolving stock of standard equipment and materials (so that the connectiontime for large industrial consumers can be substantially reduced) was in fact notimplemented. The reason seems to have been inadequate attention given by both PLN andthe Bank to this component in the early years of the project.

7. The project did not tackle the institutional aspects of transmission development.PLN's overall transmission performance is mixed with impressive growth but also delaysand bottlenecks. The importance of these broader questions were recognized inpreparation of the recent Second Power Transmission and Distribution Project(Ln.3978-IND) which is supporting the establishment of the Java-Bali ElectricityTransmission Unit (JABETU) within PLN to have overall responsibility for PLN'stransmission development and operation in Java. The combining of planning, constructionand operation into a single body is expected to lead to major improvements in PLN'stransmission development coordination and performance.

- 27 - ANNEX 1

Review of TA Activities

8. There were four technical assistance activities financed under the projects, namely:

(a) Engineering, design and construction supervision of substations andtransmission lines financed under the project: three consulting contracts weresigned in this connection respectively for the three subcomponents of WestJava/Jakarta, Central Java and East Java. All the contracts started in late 1992or early 1993 but completed in different times. For the East Javasubcomponent, the consultants completed their work in end 1994 according tothe original schedule, and the remaining construction supervisory work (onlyfor installation of transformers) was completed by PLN staff. The West Javaconsultant contract was extended once and ended in June 1997, while theCentral Java consultant contract was amended twice and finished in endSeptember 1997. The consultants have played an overall supervisory andcoordination role which was critical to the successful completion of thephysical investment activities.

(b) Engineering, design and construction supervision of several units of Suralayathermal power plant: the contract financed under the project was successfullycompleted and remaining engineering activities as well as constructionsupervision were financed from the Bank loan for Suralaya Thermal PowerProject.

(c) Site selection and feasibility study for a new thermal power plant in West Java:the feasibility study was completed in March 1994 with a selected site for a8x6OO MW coal fired plant in Pangkalan, West Java. According to PLN's1997 Investment Plan (RUPTL), the first unit (600 MW) will be developed in2005.

(d) Study for long-term development of the transmission system in Java-Bali: thestudy was completed with a final report submitted in February 1995 andrevised in January 1996. The study recommendations are being implementedparticularly in finalizing the 500 kV backbone in Java.

Project Sustainability and Operational Plan

9. The project achievements and benefits are sustainable. The physical investmentswill be productive for many years. The completed 150 kV transmission lines and150/20 kV substations will provide safe, reliable and much needed power to the rapidlygrowing load centers in Java anc' will also assist in relieving transformer overloads as wellas in improving system security.

10. The completed facilities have been integrated into PLN's entire operations in Java,and are being operated and maintained under PLN's standard procedures with

- 28 - ANNEX I

performance indicators for quality, reliability and efficiency. Maintenance on thetransmission network (included substations) in Java is managed by PLN P3B(Transmission and Load Dispatching Center). Patrols of lines take place on a regular basisand any deficiencies are noted and corrected. In addition, a fault detection system bymeans of impedance relaying is in place to provide rapid response to faults as they occur.

Disbursement

11. Against the original loan amount of US$275.0 million, US$161.96 million wasbeen disbursed as of end October 1997 and US$103.4 million canceled (in November1994, due to much lower-than-expected bid prices for equipment and materials). Theundisbursed balance is US$9.6 million. According to the Bank's standard practice, a four-month grace period (up to end January 1998) was granted to continue disbursing the loan(but only for eligible expenditures incurred, i.e. goods, works and services provided beforethe loan closing date). The remaining undisbursed balance after this period will becanceled.

Next Steps

12. The Economic Internal Rate of Return (EIRR) has been recalculated by PLN andreceived by hte mission. The mission will review it and convey any comments to PLN assoon as possible.

13. The following schedule was agreed with PLN for the final preparation of the ICR:

January 31, 1998 The Bank to send its draft final ICR to PLN forcomments.

January 31, 1998 PLN to send its own evaluation report to the Bank (thereport will be attached unedited to the final ICR; if thereport is longer than ten pages, a summary should beprovided).

February 15, 1998 PLN to forward its comments, if any, on the draft ICRto the Bank.

March 1998 The ICR will be finalized and printed by the Bank.Copies will be forwarded to relevant GOI agencies andPLN.

- 29 - ANNEX 2

ANNEX 2: OPERATIONAL PLAN

Transmission Network

Maintenance on the Transmission network (included Substation and mobile Substation) inJava is managed by PLN P3B (Transmission and Load Dispatching Center). Patrols oflines take place on a regular basis and any deficiencies are noted and corrected. Inaddition, a faults service is in place to provide rapid response to faults as they occur. Themaintenance and fault are conducted in accordance with the procedures for quality,reliability and efficiency indicators of electric supply.

The mobile substation were used for emergency condition as well as for temporaryreplacement of substation to be shut-down (due to construction or maintenance) andconnection for new big consumers where the customer substation is not finished yet.

Reactive Power Compensation

Maintenance on reactive Power Compensation in Java is managed by PLN P3B underrequest of the four distribution units. Operational of these capacitors were augment about10% voltage for network at south of Java area. This incremental is not adequate toachieve standard operation due to delay of 500 kV transmission line construction Ungaran- Klaten which was planning be finished at the same time with this project (especially atSouth Central Java area).

Technical Assistance

The Technical Assistance program has been carried out for two studies.

The firs one is study about Site Selection and Feasibility Study for Thermal Power Plant inWest Java. The study was completed in March 1994 and was concluded that Pangkalansite is an optimum site and suitable for installation of steam coal power plant with ultimatecapacity for 8 x 600 MW. Pangkalan site is located in West Java Province, about 220 kmfrom South East Jakarta or 40 km from Cijulang (Pangandaran). According to RUPTL1997 which already submitted to GOI, Pangkalan Steam Coal Power Plant will bedeveloped in 2005 for first unit (600 MW).

The second is Study of the Long Term Development of the Transmission System in Java -Bali. The study started on July 28, 1992 and was conducted using the total of 65 man-months. The recommendations of the study are currently implemented on:1. 500 kV, the double circuit Transmission Line from Paiton - Kediri - Klaten which

financed by IBRD 2nd Power T & D and partially by Export Credit. Following by

- 30 - ANNEX 2

double circuit 500 kV from Klaten - Rawalo - Tasikmalaya - Depok financed by OECFand partially by Export Credit.

2. 150 kV, the suggested partly open operation on the 150 kV grid to avoid the increasingof short-circuit current has been adopted.

During the project implementation period, for all the construction activities, PLN wasassisted by Consultants, i.e.: Ewbank Preece for West Java Project supervision, Fichtnerfor Central Java Project supervision and Newjec Inc. for East Java Project supervision.

-31- ANNEX 3

ANNEX 3: BORROWER'S OWN EVALUATION REPORT

AN ASSESSMENT OF PROJECT, DESIGN, IMPLEMENTATION, OPERATIONEXPERIENCE

The main objective of the project is to support PLN and GOI in developing its powersector by providing reliable and efficient supply of electric power in the Java-Balielectricity system through the following endeavors:

1. Ensuring adequate investments in power transmission facilities to expand, strengthenand upgrade electricity transmission system in supplying electricity to new consumers,and meeting the increasing demand for electricity from the existing ones. With regardsto the above investments, PLN has built 170 km 150 kV transmission lines, 12 km150 kV underground cables; 15 New Substations, 2 New Gas Insulated Substationsand two rnobile substations of 150/20 kV with total capacity of 1,190 MVAtransformers, 52 extension Substations with total capacity of 1,870 MVA transformersand 350 MVAR capacitors for 40 Substations. The project also supported theIndustrial Consumers Connection Fund (ICCF) with a special fund of about US$6.6million which utilized mainly in West Java area.

2. To undertake the supervision and coordination of above projects, three consultantswere assigned in this connection for three subcomponents, i.e. Ewbank Preece,Fichtner and Newjec respectively for West Java/ Jakarta, Central Java and East Java.For the East Java subcomponent, the consultant completed their work in the end of1994 which was in accordance with the original schedule, and the remainingconstruction supervisory work (only for installation of transformer) was completed byPLN staff. The Central Java consultant contract was amended twice and finished inthe end of September 1997. The West Java consultant contract was extended onceand ended in June 1997. The consultants have played an overall supervisory andcoordination role which was critical to the successful completion of the physicalinvestment activities.

3. Engineering, design and construction supervision of 3 x 600 MW of the SuralayaThermal Power Project (Unit 5, 6 and 7) financed by Bank loan IBRD 3349-IND hasbeen successfully completed and remaining engineering activities as well asconstruction supervision were financed from the Bank loan IBRD 3501-IND forSuralaya Thermal Power Project.

4. Site selection and feasibility study for a new thermal power plant in West Java wascompleted in March 1994 with selected site for a 8 x 600 MW coal fired plant inPangkalan, West Java.

5. Study for the long-term development of the transmission system in Java-Bali wascompleted with a final report submitted in February 1995 and revised in January 1996.

- 32 - ANNEX 3

The study recommendations are being implemented particularly in finalizing the500 kV backbone in Java.

AN ASSESSMENT ON COST AND BENEFITS, AND THE EXTENT TO WHICHTHE PURPOSE/ OBJECTIVES OF THE LOAN HAVE BEEN ACHIEVED

1. Substations with overload transformers were released by installing new transformersin new substations and additional transformers at the existing ones for spreading theload and anticipate the future growth load.

2. The bottle-neck transmission lines be released by constructing new transmission linesand substations.

3. To release the voltage drop (especially at South Java area), the voltage augment wasaraise by installing 350 MVAR capacitors in 40 Substations. The standard voltage maybe reached after the 500 kV Transmission Line through South Java installed.

4. The Consumers incremental in Java-Bali region area 1,250,248 customers in 1994,1,769,023 customers in 1995 and 1,692,167 customers in 1996.

5. The peak load incremental in Java-Bali region are 1,308.51 MW in 1994, 1,039 MWin 1995 and 1,904 MW in 1996.

Evaluation of the Borrower's own Performance

1. During the project implementation, PLN has made its endeavor to improve theprocess. However, delays occurred during the recruitment of Consultants andprocurement processes.

2. The other delays during the project implementation was caused by PLN encounteredin land acquisition and obtaining right of ways in West Java and Jakarta area.

The ffectiveness of the relationship among the Borrower, the Bank, and anycorinanciers

The relationship between the Bank and PLN was good. Most of the problemsencountered were clearly identified by both parties and relevant actions to solve theproblem were promptly agreed and taken. In particular, good mutual understanding wasachieved by selecting least cost materials.

-33- A,NNEX3

Key lesson learned

1. To maintain the agreed project schedule and to minimize implementation delays, it isvery important for PLN to improve it's internal procurement procedures and lobbying tothe GOI.

2. For encountered land acquisition and obtaining Right of Way it's necessary toimprove the relaLtionship between PLN and the affected people.

3. The project was a very complex one with many independent components. A centralproject management within Supervision Division of PLN could have facilitated the overallproject coordination and implementation.

-34- ANNEX 4

ANNEX 4: CALCULATION OF ECONOMIC INTERNAL RATE OF RETURN(IERR) a!

COSTS(US$ Million)

Investment O&M Cost Fuel Cost cl Consumer Contflbuton TotaYear Genealon T&D Total Revaluation Constant Shtadow Current Constant Inr Incremental Current Constant Cost

Index Price Prie bl

1983/84 10.6 0.0 10.6 1.947 20.6 19.1 0.0 0.0 0.0 0.0 0.0 0.0 19.11984/85 12.2 0.0 12.2 1.875 22.9 21.2 0.0 0.0 0.0 0.0 0.0 0.0 21.21985186 78.8 0.0 78.8 1.803 142.1 131.5 0.0 0.0 00 0.0 0.0 0.0 131.51986/87 102.2 0.0 1022 1.629 166.4 154.1 0.0 0.0 00 0.0 0.0 0.0 154.11987188 387.2 0.0 387.2 1.494 578.6 535.8 00 0.0 0.0 0.0 0.0 0.0 535.81988/89 227.0 0.0 227.0 1.410 320.1 296.4 0.0 0.0 0.0 0.0 0.0 0.0 296.41989/90 115.8 306.7 422.5 1.374 580.4 537.5 283.6 389.5 0.0 0.0 0.0 0.0 537.51990S81 147.2 2498 397,0 1.298 515.3 477.2 335.5 435.5 46.0 174.1 (52.0) (67.5) 629.7199`192 530.7 269.7 800.4 1.242 993.9 920.3 374.4 464.9 75.3 263.3 (16.6) (20.6) 1,238.31992i93 1,063.3 746.7 1,810.0 1.188 2,149.4 1,990.3 426.0 505.9 116.3 343.6 (62.2) (73.9) Z376.41993S4 828.5 538.8 1,367.3 1.152 1.574.8 1.458.3 516.5 594.9 205.4 578.8 (147.2) (169.5) 2.072.9

1994 478.5 991.8 1,470.2 1.111 1,632.9 1,512.0 502.3 557.8 168.3 274.7 (191.4) (212.6) 1,74241995 806.5 1,050.5 1,857,0 1.023 1,899.7 1,759.1 889.3 909.8 520.2 555.0 (267.9) (274.1) Z599.21996 704.9 15.1 720.0 1.000 720.0 666.7 1,293.0 1.293.0 9034 646.3 0.0 218.41997 - - - 1.000 1,293.0 1,293.0 903,4 559.2 1,462.61998 1.000 1,293.0 1,293.0 903.4 559.2 1,462.61999 - - - 1.000 1,293.0 1,293.0 903.4 559.2 1,462.62000 - - - 1.00 1,293.0 1,293.0 903.4 559.2 1.462.62001 - - 1.000 1.293.0 1,293.0 903.4 559.2 1,462.62002 - - - 1.000 1,293.0 1,293.0 9034 559.2 1,462.62003 - - - 1.000 1,293.0 1,293.0 903.4 559.2 1,462.62004 - - - 1.000 1,293.0 1,293.0 903.4 559.2 1,462.62005 - - - 1.000 1,293.0 1,293.0 903.4 559.2 1,462.62006 - - - 1.000 1,293.0 1,293.0 903.4 559.2 1,462.62007 - - 1.000 1,293.0 1,293.0 903.4 559.2 1.462.62008 - - 1.000 1,293.0 1,293.0 903.4 559.2 1.462.62009 - - - 1.000 1,293.0 1,293.0 903.4 559.2 1,462.62010 - - 1.000 1,293.0 1,293.0 903.4 559.2 1,462.62011 - - - 1.000 1,293.0 1,293.0 903.4 559.2 1.462.62012 - - - 1.000 1,293.0 1.293.0 903.4 559.2 1.462.62013 - - - 1.000 1,293.0 1,293.0 903.4 559.2 1,462.62014 - - - 1.000 1,293.0 1.293.0 903.4 559.2 1,462.62015 - - - 1.000 1,293.0 1,293.0 903.4 559.2 1.462.62016 - - 1.000 1.293.0 1.293.0 903.4 559.2 1,462.62017 - - - 1.000 1,293.0 1,293.0 9034 559.2 1.46262018 - - - 1.000 1,293.0 1.293.0 903.4 559.2 1,462.62019 - - - 1.000 1.293.0 1,293.0 903.4 559.2 1,462.62020 - - - 1.000 1.293.0 1.293.0 903.4 559.2 1,462.6

av To maimLze compfarbiity, the methododogy used here fllows that in SAR. 1997 prces are used 5hroughoutbl Shadow pie fwactwforinvestrent = 0.926cl Data from PLN Statistics. RKAP 1997.

- 35 - ANNEX 4

ANNEX 4: CALCULATION OF ECONOMIC INTERNAL RATE OF RETURN(EIRR) a/

BENEFITS(US$ Million)

Averge Total NotYear . (t IneantSab _ (GIAl Tariff Revenbu Res4denti ln4 4 seneOt Befe

ReekleeaI Comm. lndu4toi P.blie Tot Rekie. Cm.en,6aI hdirii Pub3c TeStl (UScMh) 4USS ) (US$ m) (US$ n) US$S) (US n)

1983194 0.0 (19.11I 4195 0.0 (21.2)1985Is1 0.0 (131.5

1988187 0.0 (154.11987188 0.0 (535.8

198889 0.0 0.0 0.0 0.0 (298.4

198990 5.8891 1,5889 9,4764 1,558. 18,487.0 0.0 0.0 0.0 0.0 (537.5199011 ,694.7 1,83.3 1198s4.8 18684.5 22,043.2 779.5 270A 2,418.4 107.9 3,578.2 5.7 203.3 56.5 84.8 324.8 (305.11991182 7,594.0 2,238.3 13,562.5 1,583.6 25,078.3 1,728. 809A 40806.1 127.0 8,811.3 6.3 419.3 125.3 109.5 054.2 (504.1

1982183 9,571.7 2,470.1 15,088.8 1J70.8 27,837.5 2,708.5 901.7 5,812.2 150.0 9,370.5 8.8 814.2 108.2 150.4 900.8 (1,415.619934 9,679.4 2,990.5 18,8.3 1,57.9 31,213.1 3813.3 1,391.6 7,39.9 201.3 ¶2.748.1 7.0 895.9 27t.5 196.7 1,389.1 (703.9

I9U4 10.768.7 3,278.7 l8,748.9 1,841.1 34,637.4 4,03.8 1,709.8 9,272.5 284.5 1¶8170.4 89 1123.0 355.5 248.5 1,727.0 (15.3199 12,805.6 3,944.9 21,517.8 2,084.9 40133.2 9,740.8 2,378.1 12,041.3 509.3 21,888.1 7.0 1,514.5 489.7 322.7 2,325.9 (234.4

1998 14449.0 4,924.9 24,315.5 229.1 45,887.9 0,582.9 3259.0 14839.1 742.5 27,420.8 7.0 1,906.8 522.3 397.7 2a2B.8 710.21997 17,3108 5,402.7 29,549.7 2,899.8 55,130.0 11.445.7 3,833.9 20,073.2 1,310.2 3,6622.9 94 2,332.2 829.8 538.0 3,700.0 2,237.319s 17,3108 5.402.7 29,549.7 2,89.8 55,130.0 11,445.7 3.833.9 20.073.2 1,310.2 36.992,9 8.4 2.34t.4 029.8 539.0 3.714.2 2,251.6I99 17,310.8 5,402.7 20,949.7 2,989.8 55,139.0 11,445.7 3,s339 20,073.2 1,310.2 3,6.92,9 8.4 2,34S.4 829.8 538.0 3.714.2 2,251.6

2000 17,310,8 5,402.7 20,549.7 28W8.8 55,130.0 11445.7 3,a33A 20.073.2 1,310.2 38,882.9 84 2.346.4 829.8 538.0 3.714.2 ,251,82001 ¶7.310. 5.402.7 20,549.7 2,8S6.8 55,130.0 1,1445.7 3.833S9 20,073.2 1S310.2 3e,662.9 8.4 2,346.4 929.8 538.0 3.714.2 2,251.82002 17,310.8 5, 02.7 20,94.7 2,866.8 55.130,0 11,445.7 3,833s 20,073.2 1,310.2 3e.,62.9 8.4 2.348.4 829.8 038.0 3,714.2 2,251.62003 17.310.S 5,402.7 28,594.7 2,888. 55,030.0 11,445.7 3,833.9 20.073.2 1310.2 38,S62.9 8.4 2,346.4 829.8 538.0 3,714.2 2,251.82004 17,310.8 5,402.7 29,4Y. 2,899.8 55,130.0 11,445.7 3,833,9 20,073.2 1,310.2 3e,e8239 8.4 2,346. 829.8 538.0 3,714.2 2251.6200s 17,310,8 5,402.7 20,949.7 2,869.8 55.130,0 11,445.7 3,833,9 20,073,2 1,310,2 39,962.9 8.4 2,348.4 8298 538.0 3,714.2 2,251,62008 17,310.8 5,402.7 20,549.7 2,BS698 55,130.0 1.1445.7 3,833A 20,073.2 1,310.2 3.,682,9 8.4 2.348.4 829,8 539.0 3,714,2 2,251.82007 17,310.8 5.402.7 20.549,7 2B.S698 55,130.0 11,445.7 3.8332 20,073,2 1,310.2 39,6g2.0 8.4 2,346.4 829.8 538.0 3,714,2 2,201.6200 17,310.8 5,402.7 28.54,73 23 .8 55,130.0 11,445. 3,8339 20.073.2 1.310.2 30.882,8 5A 2.3484 829.8 53290 3.714,2 2251.62009 17,310.8 5,402.7 20,549.7 2,888.8 55,130.0 11.445,7 3,8339 20,0732 1,310.2 3e,992.9 0.4 2,348.4 929.8 53280 3.714.2 2,251.82010 17,310.8 5.402.7 20,949.7 2,86998 55.130,0 11.445.7 3,e33.9 20,073.2 1,310.2 39,6e2,9 8.4 2,348.4 829.8 538.0 3,714.2 22561.2011 17,310.8 5,402.7 20,949.7 2,888.8 55,13090 11.445.7 3,S33,9 20,073.2 1,310.2 30,682.9 8.4 2,34.4 829.8 523.0 3,714.2 2,251,82012 17.310.8 5,402.7 20,598.7 2,996.8 55,130.0 11,445.7 3.833.9 20.073.2 1,310.2 38,82.9 8.4 2,348.4 a29.8 538.0 3,714.2 2,251.82013 17,310.8 5,402.7 29,4987 2,868.8 55,130.0 11.44S.7 3,83329 20,073.2 1,310.2 3e,e62.9 9.4 2,348.4 829.8 538.0 3.714,2 2,251.82014 17.310.8 5,402.7 20,549.7 2,888.8 55,130.0 11.445.7 3,833,9 20,073.2 1,310.2 38,992.9 6.4 2.346.4 829.8 538.0 3.714.2 2,251.62015 17,310.8 5,402.7 29,849.7 2,866.9 55,130.0 11,445.7 3,833, 20,073.2 1,310.2 32,992.9 8.4 2,348.4 820.8 538.0 3.714.2 2,251.82019 17,310.8 5.402.7 20,.49,7 2,988.8 55,130.0 11,45.7 3,833S9 20.073.2 1,310.2 3.,892,9 8.4 2,348.4 820.8 538.0 3,714.2 2,251,82017 17,310.8 5,402.7 20a.48.7 2.866.8 55,130.0 11.445.7 3,833S9 20.073.2 1,310.2 38,e2. 8.4 2.346.4 829.8 538.0 3,714.2 2251.82018 17.310.8 5,402.7 29,549.7 2,.98.8 55,130,0 11.445.7 3.833,9 20,073.2 1.310,2 3206.,86 e.4 2,348.4 8329.8 538.0 3.714.2 2,251.82019 17,310.8 5,402,7 20,549.7 2,899.8 55,130.0 1¶,445.7 3,33,9 20.073.2 1.310.2 30,e82.9 6.4 2.348.4 829.8 538.0 3,714.2 2,251.62020 17.31098 54027L 2049.7 29886. 55.130.0 1144g.7 38.33. 20073.2 1.310.2 32,t62.9 64 2346.4 8298 538.0 3714.2 2251.8

d/ Ad8Oosnal e .ornic beft: IEIR * 17.7%Reidentbal Sc 7.2SmW1nktarl t Sc 2.63hWH

- 36 - ANNEX 5

ANNEX 5: PLN-INCOME STATEMENT(RP. BILLION)

91192 9V93 93194 1994 1995 1996 1997SAR Est. Actual SAR Est Actual SAR Est Actual SAR Est Actual SAR-Est Actual Actual Est

SDs~~~~~~~~~~L M Q 4in UK Lm 62 5.252 7 r2 Lto gmst7EMImI mw.w. 3.921 4.003 4.790 4.794 s.sms 522 8.442 5.133 7.704 6.110 9.418 11,250C9r.Wpum.e 54 uw 107 118 121 122 135 140 15O 119 1ea 18e 228 22a

-C,camercutbudwa 70 78 96 84 143 170 171n}hw 48 45 44 5 53 se 57

-pemroi axpiz 21 am sM uz Ln LM2 17 2 Ll LSMFud B hjb4ftg 1.6,72 1,829 1.50 2.132 2,049 2793 2,224 2.048 2.80 2.970 32355 4.147

P p.Nhat 15 23 1t1 20 42 47 1s sB 15 77 193 253opwaPme 847 847 714 92o 21 1.056 1.028 1.028 1.187 1.5s7 1.7S7 2Z129

p825mB meow 387 308 413 427 484 504 622 473 se 8 758 875 1.04

RtMmatvaw viatas 290 339 301 49S 357 582 496 5e 579 8a09 912 1.083DW"BM so2 830 991 712 1,23 909 1.581 s99 1.997 1.587 1.983 2381

121 162 129 203 136 265 144 249 152 356 404 476

ill if! _ 4 S a 2 LSe 112 £2 11 ZiwwN opw88ag 42 155 54 202 72 194 93 ¶89 119 180 492 210

NawM5MoUpzo ms 74 129 82 173 90 1s1 9S 153 107 210 281 326

NXe~~~~~~~7 113 1.41 54 1149 1.52 1.23 Mi £221 1221 2.22 1.1

Int4t g 6 to op>w r 253 370 2e5 391 242 443 24< 398 358 718 1,041 1.120

a r.4a.a 421 53 2sa 152 1. 292 1.21 13 1.S 1221 1.214 li

CcewPO tax 0 0 0 0 0 0 0 0 0 0 0 0

Nd.8araa1.u b 21 133 2o54sa8 g152 142 22 1 5I 15 _ 12 23

-37- ANNEX 5

ANNEX 5: BALANCE SHEET(RP. BILLION)

91122 922t93 93194 . 9,94 9'5 _ s5 I

__ SAR Est.Act SAE ESL Actual SAR ESt ACtUal SAM EstAtSctu al tual Actual st.

ASI!FtxMAttds 1tB 15sa 27 1 ZLfI am 2111 371 ALMl D4M1 ALM 5

NaloijA*trvatt 13J8O 10,513 15,887 13,441 22,135 17A04 25.00 18.45d 30.782 27.211 2i.353 3.884

Gm= aro mn Samoa 19,345 13,942 22,752 17,572 30.456 22291t W5.58M 19.978 43,383 2s.774 32,747 42,489A4znuatiedr.a8808 5,535 3.429 8.785 4,124 8,321 4.987 10.251 520 12,001 1,553 3.3SS 5.005

Ws4iAm rgi 5.898 5,043 8.80, 8,258 8.85 9,927 11,722 12,904 15,138 13.521 17.708 17,003

CuffwA Asset l2 8m LR L1 11 1 1231 152 28 MM Mi 4mCash 18 804 377 91 425 853 488 754 s59 840 1St40 023

Gromaccons g,e..abl. 418 503 484 583 583 e7e 870 784 762 go0

A1osmutbrbaddobt (13) (1S) (17) (20) 23

N atee.88m48e 419 491 484 589 683 859 870 784 782 885 52; 1,110

Gtn n 377 413 340 588 387 779 487 790 517 735

Am0sAte8VowWerOitormt (4) (5) (7) (a) (7)Not tWnterlz 377 408 340 583 387 773 467 782 517 728 as1 853

OOtwhe muwast 103 178 108 182 113 71 118 82 124 1l9 27 1.544

Othw Asses Le la zt an Zn tm an zu an an ilS lgt8nd8s 0 0 15 57 120 110 254

418tt ut, 154 G11 I78 872 570 814 477

TOWAssats32114 1 21.17 Jug4 1ae 82271 sUrn 4&8 1J140 42 Sim1 MM

EQUT)EAN L-lUTDn

Pai44acaptal 13,371 9.s81 15,089 11.891 18.955 15.310 19.910 19294 21.260 22,408 2e,729 29.222

.uwMne 6.ty 13171 9,s50 15.000 11.ee1 16,955 15.318 19.010 19.294 21.260 22,4as 28.729 25.22

ceigp* dse" 9 08a 0.147 ,153 9,022 8.853 9,822 6.853 10.552 13.000 11.202 13.000 13.000 13800Addlain GwA .tty 5.224 2,038 6.067 5.228 7,133 s,882 8.4 8,294 10,0e8 SA,8 13.725 18,222

Co m,emk 0 0 0 0 0 0 0 0 0 0 ° °

Raingdeumgs 214 729 9W8 1.185 2.120 1.347 3.481 289 5.389 1.020 1,737 1,.74

-s=l~~~~~! 12 MB 1e47 1.121 1421 1.21 1.31 14 LOl 181 110

1M 5biN _ 2 1 UK LI U2zi 7, 11453 1741 (2120 1m 121 13 21LMTD&bmaans(t axM p nom) 4.798 4,1M8 7.488 5.031 10,483 8,185 13.180 6.930 17847 0,529 148900 18.187

Lorng4mmo o(LTD) 4,798 4.195 7.488 4,731 10,483 5.285 13,180 e.030 178047 7031 12,210 18,589

80nds 300 0oo 900 1,898 2,508 2.598

OtI*rUabd0w 502 884 803 3,847 723 4,407 s85 4.107 1.041 5.oDe 2.012 2.5so

Coftnnw Oppms 453 534 701 840 1.03) I'M85 1.303

Ots 231 3,113 3.708 3,347 3.978 1,817 1.571

s munS 1.182 1411 HE2 1.22 £811 Ln I211 i12a g212 2, 2120 21

Cu,tponionLTD 388 402 320 448 328 487 4S4 540 4S9 1.227 803 1.408Aceeun"DeW psymi542 859 58e e81 597 583 027 879 859 9Ol 744 730

Oth.C.n.bt.. 03 437 88 598 104 883 188 1.907 114 1,803 1.380 1,374

Lai9ites letoRo 81 7 85 141 348 457

ln*811mpa4ys 353 415 414 552 934ahw 77 85 108 1.007 293

TWmucva,Ad . 21.1a 1 L 24.3$ 31401 21a41 St,"j; 2t0 i 40 gm 0L 1

- 38 - ANNEX 5

ANNEX 5: PLN-FIJNDS FLOW STATEMENT(RP. BILLION)

21h22 R2tS WNM 10s4 199S1S0 19JARia Acu. s ___.UK ______ j 1967SAR Est Aetua SAR Oat hE etuA& SAR Fst Actzu2 SAN t Acku,tl SAR Esg Actuml Actual Evt

LB LB t LB LB LIE M4 lilt LB L 4447 4B opwP 6e ns gm J.304 002 0,0m 972 o273 1,760 2.064 1.92

ith t ) 2s 29 1 I5 l (0) 220 (11(8

so 121 996 I9m on Is3 s 620 159 57 1,043 1.63 2210

orw 1SO Ce 1n7 232 227 s20 204 450 277 #4e Su 062

D9ff. C w_caDb 100 42 96 162 107 362 1009 300 04 20 370 24"

Ca,w,mv44p_ 9I 54 101 91 120 167 146 141 173 091 194 100

DDWlk" gourw m la Lii I l .iUI n an LD 63 GM41 03 a o 6gm 62 o 072 398 9S2 076 2,115 2 2Z3

- h*a."g"5d*mwa 213 243 299 207 242 293 244 2z9 388 47 1,041 1,120

Dt 320 290 3 2220 463 V2 10 494 79 1.079 W00

:Ed~~~~~ ~ ~ ~ ~ ~~~~~~~~~~~~~ qO 0 200C.P.M*m a~~~~~ 00 0 0 0w

192 (1,737) 19 (7 s 1.2070 607 422 10.4 289 g16 72n

h8 5s 113 03 (2.2e 11 (Z27) 5 (1.937) o00 (222 400 702

Ch.I W,t3et4 = . 0.1 a0,.paOal( 0 (41) 3 se 11 21 (537) 1DS 147 S7 1.s

0059. 174 C2.340 (4 (.00) (290 (4) (g7m

f_~~~~~~~~~~~~~~l 2= mm mu 2 UR im m M a LB II UR11 LEE UKELI LI LB LEE uS EL

0..ma..a .q.4y 1.246 2274 675 2.730 0 344 3.240 850 4.477 4.243 2492

OIP s 6 97 1.025 2.186 1,292

P.dA . d 4b16p8

#mft 1,70 1.0 497 2.6te 3X452 1577 1,290

c _ "Ay0 a 0 a a a - o

Lowe as9 603 3069 1.236 3297 1,000 3.0 "a 5.102 214$ 3,4S7 499

so54 .XL 9*) gas 3es 3.056 on X 2i7 1,000 31025 9on 5.12 1,147 2.797 4,5d

Ban* 0 0 0 00 0 Mc0 0 0 0 egg 700 300

12OL22MU am anI mu LB WI LB Liui LEE LE IZ LuN LB

*-inteixLe UN 2m Am km I" LE Lo tf4 LK LB US LEMtCa 090 06'49 3,372 3X722 S.1 a79 50794 0 172 5152 9.458 sse2 7.405 7.S9

458495059994a9919509 229 11 24 78 436 316 us 737 461 a67 . 1.292

mcn) i iE in A gm 2 Ii D 1924 Liu 1.111 gUIm

C5580 0 6 .5..9.6 7 W 062 706 199 804 277 v1e 425 853 496 704 "a 0.960

IS9 904 277 et9 425 899 469 754 659 649 I.m0 821

MAP SECTION

IRD 22597

1i 1O INDONESIA

POWER TRANSMISSION PROJECTMAJOR POWER PLANTS AND MAIN TRANSMISSION LINESUNDER PROPOSED DEVUELPET rasliOnies

EXISTING CONSTRUCTION PROJECT

OEVELOPMENT 500 LVSUMATERA 50k-SO kV ond 70 kV

Power Stations500 kV SubstIaionsEr obyarJAKARTA S*

150 kV and 70 kV SubstationsW.(iod. Sre mmre I-P Petrokimi;1 C S t- -- --

S-S K,d,uay S XIV PLN's Wiloyah Numbers

,R. 1 ,, nod.nrnkk * Wilcyah or Distribusi Headquartershl, rg,}l1\e C S i I Sgk mdi Indirmosu -W.-y

....... PUN', Wilayah Boundciries

W ; ,1 4sL ~~~~~~~~~~~~~~ V ' Ic3Z uoreNn

rl.e. 1epol pomolP& g e DOD O DemuR dut ooo

C lge,e e le 3 \9

uC IF <1 _ s bmrn wDlr -lbn

Raw JAWA BARAT Enejo JAWA TENGAN en.n,SURABAYA Be."kbn*we wo t sh s st- ewssswb XIV V.n1DD3' \W ,I m t bug\ Ugao ne o5ueklTNd RsanPs

;r>us wyrmt sumodro \4 mDIDyp .*- PuntOkeltl |cO hP____ i_____ ___i Gpmbp

... *. CpIon --GrmdSO xi

P ... knTnknlr *..Mn'

3ate iln

a,tF Paraapth k-~ ' Rtj<, Elaunk (IMederl) >*, _ _<*<r1rX E oNg-l

106. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~Wae.URd d 'WW .

L = = = = = _ | oWomxterl , JAWA TIMU9 /Y bWeto \ 4 Probollnggo poiton /~~~~~~~IAA TMUR

3 Pabolagg PaJAKARA A,ag a 'I.,VX

Cengko.eng r K _mcy_ -on Tgnl hg z K EIJn

Ingv)eP P D ] 1>

-ttoromdkD es b _ _ , ; q p^^ dJA6 aR t l\KP d -atu r Va S E M A R A N G

S '>lb 9 ;mdku nd9> / PeLrok I T 10 w C

SmPikTarneadag Otnba P\ a F,,, I t s r b9 --

Dond, X C l15ngsl F > e o st Somorong l Xmodz \ g SmponZ e O StZ IL]D I10 KILOMETERS

X \\S;r Nabaldar \o 4o eb--- tb ID l MILES

1 4' 9112 PeERUARY 199