nocummat of

The World BankFOR OMCIAL USE ONLY

Report No. 6238

PROJECT COMPLETION REPORT

INDONESIA

SIXTH POWER PROJECT (LOAN 1365-IND)

June 4, 1986

Projects DepartmentEast Asia and Pacific Regional Office

This document has a restricted distribution ant may be used by recipients only in the performanceof their official duties. Ils contents may not otherwise be disclosed without World Bank authorization.

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THE WORLD SANK FOR OMCLAL UK ONLYWashmlton. O.C. 20433

U.S.A.

Oihc of ODvctar.c.nwsO0rAmn EvIISMnW

June 4, 1986

MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT

SUBJECT: Project Completion Report - Indonesia Sixth Power Project(Loan 1365-IND)

Attached, for information, is a copy of a report entitled"Project Completion Report: Indonesia Sixth Power Project (Loan1365-IND) prepared by the East Asia and Pacific Regional Office.Under the modified system for project performance auditing, further-evaluation of this project by the Operations Evaluation Departmenthas not been made.

Attachment

This document ha restited distribuuon and may be usd by recplets only in the prfofnunceof their ofcial dutie Its contents maY not otherwie be disclosed without Waorld ank authoriation.

FOR OFICUL US oNy

INDONSIA

SIXTH POWER PROJECT (LOAN 1365-lID)

ProJect Completion Report

Table of Contents

Page No.

P CEFATACSHEET 0........ e ......... 0 .......... e.e0...c.e....e 0ee. ii

BAIC DA TA SHEET............... . ii

I. INTRODUCTXONg........................................... . .... 1

The Power c0ctor 1The Borrower/Beneficiary...................................... 2Sources of Data for PCR................... ,..... 3

-I. PROJECT IDENTIFICATION PREPARATION AND APPRAISAL*............. 3

Preparation and A p p r a i .. . 4Project Objectives .... .......... e. . 4Project Descriptions..... 4Cost Estimate and Financing Plan............ ................. 5Subsequent Additions .......... ...... . . 5

III. IMPLEMEXTATION........... ... .... ......... .... o....... ... 6

Implementation Arran6ements.o. e.e.c...... .................. 6Implementation Se6dule...... ...... gece........ eee......CCC 6Project Costs 8

9Performance of Consultantsn s u l t a nte............. ......... ... 10Reporting ...... ... .. ........ ... ee..... ............ ........ cc 10ProcurementcC..C.e..~e... e .. e.C.C.Cee ... e.e.C.... .......... 11

IV. OPERATING PERRMC.... C e 11

Operating Efficiency.. C C 11Operating Pr o Clem s 11Engineering. Designp, Operation and Maintenace*eec.....e.e 12Environmental Aspectsp. 13

This document has a restatd distrlbutn nd may be sd by repients only b the performanof tir offcil duties, Its contents may not otherwis be disclosed without Wod OSnk suthwitation.

Page Vo.

V. FINANCIAL PERFORMANCO. ... ..................... .*. ............ 14

Financial Objectives ........................ * **..** *..*...... .. 14Performance Resultsooo .......... ........ . ...o** . ..o.o .* 14Tariffso*ooo*oo010*o**ooooeooooo*00 isFinancial Managemnt.....o..o...oos.o...o..o.o.e nt..... o.. o.. 16Auditingeudiotoi ng............e....o..o....ooo o.o.o.. . .oos. 17

VI. INSTITUTIONAL PERFORMANCE AND DEVELOPMENT.........**9**40..*0 17

Manaeomet isPlanning Design and Research s e a r ch.... .. ... ** .. .o. ..... o 18Manpower and Training................... o*................... 18Accounting and Budgetingoood g e t i ng...... . . . ........ ..... 19

19Overall Performance. ................ o.*................ 20

VIIo ECONOMIC REEVALUATIOVo..o..*........ ...**** .. . * .***..*.* .. 20

Plant Capacity Factor.....tor......... ..... . ........... 20Fuel Priericeoooooooooo***0*0*0*000* 20Operation and Maintenance Cost.ost............................ 21B efooo oo 21EIRR Computationooo...o..00..0...... oe*o***Oee* 21

*WIII. 0 0CLSINC L U 8 I O NS000000000*0*400000*0* 21

Achievement of Project Objectives.......oo.....ooo..o.*....... 21Project Implementation and Operating Outcomeoo*ooo**o*o...o... 22Performance of External Agencies............................. 22

ANNEXES

1. Major Contracts -- Implementation Desa y s 232. Estimated and Actual Costs 243. Actual Disbursements Versus.. 25

Appraisal Estimate4. Summary of Key Financial In tocators 265. PLN Income Statements 27

PLV Balance SheetsPLN -- Funds Flow Statements

6. Economic Re-evaluation of Nuara Ku r a n g 30Thermal Station Units 4 and 5

MAP - IBRD 17207 Rl (PCR)

INDONESIA

SIXTH POWER PROJECT (LOAN 1365-IND)

PROJECT COMPLETION REPORT

Preface

This is the Completion Report (PCR) for the project financed underthe seventh loan to the Government of Indonesia. The US$116 million loan,which became effective on June 6, 1977, was provided to finance approximately821 of the foreign cost of a project consisting of the addition of two 200-MWoil-fired units at the Muara Karang power station, the cost of consultancyservices for a 200-MW unit for the Semarang Harbor power statioa and the JavaExtra High Voltage system study.

Although the project was cxmpleted in September 1982, disbursements,mainly for payment of contractors' retention monies, continued until August1985, and the original closing date of December 31, 1984, was extended toAugust 1985. The Bank loan was underutilized to the extent of US$2602 mil-lion, of which about US$20.7 million was used to finance cost overruns in Bankloan 1!z7-IND for Huara Karang and preparation of several feasibilitystudies. US$5 million was cancelled on April 6, 1985, and about US$0.5 mil-lion was cancelled when the loan was finally closed.

This report was prepared by the East Asia and Pacific ProjectsDepartment, Energy Division, following a project completion mission which tookplace in July 1985, and is based in part on completion reports prepared by theconsultants retained for this project.

In accordance with revised procedures for project performance auditreporting, this PCR was read by the Operations Evaluation Department (OED),but the project was not audited by ORD staff.

Following standard procedurest OED sent copies of the draft PCR tothe Government and the Borrower for commetq. However, no comuts werereceived.

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tSOJteT C'WLiUMON SPORT "AStC ATA 61431?

KTn PoJKC D6AT

tpptasl Actl t4if a UMLW.L2 current *estimte

Total roeSct coat CUSS uttllos) 241.42 111 Uneru Cl) a .

L,an/Credit Amongt (USS lttIlie) _oC Cgac.lld ) 1ZO lt

iSburs"-d ) i ¢Ga:. lh7Cica Caoea te complted ww Uftapottio@ Competed by Aoe" Date (7)Proportion of TUN Uiderrun or Overrun (X)Lncei t lale o etutn (lj (xiinanctal terforauMeinstigait onal Pefrtmeancete

tAuttatal emuti (US$ a) 5.4 24.0 50. $Ol O4.I 114.0t 114. 114.0 114.0 114.0Actual (MuU a) 0) 19.0 3S.3 4.5 74.9 A. 49 . "ag.* OLO6. £10.sActual as X ot ettstete 0.0 1.l "9. 61.0 7I.I 72.0 71.1 1.4 911 91.3Sate of final ditbrsuemnt 3V16/81printcial frpaid to (eo/day/yr)

lirat 'ntion it ftles or TLmegabli *41L.1overnwnt s AplicpLation

SegotS.atloeaspaed ApprovalL" te_ otst nOMFW77

Wa Aetvreess O ate 4/ - -- . . .U...Slone ta t WNW

sal Tear of Iorrmr. ofoLw-oo Projtct Ine tri VIalgt T 1UM AT

lanlCredtt Nmber 1 3-.DAmout (UsS mUtton) .19

oan/Credit A.ftemsAt Sate i7

ItSqUON DATA

so. of gate ofice. W. r.. LMt PToerkw k tc __Uzrt

tdntittcAtion r/ 75 - Irapprateal a - - 7__r__

Appraisal - _ I,Foscappratal

Total--

sperv'tston I 12Supervtsion tt 21 LZIILL.Su*pv1IO .11? z z -Z_4 Superviston ;t Q

smapwvtion VSupervtiio Vt ')II83Completion 752_ _ _ _ 7/:8

CWTYUCIWIGI RAT'S

Nom of Curtrecty (abbeviatson) tndonesti Raptah 1)"ttAppaisal Tea A"fve bcItang" ates P SIA *311Intr"ening Tears Av -' 191127l CSJI * USSICompletion yea t:sgi

i is de" not incSle abou US20.? etilton for Later dilttons (pan. 2.07).Thig date wes later rvi"d to 03/S1 (fotr unt 5).7 a4mek aft estiuate of part-time Spervisios on the ptoject.

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INDONESIA

SIXTH POWER PROJECT (LOAN 1365-IND)

PROJECT COMPLETION REPORT

Highlights

i. A US$116 million loan was made to the Government of Indonesia tofinance part of the foreign costs of constructing two 200-MW oil-fired unitsat the Muara Karang thermal power station, the cost of consultancy servicesfor a 200-MW unit for the Semarang Harbor power station, and the Java ExtraHigh Voltage system study. The first 200-MW unit was comissioned in May1982, followed by the second unit in September 1982. The project wascompleted about 12 months behind appraisal projections and was accomplishedwith a cost underrun of about 36.71. Major reasons for project delay weredelays in contract finalization, construction error in alignment betweenexisting and new plant buildings, and unsatisfactory contractor performance incertain areas. The large cost underrun was due to lower-than-anticipatedequipment prices, strength of the US dollar and very low rates quoted by thegovernment-owned contracting agency for civil works.

ii. The generating sets at Muara Karang have been operating satis-factorily with acceptable levels of efficiency and plant outage rates. TheEI of the project is 12.3X against an appraisal estimate of 21X, in view ofhigher actual system operation and maintenance costs and low-)r revenuerealizations. The Extra High Voltage (ESV) system study accomplished underthe project paved the way for establishment of a natiunal EYV grid. Othertechnical studies subsequently included in the project concerning hydro,geothermal, minihydro, and transmission/distribution development served auseful preparatory ground for future projects in the power sector.

iii. During project construction (1977-82) PLN's sales increased by about258%, at an average annual growth rate of 211. The project was thus a timelyaddition to PLN's generating capability. I

iv. While fuel oil price was subsidized by the Government until 1978/79,in the succeeding 4 years the price increased by about 350%. As correspondingtariff adjustments allowed by the Government were not adequate, PLU registereda net operating loss in 1982/83. PLN's future performance will significantlydepend on tariff level, the price of fuel oil, improvement in system lossesand financial assistance from the Government for its rural electrificationprogram.

v. PLt's institutional development has been impressive, and it hascontinued its efforts to make further progress in various fields. Animportant issue which needs to be addressed in the future concerns reductionof the project implementation period, especially through speedier procurementand contracting procedures.

INDONESIA

SIXTH POWER PROJECT (LOAN 1365-IMD)

Project Completion Report

T. INTRODUCTION

The Power Sector

1.01 The generation, transmission and distribution of electricity inIndonesia is the responsibility of PLN, a government-owned enterprise createdin 1951. Captive power plants installed by private parties also play a predo-minant role in the power sector, which in addition, comprises municipal fran-chises and cooperatives supplying power in a few remote rural areas. The activities of the power sector are regulated by the Ministry of Mines andEnergy (MM) established in 1978, through its Directorate General of ElectricPower (DOEP). Dy a legislation enacted in 1979, DGEP acquired from PLN theresponsibility for policy planning, licensing of franchises and general super-vision of the power sector. PLY started to function as an autonomous utilityaround 1972, when its status was changed from that of a ministry departent toa public corporation. Thereafter, it undertook the urgently needed rehabili-tation and expansion programs. PLN's subsequent growth was rapid and in1983/84 it had about 4.4 million consumers and supplied about 651 of the totalelectricity in the country. The growth in generating capacity of PLY sincethe time of appraisal in 1976/7? and projected up to 1988/89, is shown inTable 1.1, which also indicates the growth of captive power plants up to1983/84.

1.02 Following the steep increases in oll prices from 1979, diversifica-tion away from oil was established as a policy objective and coal was estab-lished as the primary choice for thermal power plants. New hydro and coal-fired plants started comdng on line since 1985. Geothermal energy will playan increasing role in the power sector, while. oil-fired capacity will remainstable and gas turbines and diesel generators will be progressively phasedout. By 1988/89, oil-fired capacity will reduce to odly 44X of the totalcompared to 79X in 1983/84. Captive power plant capacity is expected toreduce as economic, reliable grid power becomes available.

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Table l.lt GUNUATING CAPACITY OF PLY (JAVA)

ProjectedActual MW MW

1976177 1983/84 1988/89

Hydro 408 535 1,819

ThermalOi-Ifired 200 1,506 1,836Coal-fired - 1,200Gas turbines 340 645 645Geothermal - 30 140Diesels 57 0 0

Total 1,005 2,716 5,660

Average annual growth ratefrom 1977 (x) - 15.3 15.8

Oil fired capacity as 2 of total 59.4 79.2 44.2Captive plant (WA) 2,400 2,900 n.a.

The Borrower/Beneficiary

1.03 The borrower was the Government of Indonesia and loan proceeds wereonlent to PLU on the same terms and conditions as those of the Bank loan. PLNoperations are managed by a board of directors (presently consisting of fivedirectors, of plann ng, construction, operations, finance and administration)headed by a President-Director, who is appointed by the President andaccountable to the Minister of Mines and Energy. The directors perform moreof a staff than a line role, as line responsibility devolves from the board asa whole to 16 regional operating managers and 12 construction projectmaw-gers. PLY's major policies and programs - including its investmentplans, budgets and tariffs -- are subject to review by a supervisory boardchaired by the DCWP and the Ninister for Mines and Energy. PLY's procurementactivities are controlled by a Procurement Control Team in the Governmenc'sState Secretariat (5E1REG) set up in 1980.

1.04 Since 1969, the Bank has played a significant role in the develop-ment of power generation and distribution facilities in and around Jaka.rta andin West and Central Java, through three distribution projects (Credits 165-INDand 334-IND and Loan 1259-IND) and eleven power generation cum transmissionand distribution projects (Credit 399-IND and Loans 1127-IND, 1365-IND,1513-IND, 1708-IND, 1872-IND, 1950-IND, 2056-IND, 2214-IND, 2300-ID and 2443-IND). These loans and credits encouraged some major institutional, organiza-tional and financial reforms in the sector, and provided PLN with a newcharter giving it substantial autonomy. They also provided funds for consult-ing services, notably a large management consultancy effort, the Java Syutem

Development Study, and the EHV System Study, amng a host of other technicaland institutional studies. Five power projects have been completed so far.While PLI's performance in implementation has been uneven, it has shownsignificant growth in its capability to undertake large and complex projectssuch as Suralaya Steam Power Plant, 500KV Transmission lines, and Saguling andCirata hydroelectric projects financed from the Bank loans.

Source of Data for PCR

1.05 This PCR is based on:

(a) information available in Bank files;

(b) quarterly Progress and Financial reports submitted by theconsultant;

(c) project completion report furnished by the consultant;

(d) SARs for thc sixth to the fourteenth power projects; and

Ce) discussions with PLN persovinel and field visit to Muara Karang powerstation during the Bank mission to Indonesia from July 2-16, 1985.

II. PROJECT IDENTIFICATION, PMEPARATION AND APPRAISAL

Origin

2.01 The Bank has been associated with the power development program ofIndonesia since 1969 and the present project was a logical step in thisdevelopment process. The Java System Development Study carried out by a con-sultant had identified addition of 2 x 200 MW units at Muara Xarang powerstation (where 3 X 100 MW units were then nearing completion) followed by theaddition of 1 x 200 MW unit at the existing 2 x 50 MW Semarang power station,as the least cost sequence of development, to meet the demand by 1982-83.Hydro projects could not be commissioned in time, while the gas turbinealternative was less economical. The basis for the above plan was an annualrate of load growth of 20X in the Java system, during 1975-85. The actualrate of load growth was around 181. However, with delays in the comissioningof generating sets, the ratio of installed capacity to peak demand has beensubstantially maintained (thus 1982/83 installed capacity/peak demand ratiowas 1.68 as forecast and 1.60 actual). The high value of this ratio is due to600 NW of gas turbine plant (installed as a crash program between 1975-77),which is uneconomical to run except for peaking duty.

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Preparation and Appraisal

2.02 The project was conceived around September 1915 and was prepared byPLN in about 12 month's time, with the assistance of BeA' missions id4 consul-tants who were working on Muara Karang unit 3. A unit size selection study bythe consultant established 200 MW as the next appropriate size for the 8rid.Muara Karan8 site did not have adequate space for coal storage, hence theunits were desiped for oil firing only. It was earlier proposed to provideBank funds for financing the fourth 200 MW unit; subsequently, at 001'srequest, the financing of the fifth 200 MW unit was also included . Duringloan negotiations, quotations for major equipment for unit 4 had already beenobtained, together with options for unit 5, with financing either by IBRD orsuppliers' credits. The Bank demonstrated to the negotiating team thatsuppliers' credit terms would be advantageous; it was therefore decided tolimit IBRD finance for unit 5 to general construction, minor equipment andmiscellaneous items.

2.03 An important item which was incorporated for Bank financing at therequest of the Indonesian negotiating team in December 1976, was the SHYsystem study including engineering for the transmission lines. The JavaSystem Development Study done by consultants had indicated the need for anisland-wide ESV interconnection in the early 19809 to ensure optimumutilization of generat;ng capacity and enable growth of PLN's system in anintegrated manner. In early 1977, based on discussions with consultants, PL4advised the Bank of its decision to select 400 kV as the SHV system voltage,which would have made the EHV study unnecessary. The Bank however persuadcidPLN to undertake the EHV study as originally planned. The ultimate selectionof 500 kV rather than 400 kV as the ENV system voltage, was indicated by thisstudy as a better alternative.

Project Objectives

2.04 The main objectives of the jnuject at appraisal were to augmentPLN's system capability to meet the rapidly growing demand, to initiate actionfor the next stage of generation development by financing detailed engineeringfor the 200 MW unit at Semarang and to prepare the ground for the island-wideEHV link through an ENV feasibility study, followed by detailed engineering.An annual review by the Bank of PLN's detailed financial plan that wouldenable it to meet its operating expenses, interest and other charges on debtand provide a reasonable contribution towards new capital investment, was amajor objective aimed at strengthening the institution. During projectexecution, several additional studies, having technical and institutionbuilding objectives, were added to the project scope and financed by the Bank(see para. 2.07).

Project Description

2.05 The project comprised:

(a) the fourth and fifth thermal power units (200 MW each) at the MuaraKarang power station;

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(b) engineeritg and design, including the preparation of bidding docu-monts and evatluation of bids for the third unit (200 MW) at theSem_rang Harbor power sta ion; and

(c) congultancy gervices for ths Java U1V system study, includingdetailed design and preparation of bidding docsiments for phase I ofthe intercoanection.

Cost Estimate and finncina Plan

2.06 Table 2.1 gives the project's cost estimate and financing plan.

Table 2.1: COST ESTIMATE AND FINANCING PLA(Us$ million equivalent)

Foreigo exchane sourceBilateral/suppliers' Local cost /a Total

Item IBRD credits GOI cost

General construction units 4 and 5 37.66 - 22.02 59.68Local construction units 4 and 5 - 39.35 39.35Mechanical and electricl plantt

Unit 4 43.83 - 8.95 52.78unit 5 17.60/b 29.28 7.71 54.59

Engineering and supervision 6.76 - 0.77 7.53Administration and overheads - 7.01 7.01Contingencies 4.71 1.49 4.38 10.58Engineering -- aemarang unit 3 3.00 - 0.30 3.30Engineering Java ERV 5.00 - 2.00 7.00

Total 118.56 /c 30 '1 92.49 241.82

/a Local cost conversion based on US$1 * Rp 415.7i For unit 5, the loan financed down payments and ocean freight for boiler and turbine

generator plants, electrical equipment and transformers and 100l of foreign exchangecoat for instrumentation, structural steel and environmental protection equipment.

/c The loan amount of $116 million excluded $2.56 million provided in Loan 1127-IND forengineering of unit 4.

Subsequent Additions

2.07 During project implementation PLY saved considerable amounts of theloan due to lower equipment prices. At the request of GOI/PLN, the Bankagreed to ftnancing of the following additional items from the loan proceeds.

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Actual costItem (Us$ million)

* Cost overruns from Muara Karang units 1, 2 and 3,financed under credit 399-IND and loan 1127-INDincluding consultancy (US$50,000) 8.4

* Feasibilitq study for Java tria.smission anddistribution (preparatory to Power 12) 1.5

* Consultancy services for Cirata hydroelecric project(preparatory to Power 13) 7.6

* Minihydro potential study including feasibility studiesfor 4 schemes and prefeasibility studies for 21schemes (preparatory to Power 12) 1.0

-- North Sumatra minihydro project study 0.2

Risk analysis for Saguling hydroelectric project(preparatory to Power 10) 0.1

-- Engineering study for Kamojang geothermal project(preparatory to Power 12) 1.9

Further, the consultancy contract for the ENV System study was extended tocover 150 kV system protection coordination and training of PLN personnel inEHV system design.

III. IMPLEMENTATION

Implementation Arrangements

3.01 In the absence of an organization in PL for designing thermalstations, it was decided to entrust to a consultant the design, preparation ofbid documents, assistance in bid evaluation and contract award andconstruction supervision of Muara Karang thermal station. The Department ofSteam and Gas Turbine Construction of PLN provided a construction supervisionteam under a project manager. Evaluation of bids was accomplished at PLN'shead office with the consultant's assistance.

3.02 PL, exercising its option for extending the then-existingconsultancy contract for units 1, 2 and 3 at Muara Karang, appointed the sameconsultants for units 4 and 5. At the time of appointment, PLY pointed outcertain deficiencies in the existing consultancy services, notably lack of

experience of consultants' site staff and the consequent need to refer toomany decisions to the consultants' office in the US. The consultants agreedto provide more experienced site personnel.

Implementation Schedule

3.03 Delays in Contract Awards. An analysis of the scheduled and actualdates of contract award and contract implementation for major project compo-nents is presented in Annex 1. There were delays ranging from 3 to 5 monthsin the signing of most of the contracts, a delay of 7 months in the contractfor fabricated steel and 17 months in the contracts for site development.Finalization of the Control and Instrument Contract also dragged for severalmonths. The time interval between tender invitation and contract signingranged from 8 to 14 months for the major contracts.

3.04 Major Problems and Delays in Construction. The project was besetwith several problems during the construction phase which resulted in lengthyimplementation delays. The major problem areas are highlighted below:

Lack of access due to deiay in Units 1,2 & 3

As construction work was not complete on the earlier units,commencement of activities for the new units had to be delayed byfive to six months.

Site Development and Piling

These activities started about six months behind schedule due tolack of access caused by delays in completion of the earlier units,and tardy cement supplies introduced a further delay of about onemonth.

Misalignment of Building for Units 4 and 5 vis-a-vis Building of Units 1,2 and 3

In October 1978, PLY suspected a misalignment between the centerlines of units 4 and 5 and the rest of the building, and this wasconfirmed by PLN and the consultants in February 1979. The progressreport of June 1979 indicated that the misalignment, which was about10 cm, would be corrected by suitable modification of the columns ofunits 4 and 5. However, the consultants failed to evolve a workablesolution to this problem until the end of 1979, causing a delay ofabout nine months. The consultant's completion report, attributedan effective project delay of 2.1 months to this incident, but it isbelieved that this figure would be much higher.

Mechanical and Electrical Construction

The tardy and inefficient work of the contractor -- failure ofvalves, inefficient installation of condenser, inefficient prepara-tion, installation and chemical cleaning of feed water and mainsteam lines, inefficient installation of control and instrumentation

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work - resulted in a delay of about seven months in the commis-sioning of unit 4. A part of this delay, however, was due to piperouting modifications which had to be later introduced by theconsultant as a result of change in vendor data.

3.05 Minor project delays also occurred as under:

Late comissioning of outfall structure - delay of about1 month

Commissioning problems during initial firing - delay of aboutof unit 4 boiler, which produced a lot of tar 1 monthin the air heater

Lack of make-up water for unit 4 due to - delay of aboutpotlution in the intake from Nuara Karang 2 monthsriver, making it impossible for the desalinatorand demineraliser to prepare enough water

3.06 As a result of the above delays unit 4 was commissioned 22 monthsbehind schedule. Some time was made up for unit 5 which went into serviceabout 18 months behind schedule. These delays refer to targets set by PLYsubsequently to the SAR. With regard to the BAR projections the delays were20 months for unit 4 and 12 months for unit 5.

3.07 Delays in completion of the 150 kV line associated with MuaraKarang, restricted output from unit 4 in the first year of operation. Thisdelay was due to problems of land acquisition.

Project Costs

3.08 The estimated and actual costs of the original project componentsare detailed in Annez 2 and a summary comparison with the SAR estimates ispresented in Table 3.1.

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Table 3.1: COMPAI SO OF ACTUAL EXPENDITUE AND ESTIMATED COST(US$ million equivalent)

SAR estimates Actual expendituresForeign Local/a Total Foreign Local/b Total

Civil works and generalconstruction 37.66 61.37 99.03 18.97 16.06 35.03

Main plan equipment 90.71 16.66 107.37 88.33 5.04 93.37Engineering and constructionsupervision 6.76 0.77 7.53 6.27 1.17 7.44

PLNs administration andmanagement 0.00 7.01 7.01 0.00 7.01 7.01

Contingencies 6.20 4.38 10.58 0.00 0.00 0.00

Total for Muara KarangUnits 4 and 5 141.33 90.19 231.52 113.57 29.28 142.85

Engineering and design ofSemarang Unit 3 3.00 0.30 3.30 3.00 0.00 3.00

Engineering of Java inter-connection 5.00 2.00 7.00 7.30 0.00 7.30

/a Local cost conversion based on US$1 = Rp 415.7i Local cost conversion based on US$1 - Rp 625.

3.09 There was a large differential of almost 65Z between the estimatedand actual cost of civil works and general construction. This was due to avery low quotation submitted by a government-owned contracting agency, whereasthe estimate had provided for an offshore bid. This, coupled with much lowerthan anticipated equipment prices and stronger US dollar resulted in a costunderrun of about 38X on Muara Karang units 4 and 5.

Disbursements

3.10 A comparison of actual disbursements of the Bank loan versusappraisal estimate is shown in Annex 3. Actual disbursements as percentage ofthe appraisal forecasts are tabulated below.

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Table 3.2: CUMULATIVE DISBURSEMENTS(US$ million)

FY77 FY78 FY79 FY80 FY81 FY82 FY83 FY84 FY85 FY86

Appraisal 5.4 26.0 50.6 80.1 108.1 116.0 116.0 116.0 116.0 116.0 /aActual 0 19.0 35.2 66.5 76.9 83.5 89.3 96.8 108.0 110.5Actual as Xof appraisal 0 73.1 69.6 83.0 71.1 72.0 77.0 83.4 93.1 95.3

/a US$5.0 million was cancelled from the loan amount on April 6, 1985, and thebalance was cancelled on loan closing in August 1985.

3,11 The delayed disbursements were largely due to procurement and imple-mentation delays and to some extent also due to cost savings.

Performance of Consultants

3.12 While the performance of the main plant consultants was satisfactorywith regard to engineering and design of the plant and training of operatingpersonnel, their performance on construction supervision left much to bedesired. Not only did a serious construction error arise in misalignmentbetween the new and the existing plant buildings, but the consultant'sresponse was also so tardy in suggesting suitable corrective measures that theproject completion schedule was adversely affected. A tighter supervision wasalso called for on the work of the mechanical and electrical contractor forunit 4, which necessitated a lot of rectification work and consequent delaysin project completion.

3.13 The performance of the consultants on the various studies (seepara. 2.07) and on the engineering and design of Semarang unit 3 was generallysatisfactory. Of particular note is the benefit derived by PLV from the hydropotential study with regard to its institutional development (including activeinvolvement of Department of Public Works, Agency for Land and Aerial Surveyand provincial governments) and compilation of useful hydro potential data inits computer. The Java EHV System study established the system voltage as500 kV, laid down the basic configuration of the EHV network and its coordina-tion with the associated 150 kV network and the concept of the nationalcontrol center.

Reporting

3.14 PLN and the consultant submitted a total of 31 physical completionand financial reports. The format of the reports was useful in monitoringprogress of the project. The consultant also submitted a detailed completionreport, which though not following Bank guidelines, contains useful informa-tion on the project.

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Procurement

3.15 Procurement was accomplished through a total of about 13 contractpackages. Site Development and Piling were awarded to local contractors whowere paid in rupiah. The General Construction and Mechanical and Electricalcontracts, which were common for units 4 and 5, covered mainly the erectionwork with some items of supply and involved both foreign and local costcomponents. A }.5X price preference was permitted in the loan agreement forlocal construction contractors. The General Construction contract was won bya local firm without recourse to the price preference. The Mechanical andElectrical contract was won by a joint venture between a Dutch and anIndonesian firm. While unit 4 had four contract packages for major plantitems, unit S (largely financed by supplier's credit) had a single contractpackage including supply and erection of boiler plant, turbine generator plantand electrical items. Control and instrumentation and fabricated steel workswere included in common packages for units 4 and 5.

3.16 There were no major problems in procurement apart from inordinatedelays in the award of contracts.

IV. OPERATINC PERFORMANCE

4.01 The operating performance of Muara Karang units 4 and S as brieflynarrated here is based on discussions with PLN engineers during a site visitin July 1985.

Operating Efficiency

4.02 Performance tests on units 4 and 5 yielded a gross heat rate valueof about 10,035 kJ/kWh at 100% load, corresponding to a gross thermal effici-ency of about 35.9X. The net heat rate and efficiency figures, after allowingfor auxiliary consumption, were 10,540 kJ/kWh and 34.2%, respectively. Thesefigures are satisfactory for 200 MW units and meet the guarantees. The net(test) heat rate and efficiency figures for the 100 MW units at Muara Karangwere of the order of 12,650 kJ/kWh and 28.52, respectively.

Operating Problems

4.03 There have been no major operating problems with these units. Airheater elements require to be cleaned every two months; this problem is commonwith stations burning high sulfur content (up to 3.5Z) oil. The penalty dueto loss of efficiency, if average cold-end temperature of the flue gas isreduced, is higher than the maintenance cost due to increased corrosion. Theproblem of condenser fouling due to debris in the river water was solved bysubsequent installation of debris filters. The circulating water system'smarine growth problem with the earlier units' intermittent chlorine injectionsystem has been minimized after installation of the continuous hypochloritesystem (electrochlorination). There is a minor problem of high coupling oiltemperature, when two boiler feed pumps are operated at partial (below 50X)load. This is presently resolved by operating one pump at partial load. The

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desalination plants have not been operating satisfactorily due to high levelof river pollution especially during rains. The total desalination plantcapacity is 1 X 30 tons/hour plus 3 x 10 tons/hour (derated to 3 x 5 tons/hourdue to pollution), against a make up water requirement of 24 tons/hour. Ifthe 30 tons/hour plant should fail, the remaining plants would be unable tosupply the total station's water requirement. Problems of similar natureaffect the demineralizing plants at the station. These problems are beinglooked into by PLV and the consultants. The problem of soot collectionfollowing soot separation, was solved by installation of an automatic sootcollection system. The latter system has not been found necessary for plantsnot having soot separators.

4.04 The station has kept detailed statistics of plant outages and haseffectively monitored the outage rates of all the units. Table 4.1 summariesthe performance of units 4 and S.

Table 4.1: PERFORMANCE OF UNITS 4 AND 5

Operating Operatingservice availability Forced outage

factor (Z) factor (X) rate 2Unit 4 Unit S Unit 4 Unit 5 UnIt 4 Unit 5

1981/82 50.3 - 50.3 - 41.2 -1982/83 66.9 79.0 68.3 79.0 0.2 0.21983/84 94.8 74.3 95.9 74.3 0.2 4.61984/85 83.7 80.6 83.9 80.6 4.5 2.8

4.05 The performance figures for 1982/83 onwards are considered to bewithin acceptable range for good operating practice.

Engineering, Design, Operation and Maintenance

4.06 The engineering and design of the plant were generally satisfac-tory. The operators have been well trained during the construction phaseunder the consultancy contract, as also through some of the supply contractsin Indonesia and abroad. However, there is a severe shortage of experiencedmaintenance personnel, and this problem has been engaging the attention ofPLN. Presently no maintenance work is given out on contract; supervisors fromequipment suppliers are, however, engaged during major overhauls. A majorunit overhaul takes about 60 days, and there are proposals for cutting downthis period to 45 days. The station employs a total of 340 persons (280 inoperation and maintenance) which is slightly on the high side.

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Environmental Aspects

4.07 The Muara Karang power plant was designed using US EnvironmentalProtection Agency standards as criteria. One-time environmental pollutionmeasurements made by PLN's research department gave the following results.

CONCENTRATION IN PPM

1984 extrapolationLocations from 1982 actual test based on fuel Maximum /a

plant measurements consumption limitAverage Na-imum Average Maximum

8022 kM 0.0002 0.004 0.00037 0.0007 0.15 kM 0.00018 0.00033 -1 hr7 kM 0.00013 0.00024

NOx3 kM 0.002 0.0048 0.0037 0.009 0.0055 kM 0.0014 0.0026 -24 hr.7 kM 0.0015 0.0028

/a Set by government of Jakarta. Environmental regulations were introducedin Indonesia in 1977-79.

4.08 The stack monitoring systems and the mobile atmosphere pollutionmeasuring stations8 procured under the loan, were received only in 1985 andtrial operations have been commenced with the equipment. Training abroad ofpersonnel for operating the mobile units has also recently commernced. On linemonitoring of cooling water temperature and monitoring of waste effluent waterare proposed to be undertaken on a periodic basis. Residual chlorine ismonitored and kept below 0.1 ppm. Monitoring of the sea is-being doneannually by the National Institute for Oceanology.

4.09 Periodic monitoring of air and effluent water at the station, asalso instailation of remote air monitoring systems near the densely populatedJakarta area, are activities that PLN still has to introduce. Theoreticalstudies made by the consultant, at Bank's instance, have pointed to the needfor close monitoring of air pollution near Jakarta, in view of prevailing windconditions and narrow margins between calculated and permissible pollutionlevels.

4.10 Subsequent to the design of the Muara Karang plant, two developmentstook place (a) a landfill about 400 m to the east of the station jutting about500 m into the sea and (b) a canal constructed about 1000 m to the west of thestation. The possibility of water recirculation due to these obstructions was

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pointed out by the Bank mission in September 1978 and a detailed study of theproblem was undertaken by the consultant. It was found that the higher cool-ing water temperature (about 1°C) and consequent lower efficiency caused bythe obstructions would involve a cost penalty of about US$69,000 per year at80X plant capacity. Moving the outfall about 1,500 m to the east would haveresulted in an annual .aving of about US$141,000. The additional cost (andinconvenience) of the increased outfall tunnel length did not justify theannual cost saving and hence the original layout was maintained.

V. FINANCIAL PERFORMANCE

Financial Objectives

5.01 Under the sixth power project, the Government and PLN agreed toreview annually with the Bank PLN's investment budget for the next fiscal yearbefore its final approval by the Borrower. This was the interim periodbetween completion of the Financial Recovery Plan (FRP) (adopted under theThird and Fourth Power Projects and continued under the Fifth Power Project)and the introduction of financial performance targets.

5.02 The new system of financial performance targets for the period afterthe MP was first established through a covenant under the Seventh PowerProject (Loan 1513-IND, 1978). A self-financing ratio (SFR) was then adoptedbecause of the desirability of financing, out of internal cash generation, areasonable proportion of PLN's investment program. The agreed SFR was 30X by1985/86, with indicative targets for the intervening years.

Performance Results

5.03 The objective of the FRP for PL to achieve a full revenue/costrecovery was met in 1975/76, three years ahead of schedule and PLY was able tocontinue to maintain a position slightly above breakeven in terms of operatingincome through 1978/79. This satisfactory trend is shown in Table 5.1.

Table 5.1: PLN: REVENUE/COST RATIO

FY 1974/75 1975/76 1976/77 1977/78 1978/79

Target 80 N/S /a 90 N/S 100Actual 95 108 110 102 106

/a Not specified.

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5.04 The quantification of SFM indicative targets had been revised underthe Eighth Power Project (Loan 1108-IND) and the Twelfth Power Project (Loan2214-IND), to take into account significant changes in PLN's capital expendi-tures and fuel costs. The SF1 target for 1985/86 and onwards was reduced from30X to 201 under the Twelfth Power Project. PLN's financial performance interms of cash generation is shown in Table 5.2.

Table 5.2: PLN: SELF-FINANCING RATIO /a

1976/77 1977/78 1978/79 1979/80 1980/81 1981/82 1982/83 1983/84

TargetLoan 1513 17 17 17 21 21 21 25 25Loan 1708 - 12 12 18 18 18 25 25Loan 2214 - - - - - - 10 10

Actual 14 13 21 20 26 27 20 1S

/a The percentage of PLN's capital expenditures for the target year plus the twopreceding years covered by its net revenue plus depreciation retentions less debtservice for the same three years.

5.05 PLN was able to meet the revised minimum SFR targets in each year.The total capital expenditure over the period 1976/77 to 1983/84 wasRp 3,904 billion compared to appraisal projection of Rp 3,020 billion and thecoLresponding internal cash generation for the period was Rp 817 billionagainst the appraisal forecast of Rp 902 billion.

5.06 Actual operating revenues increased, over the period 1976/77 through1983/84, at 37Z p.a., as against the projected 28% p.a. As regards PLN'ssales in GWh, the actual results were close to the projected sales until1981/82. In 1982/83 and 1983/84, the actual sales were about 10.5Z and 191lower than the projections mainly due to the economic recession in the lastfew years leading to lower consumption from existing consumers. A comparisonbetween the projected and actual financial results is summarized in Annex 4.Detailed comparative financial stements are given in Annex S, Tables 1 to 3.

Tariffs

5.07 Fuel price increases following 001's policy of removing domestic oilsubsidies significantly increased PL's operating expenses. The average fuelprice paid by PL remained at about tp 25/liter until 1978/79 and increased byabout 301 in 1979/80, 401 in 1980/81, 202 in 1982/83 and about 601 in 1983/84and 1984/85. The fuel cost as a percentage of total operating expenses rosefrom 24.51 in 1976/77 to 601 in 1983/84.

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5.08 While fuel prices increased significantly in recent years, PLN'stariff remained unchanged until 1960/81, when PLN raised tariffs about 501 asa condition of the Bank's assistance in financing the Ninth Power Project(Loan 1872-IND, 1980). Tariff adjustments since 1980/81 have mainly offsetthe fuel cost increases and in addition lagged behind the fuel price adjust-ments. Consequently, PLN's tariffs were not sufficient to cover the fullincreases in its operating expenses, resulting in operating losses 1982/83.

5.09 In May 1974, PLN instituted a mechanism of tariff surcharges,through which adjustments of revenues were made possible. Repeated use of thesurcharge mechanism introduced distortion into the tariff structure. Theconsequential pricing anomalies were rectified in the tariff revision of May1980, which was based on the Long-run Marginal Cost (LRMC) pricing princi-ples. However, since 1980, all tariff increases have been effected entirelythrough changes only in the energy charges. The failure to adjust the demandcharges has thus reintroduced distortions in the tariff structure.

5.10 In 1983, the Bank assisted PLN in its studies of costs and tariffstructure. Based on the results of these studies, PLY agreed to revise itstariff structure to reflect the LRMC of electricity supply. The Bank'scontinued involvement in the power sector and itA support in tariff studieshas been an important contributing factor in motivating PLN towards economic-efficiency pricing. In January 1984 PL1 introduced an increase of about 241in the demand as well as energy charges. With this change the average levelof tariff is close to the average costs of supply, though some distortionsremain in individual categories.

Financial Management

5.11 The Bank had recommended a change in the financial performanceindicator from the Self rinancing Ratio (SFR) to the Rate of Return on therevaluded asset base, as more appropriate in the stage of development that PLNhad reached by early 1980s. Under the Fourteenth Power Project (Loan 2443-IND, 1984), GOI/PLN agreed to a rate of return covenant of at least 8Z from1986/87 onwards, with a target of 61 in 1985/86. This change is expected toavoid the uncertainties associated with the setting of SFR targets because ofthe uncertainties in the investment program and ensure that assets in opera-tion would earn a reasonable return. The SFR will be retained as one of theperformance indicators and will be monitored to ensure PL1's self-financingcapability.

5.12 Under the Fifth Power Project, two covenants were introduced toensure PLN's prudent debt management: (i) minimum future debt service cover-age of 1.0; and (ii) settlement of all its debts within one month when due.These covenants (which applied for the Sixth Power Project, also) werereplaced under the Seventh Power Project by: (i) minimum future debt servicecoverage of 1.3 times; and (ii) a debt/equity ratio of 60/40. The ThirteenthPower Project (Loan 2300-IND, 1983) adopted only one debt management covenantwhich required a minimum of 1.5 times coverage of future debt service eachyear out of the forecast internal funds for that year; this requirementreplaced all earlier debt limitation covenants. This change reflected thegrowth of a company like PLN, and at the same time, made allowance for theadded future earning power. PIN has been complying with these covenants.

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5.13 PL's collection performance has been generally satisfactory. Theaccounts receivable position of customers other than government users has beenimproved to about two months of billing. PLN's sales to government usersaccount for about lOZ of its total sales} but collections from some governmentusers (including Army and local governments) have not been promptly settledwhen due.

5.14 The Government has taken various measures to correct the unsatisfac-tory payment performance by government users. Outstanding government accountsreceivable were reduced from over one year in 1981/82 to about fVve months ofbilling in 1983/84; this is still not considered satisfactory. An action planwas agreed under the Fourteenth Power Project (Loan 2443-IND) to reduce thearrears further. It was also agreed under the Fourteenth Power Project toamend the old covenant which would require each and every government user topay its bills promptly to a more realistic covenant that would require theamounts owed by all government users in aggregate be kept to less than twomonths of total billings for such users. PLN would also be required under thenew covenant to keep collection data for government users adequatelydisaggregated so that the source of any overdue payment problems could beidentified.

Auditing

5.15 PLN's accounts are required by its charter to be audited bygovernment auditors. The audit reports are acceptable to the Bank, but aresubject to long delays. In 1983 special efforts were made by the AccountingDepartment to expedite the closing of accounts within six months after theclose of the fiscal year as stipulated in PLN's charter. This was a signifi-ca_; improvement. Government audit would normally take about two to threemonths. To be more realistic and also in line with PLN's charter requirementand Government's regulations, the Bank's audit submission covenant was amendedunder the Fourteenth Power Project from six to nine months after the close ofthe fiscal year. PLN, however, will submit its unaudited accounts to the Bankfor early review and, as required of all public corporations in Indonesia, tothe Government for audit within six months of the end of the fiscal year.

VI. INSTITUTIONAL PERFORMANCE AND DEVELOPMENT

6.01 At the time of appraisal in 1977, PLN had begun to emerge and wascontinuing to develop into a well-organized power utility from the "chaoticstate" it was in in 1969, the first year of Bank's involvement in the powersector. The present project contributed to the institutional developmentprocess, through continuous review of financial performance and organixationaldevelopment as also through several major technical studies, which had compo-nents for training and enhancement of expertise in specific areas. PLN'sinstitutional development and Bank's involvement in this process is brieflynarrated below.

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Management

6.02 PLN's management systems have in general been well designed;however, there are still certain weaknesses, notably in the division ofresponsibility between the regions/construction divisions on the one hand andthe central departments on the other. The process of decentralization ofresponsibility to the regions/construction departments is under consideration,but its implementation will be gradual as improved and restructuredinformation systems are still being developed. A management audit wascommissioned by PLY in 1980/81 and was undertaken by a local firm working inassociation with international management consultants. Their recommendationsfor the establishment of a more comprehensive corporate plannning process,improvement in coordination between the various headquarters departments andbetween headquarters and the regions, adoption of common design standards andprocuremeut methodology and improvements in accounting, computing, inventorycontrol and personnel management were reviewed by an in-house committee andseveral recommendations were implemented. The Bank has financed severalmanagement studies: Project Management Advisory Services (under Power 8),Accounting, Budgeting and Management Information Systems (under Power 11),Management Information Systems for PLN (under Power 12) and ManagementInformation Systems for DCEP (under Power 7). The studies are in variousstages of completion/implementation. Reporting systems for PLN and theproject management information systems for Cirata and Suralaya are underimplementation.

Planning. Design and Research

6.03 PLN has acquired adequate expertise in generation, transmission anddistribution planning. Steps towards greater regional involvement in planningwere taken in 1981 and a series of management development courses have beeninstituted for regional and branch managers. Several Bank-financed studieshave been devised for enhancing PLN's planning capabilities, notably PowerMarket Study (under Power 8) and the Hydro Potential studies under the presentproject. Towards strengthening PLN's engineering and design capabilities theBank has supported the creation of an Engineering Services Center and is pro-posing to finance consultancy assistance for this under a future loan. Withall these efforts PLN's capability to formulate, design and supervise largeprojects will further improve over the years.

Manpower and Training

6.04 PLN's staff increased from a level of about 21,000 in 1976/77 toabout 32,000 in 1982/83 and is projected to a level of about 42,000 in1985/86. About 601 of the staff is in technical and 401 in administrativecadres. In spite of efforts such as student scholarships and incentives offoreign technical training, PLY has always faced and continues to face diffi-culties in recruiting technical graduates, whose composition continuous toremain at an unsatisfactorily low level of about 31 of the total staff.

6.05 PLN's efforts at training and Bank's involvement in this field, havebeen considerable. PLN has a separate function (Pusdiklat) for education andtraininj. Its staff of about 200 (including 48 trained instructors) trains

- :9 -

annually about 1,300 personnel in technical and financial disciplines. Fivetraining centers were built under earlier Bank loans. The Ninth Power Project(.oan 1872-IND) provided for an advanced training school, including afacsimile digital training simulator for the training of operating staff forthermal power plants, which is now functioning at Suralaya. The Ninth PowerProject also provided Zor training in the fields of systems protection,thermal station operation, maintenance and design and in EHV practice, whilethe Tenth Power Project (Loan 1950-IND) provided for on-the-job training inthe country in selected fields like civil works contract administration. TheTwelfth Power Project (Loan 2214-IND) includes a large training omponent ofUS$25.0 million to (a) reorganize and enlarge the entire manpower development,training and personnel management functions for middle and lower level staff,improving job performance evaluation systems and introducing in-housemanagement training; (b) start 5 more training centers (in addition to theexisting 6); and (c) develop a training/development program for PLN's seniortechnical staff.

Accounting and Budgeting

6.06 The present system of accounting, installed in the early 1970s,though generally following normal utility practice, is in a need for improve-ment. Though delays in the finalization of accounts have been greatlyreduced, there is scope for further improvement. PLN's procedures for budgetpreparation and monitoring expenditures still need to be properly coordinatedbetween departments and between regional offices. PLN's management has initi-ated a detailed review of the procedures. Under the Eleventh Power Project(Loan 2056-IND) Bank funds have been provided for management consultancy insetting up an appropriate accotunting system, strengthening budgetary controlprocedures and computerizing the accounts. This study is still in progress,as there was considerable delay in appointment of consultants. PLN has alsoengaged consultants to improve assets evaluation, inventory control andproject cost accounting. A major constraint to PLNs accounting has been alack of trained senior accountants. Steps are being taken to redress thissituation through the training program and transfer of personnel from theMinistry of Finance.

Procurement

6.07 Procurement of goods and services has a major influence on PLN'soverall performance in project implementation. Procedures introduced b7 GOIin 1980 and 1981 for external control of procurement of both consultantsservices and of goods and services have reduced PLN's autonomy in procure-ment. These procedures have also considerably lengthened the time required inthe procurement cycle, particularly bid evaluation, approval of the evalua-tion, contract negotiations, etc. PLY is looking into this problem to findways and means of trimming down internal procedures to reduce delays. Theorganization of procurement has been reviewed, inter alia, by consultants inthe context of the project management study under the Eighth Power Project(Loan 1708-IND).

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Overall Performance

6.08 PL3's overall performance from the time of appraisal in 1976/77through 1983/84 has been impressive. Its sales increased annually by an aver-age of 181. The performance indicators such as the number of consumers peremployee increased from 5.6 to 12.0 (i.e., by 1142) and energy sold peremployee increased from 142 MWh to 273 MWh (i.e., by 922). Its ambitiouscustomer connection programs were fulfilled year after year. Access to ser-vice increased by about 50X. Standards of reliability of supply wereimproved. The rate of growth of uneconomic captive plants in the countrydeclined after 1977. Improvements in the speed of implementation of projectshave been eroded by slippages of over a year in construction of major thermalprojects like Muara Karang, Semarang and Suralaya. The main problems have nowshifted to complex procurement procedures and resource constraints. PLN'sdrive to reduce transmission and distribution losses which appeared to haverun out of momentum, has recently been revived (Loan 2214-IND) and anintensive loss reduction effort has been initiated.

VII . ECONOMIC RE-EVALUATION

7.01 An economic re-evaluation of the 2 x 200 KW units for Nuara Karanghas been done, essentially on the lines of the SAR. The re-evaluation isbased on constant end-1981/1982 prices. The main points which highlight thedifferences between the data and assumptions used in the SAR and those used inthe reevaluation are summarized below.

Plant Capacity Factor

7.02 The 8AR assumed a capacity factor of about 70? for the first10 yearst reducing to about 552 tovards the end of the plant life of30 years. The PCR uses actual capacity factor values from 1981/82 to 1983/84and values declining from about 652 from 1984/85 to about 301 in 2006/07 asshown in Annex 6, assuming a plant economic life of 25 years. Lower capacityfactors are used in the PCR, in view of the planned shift from oil to coal asfuel for the base loaded thermal stations.

Fuel Price

7.03 The SAR's economic evaluation was based on a fuel price ofUS$11.25 per barrel of Bunker C oil (US cents 7.1/liter or Rp 29.4/liter in1976 prices); the equivalent energy cost being tp 9.1/kWh generated. Prior to1984/85, the fuel oil prices to PLN were subsidize4d In 1984/85 the fuel oilprice for PLY was slightly above the international price. The PCI uses a1984/85 fuel price of Rp 200/liter (equivalent to about US$31.8 per barrel),actual gross fuel efficiency of 0.24 1/kWh, amounting to an energy cost ofRp 48/kWh in 1984/85 prices or Rp 34.3/kWh in 1981/82 prices.

- 21 -

Operation and Maintenance Cost

7.04 The BAR had assumed an operation and maintenance cost of 2X of thecapital cost for Muara Karang and the associated transmission and distribu-tion. The PCR uses actual OiM costs for Muara Karang from 1981/82 up to1984/85 and the 1984/85 value throughout the remainder of the plant life. O&Nand administration costs for transmission and distribution are based on actualcosts furnished by PLU per kWh of electricity sales from 1981/82 to 1984/85and the 1984/85 value for the remaining years. These cests are much higherthan the SAR value of 22 of the capital costs.

Benefits

7.05 The SAR evaluated the benefits on the basis of average sale price ofRp 27.21 per kVh in 1976 prices. The PC& evaluates the benefits based onactual average revenues per kVh from 1981/82 to 1984/85 and the 1984/85 valuefor the rest of the plant life. As may be seen from Annex 6 Table 2, revenuebarely covered the fuel cost in 1982/83 and was below fuel cost in 1981/82.These aspects are not revealed in PLN's financial statements as the fuel costswere heavily subsidized by GOI. To allow for the distortion (arising out of001's subsidizing of fuel costs without allowing PLN to raise tariffs) the PCRassumes additional benefits corresponding to the difference between theeconomic fuel cost and the subsidized fuel cost, for the years 1981/82 to1983/84.

KIBB Computation

7.06 Details of the economic reevaluation are presented in Annex 6. TheEIR works out to 9.42 without considering the compensation for fuel subsidy(para. 7.05) and 12.32 with this compensation. The values are lower than theSAM figure of 20.9X due to several factors such as delays in commissioning,much higher system OUM cost and comparatively higher fuel cost via a visrevenue realized. A sensitivity test using OlM cost at 21 of capital cost (asassumed in the SAR) yields an EIRR of 18.2Z.

VIII. COICLUSIONS

Achievement of Project Objectives

8.01 Construction of the two 200 MW units at Muara Karang was a timelyaugmentation of the generation capability of PLY, as borne out by thesustained load growth at an average annual rate of 18X.

8.02 The two 200 MS units have been operating at about 652 capacityfactor instead of 701 assumed in the SAR. further, with shift away from oilfired generation to coal, the capacity factor for Nuara Karang will progres-sively reduce. The Nuara Karang units achieve an economic internal rate ofreturn of 12.31, with benefit evaluation based on prevailing tariff levels inview of much higher than anticipated OLM costs and lower revenue realizationscompared to fuel costs.

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8.03 The technical studies associated with the project have served asuseful preparatory ground for future Bank operations in the power sectort andsome of them have contributed to institutional development of PLN. The ENVsystem study has paved the way for establishment of the national SHV gridwhich is presently nearing completion of its first phase.

Project Implementation and Operating Outcome

8.04 Implementation of the Muara Karang thermal power project wasachieved with an inordinate delay of 22 months for unit 4 and 18 months forunit 5 (the delays were 20 months for unit 4 and 12 months for unit 5 withregard to SAR projection) and delay in 150 kV transmission (not covered underthe project) curtailed output from unit 4 in the first year of operation. Thedelay was due to a combination of several factors, the most important of whichwere (a) delays in finalizing contracts; (b) weakness in construction supervi-sion leading to misalignment and tardy response from the consultant in final-izing corrective measures; and (c) unsatisfactory performance of thecontractor for mechanical and electrical works of unit 4 coupled with designchanges.

8.05 The power plant has been operating satisfactorily and has achievedguaranteed figures of performance. The outage record of the units has beengood.

8.06 PLY continued to make progress in institutional development andfinancial performance over the tenure of the project. While a lot has beendone in these fields, more still remains to be done and PLN is making seriousefforts towards maintaining the momentum of progress.

Performance of External Agencies

8.07 The Bank not only continued but also intensified its involvement inthe growth of PL1 and in the development of the power sector. PLY extendedexcellent cooperation to Bank missions and appreciated the Bank's role in itspower sector development.

INDONESIA

SIXTH POWER PROJECT (LOAN 1365-IND)

PROJECT COMPLETION REPORT

Major Contracts - Implementation Delays

Delay incontract Delay in

Spec. issued Tender Contract signed award Start at site Cbopletion completionfor review issued Schedule Actual months Schedule Actual Schedule Actual Months

Site development 09/76 04/77 ) 07/77 12/78 17 07/77 01/78 10/78 01/79 3Piling 09/76 04/77 } 07/77 12/77 5 07/77 12/77 03/79 06/79 3General construction }#4 and #5 06/11 11/77 } 10/78 01/79 3 10/78 01/79 06/81 07/81 1Mechanical & electrical *construction }- #4 08/77 02/78 } 11/78 02/79 3 04/79 05/79 04/80 11/81 19 '- #5 - - - - - - - 02/81 06/82 16Steam generator- #4 - - 01/77 04/77 3 07/78 07/78 07/80 05/82 22- #5 - - 07/77 12/77 5 07/79 07/79 03/81 09/82 18Turbine generatorand transformers- #4 - - 01/77 04/77 3 10/78 09/79 07/80 05/82 10- #5 - - 07/77 12/77 5 07/79 07/79 03/81 09/82 18Electrical equipment#4 and #5 - - 01/77 04/77 3 - - 07/80 05/82 22Power transformers #4 - - 01/77 04/77 3 - - 07/80 05/82 22Fabricated steel#4 and #5 - - 07/77 02/78 7 - - 02/80 02/80 0Control and instrumentation- #4 08/77 02/78 11/78 02/79 3 04/79 05/79 04/80 11/81 19- #5 - - - - - 04/80 05/80 02/81 06/82 16

_ _ _ _ _ _ _ _ _ _ _ _ _ _ ' I

-24 - am 2

SIMN PONWE P QROJCT (LOAJ 1365-IND)

PRMMECT COMNLETION UZIORT

stimted and Actual Costs(U$ ailJ.one quivalent)

EstlIcted cost Actual costForergn Local Tol Foreign -ocal a Total

%hara Karans IMits 4 and S

Local ConstructionSite develop ent - 19.31 19.31 ^ 5.09 5.09Piling - 20.04 20.04 - 3.60 3.60

General ConstructionCivil and structural 9.83 4.84 14.67 3.66 2.61 6.27Mbchanical and electrical 27.83 17.18 45.01 15.31 4.?6 20.07

main Plant utdntStlltr and *uxiloaries *4 13.49 2.09 15.58 15.61 1.77 17.38Turbine senerator and auwiliaries #4 17.12 0.81 17.93 19.40 0.67 20.072lectrical equipment #4 2.34 0.00 2.34 2.63 0.00 2.63Transfomrs #4 1.15 0.00 1.15 1.29 0*00 1.29Maln plant equipment Incl. boiler, turbinegenerataor & electricl equipment 36.58 2.89 39.47 42.51 2.57 45.08

rnstrumentation #4 & #5 2.74 0.23 2.97 1.81 0*03 1.84Structural steel #4 6 *5 3.84 0.00 3.84 1.42 0.00 1.42Environmental protection equipment,includiag hypoelor, dust bandling,debris filters stack monitorand portable environment sets 13.45 10.64 24.09 3.66 0.00 3.66

Eni"neering and Construction Supervision 6.76 0.77 7.53 6.27 1.17 7.44

PLO Adminlstration and Management 0.00 7.01 7.01 0.00 7.01 ^ 7.01 b

Contingencies 6.20 4.38 10.58 0.00 0.00 0.00

otal 141.33 90.19 231.52 113.57 29.28 142.85

Engineering Design of Senasang Unit 3 3.00 0.30 3.30 3.00 - 3.00

Engineering of Java Interconnection 5.00 2.00 7.00 7.30 - 7.30

La Local cost conversion based on US$1 - Rp 625.

sb Assumd values, as actual flgures are not avallable

- 25 -A= 3

NIXTH POR PnOJECT, (LOAN 1365-IND)

PROJECT COEPLsTIOW REPORT

Actual Disburr s_ Venrus Apraid l Estimat(US$ 111o0)

Bank fiscal Astual Apprisalyear and Die- Cuwulative Dis- cuulativequarter bursemente total burseunts total

1977Jul-Sep 76Oct-Dec 76Jan 7 - _ _ Apr-Jun 77 - - 5.4 5.4

1978Jul-sep 77 - - 5.5 10.9Oct-Dec 77 13.10 13.10 5.6 16.5Jane-ar 78 5.26 18.36 5.9 22.4Apr-Jun 78 0.68 19.04 3.6 26.0

1979Jul-sep 78 5.25 24.29 7.0 33.0Oct-Dec 78 3.01 27.30 3.3 36.3Jal-1hr 79 3.85 31.15 6.6 42.9Apr-Jun 79 4.08 35.23 7.7 S0.6

1980Jul-Sep 79 9.85 45.08 7.9 S8.5Oct-Dec 79 6.40 51.48 8.5 67.0Jan-lker 80 4.22 55.70 5.7 72.7Apr-Jun 80 10.81 66.51 7.4 80.1

1981Jul-Sep 80 4.20 70.71 7.1 87.1Oct-Dec 80 2.09 72.80 11.7 98.8Jan-War 81 2.68 75.48 3.9 102.7Apr-Jun 81 1.44 76.92 5.4 108.1

1982Jul-Sep 81 1.19 78.11 4.1 112.2Oct-Oec 81 2.13 80.24 3.6 115.8Jan-Mar 82 1.73 81.97. 0.1 115.9Apr-Jun 82 1.48 83.45 0.1 116.0

1983Jul-Sep 82 1.08 84.53 - -Oct-Dec 82 1.37 85.90 -Jan-War 83 1.75 87.65 -Apr-Jun 83 1.61 89.26 -

1984Jul-Sep 83 1.08 9.34 -Oct-Dec 83 0.54 90.88 -Jan-rHer 84 3.73 94.61 -Apr-Jun 84 2.19 96.80 -

1985Jul-Sep 84 1.66 98.46 -Oct-Dec 84 2.59 101.05 -Jan-Mar 85 2.87 103.92 - -Apr-Jun 85 4.05 107.97 - -

1986Jul-Sep 85 2.54 110.51 -

INDONESIA

SIXTH POWER PROJECT (LOAN 1365-18D)

PRaJCT COItLEION lEPORT

S_sgry of Key Fnancial Indlcators

1976/77 1977/78 1978/79 1979/80 1960,81 1981/82 1982t83 1983/84

*ppr- Actual hppr. Actual Appr. Actual pppr. Actual Appr. Actual lppr. Actual 4Apr. Actual 4pp. ctu

hevenuetcostratalo S 107 110 109 102 104 106 105 87 108 113 108 101 107 9 10S 98

gets of returnon average netfixed assets inoperation (2) 1.7 5.3 2.2 0.9 1.0 2.8 1.2 -2.9 2.0 5.2 2.3 3.3 2.5 -0.9 2.7 1.1

met internal caah /ageneration as per-cent of capitalexpeadltures 28 23.9 30 20.2 30 25.1 30 23.6 30 32.1 30 25.6 30 14.9 30 17.0

Debt/equlty ratio 1/99 3/97 12/88 6/94 23/77 9/91 32/68 11/86 40/60 21/79 45/55 25/75 49/51 25/75 51/49 30/70

Tines total debtservice coveredby gross Internalsources - - - 34.6 - - - - 39.3 480 12.6 12.0 5.8 8.7 3.9 4.2

a Includes consumers' contributions.

811T7 PR PRtOJECT (IOAN 1365-IIID)

PROJECT COIFLETOU *VET

PLU -:Ct1m Sheets

(In Vp billion)

3976177 1971/78 _ 1§78179 1979/80 1981/82 1962/83 _ 1983/4Appra9Isa Ictual Appraisl Actul Apptatal Alil Appraisal Actual 1FFWala7 Ictual AppralsazlActa pr I ctl Apprasl Actal

Gros fixnd assetIn operatlon 423.0 305.7 636.0 390.S 753.9 555.9 935.0 741.3 1,196.6 920.6 1,602.4 1,262.1 2,0S7.5 1,571.S 2,859.8 2,065.6 gAcemulated dapreclatioa (147.0) (78.1) (201.1) (105.9) (253.3) (135.2) (320.0) (50.5) (402.9) (107.8) (508.0) (196.9) (640.6) (303.9) (810.1) (421.9) '1

Iat fixed assetsIn operation 276.0 227.6 434.9 284.6 498.6 420.7 615.0 690.8 793.7 813.0 1.094.4 1,065.2 1.416.7 1,267.6 2.049.7 1.663.7

Vark ln progresa 248.0 358.2 279.7 531.3 426.3 659.9 569.8 854.9 719.2 1,124.5 803.6 1,263.3 909.3 1,90J.7 748.4 1,609.4'tota' et Plead

A.ete 524.0 585.8 714.6 815.9 924.9 1.080.6 1.184.5 1.545.7 1 S12.9 1.937.5 1.898.0 2,328.5 2,326.0 3,175.3 2.t98.1 3,273.1GArrOat aseets 77.0 116.9 89.0 120.7 110.3 167.2 140.0 166.5 160.0 28.5. 195.0 381.6 200.0 498.0 201.0 S21.1

TOTAL ASSETS 601.0 702.7 803.6 936.6 1,035.2 1,247.8 1,324.8 1,732.2 1,672.9 2,223.0 2,093.0 2.710.1 2a526.0 3,673.3 2,999.1 3.794.2LIASILItZlES

Accmlated governmetcostributleo andreulnatlos reerve 524.2 617.1 584.7 791.7 609.3 1,012.7 614.7 1,352.2 614.7 1,548.0 614.7 1,775.0 614.7 2,401.8 614.7 2,204.2Accimulted profit/lose (20.4) (1.3) (10.2) (2.1) (4.1) 5.6 5.6 (9.8) 24.1 18.0 48.2 24.1 74.6 25.4 103.0 36.0

Total Equity 503.8 615.8 574.5 789.6 605.2 1,018.3 620.3 1,342.4 638.8 1,566.0 662.9 1,79.1 689.3 2,427.2 717.7 2,240.2Conae.r contributton 12.5 S3.5 97.0 79.9 124.3 116.9 154.6 159.2 187.8 208.6 221.9 244.0 257.0 304.6 292.5 368-.tong-tere debt 9.1 20.7 t13.8 54.5 277.1 96.7 509.6 212.9 197.9 417.4 1,151.2 S98.6 1,S23.7 808.8 1,"3.9 950.1Current liabilitles 15.0 12.7 18.3 12.6 28.6 15.9 40.3 17.7 48.4 31.0 57.0 68.4 56.0 132.7 55.0 23S.1

TOTAL LtABILITIES 601.0 702.7 803.6 936.6 1,035.2 1.247.8 1,324.8 1,732.2 1,672.9 2,223.0 2,093.0 2,710.1 2,526.0 3,673.3 2.f99.1 3,794.2 C.. S

O en~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~U

INDOhESIA

SIX" POilBP PRawECT (LOAN 1365-IND)

UwScT OOWLK?103 REPOT

PLl - tacom Sateaent(io Up billion)

1976/7 19t7/78 19t8/79 1979/80 1961/82 1982/83 19U/64ApprAisal ractal Appraisal Actual APP-raisal11 Act".41Apasl Actua1601 P.P., 2y Aprasa At ua l Apraial Atual Appail Actal Apraisal actual

iura tlo pluspurchases (Gb) 4,413 4,127 5,163 4,725 6,127 5,722 7,383 7,004 8,970 8,420 10,915 10,137 13,213 11,644 16,017 13,39

'Aes and plant cocoosmptioo (0l) (1,143) (1,045) (1,317) (1,196) (1,532) (1,43S) (1,809) (1,641) (2,153) (1,897) (2,56S) (2.292) (3.039) (2,74S) (3,604) (3.391) 1

Isaes (Qb) 3,270 3,082 3,846 3,527 4,5S9 4,287 5,54 5,343 6,617 6,523 6.350 7,84S 10.174 9,101 12,413 10,000

Incr_as of sales (Z) 16.6 9.9 17.6 14.4 19.5 21.S 21.3 24.6 22.3 22.1 22.S 19.6 21.8 16.0 22.0 9.9

-araesC ra ne_ perkib sold (BP) 27.21 2M.12 31.6S 27.41 34.15 27.36 34.91 27.31 37.32 41.40 39.33 43.35 41.53 56.52 "4.49 75.98

w 7s aEm sles ofpower 89.0 83.6 122.S 96.7 156.9 117.3 194.9 14S.9 254.4 270.2 328.4 340.1 422.5 514.4 552.3 759.8

Otbsr operatims reines 0.9 0.4 1.0 0.7 1.1 0.7 1.2 OS 1.3 1.1 1.4 1.3 1.6 2.S 1.7 3.1

Total Operatn t6.Sawenasa 89.9 84.0 123.5 97.4 1S8 118.0 195.8 146.4 2SS.7 271.3 329.6 341.4 424.1 516.9 S54.0 762.9

_ d _,"Mcbme"842PPE"e"r- 1.3 1.1 1.5 1.1 1.7 1.3 1.9 1.3 2.1 2.0 2.3 16.5 2.S 21.6 2.7 19.9

1ysl 20.7 21.7 33.3 26.0 50.3 31.2 59.9 S2.2 82.1 96.6 111.4 130.6 IS2.0 261.3 206.5 456.1

Other operating pex ses 30.9 36.7 39.1 42.9 41.7 49.7 S7.6 6S.4 67.6 65.7 79.4 106.6 90.3 142.5 107.3 164.8

Depreciatiom 31.5 16.6 39.4 23.1 52.2 28.7 66.7 48.6 82.9 SS.2 105.1 84.2 132.8 101.4 169.3 118.8

Total Opratlt=XPON" $84.4 76.3 113.3 95.1 151.9 110.9 186.1 167.5 234.7 239.5 298.2 337.9 377.6 527.0 467.8 761.6

ft 00eali Kacm_ 5.5 7.9 10.2 2.3 6.1 7.1 9.7 (21.3) 21.0 31.8 31.6 3.5 46.S (10.1) 66.2 1.3 td

I_nsperaetia Lain o et - 0.7 - (3.2) - 0.6 - 5.7 - 6.1 - 13.9 - 17.7 - 23.0 *

tnterest darins conatruciton O.S - 7.1 1 21.1 4.0 41.3 12.0 64.4 12.0 91.4 27.0 11S.2 28.0 136.5 44.0 I'J1

tneereat cbar3ed to ope t3ae - - - - - - - - 2.5 - 7.5 2.0 20.1 S.S 37.8 19.0 o

Profit/loss S.S 8.6 10.2 (0.9) 6.1 7.7 9.7 (15.4) U6.5 37.9 24.1 15.4 26.4 2.1 28.4 S.3L = .~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~a

S1IX= r0w81 PROJDCT (LOMN 1365-ISO)

PIoJI COWLMOM IIWWT

n. - Sources ad A lIcato0 of Fude Stat_mat(in 3p bIllIons)

Appra1tl ctual Appraisal Actual 4prplea1 Actl t Apprs l t Apprisal Actua 1 ppraisal ctual Apprais Actul Appralel At_l

Mg tIsm_ befon Interest 5.5 7.2 10.2 (0.9) 6.1 6.5 9.7 (15.4) 21.0 25.2 31.6 10.4 46.5 7.6 66.2 24.3OD wm's coetributioo.Mad other adj}ustente 16. 14.2 17.2 26.6 17.6 38.0 17.9 42.4 18.0 61.6 17.8 33.S 17.3 44.2 16.5 S8.0 'Oepreclt0ino 31.5 17.1 39.4 27.8 52.2 29.3 66.7 50.4 62.9 57.3 105.1 09.1 132.8 107.0 169.3 123.6

IAs efbt ServiceAmeOta&rtIM ., - 1.5 _ _ _ _ 0.6 0.3 4.6 7.9 13.6 10.9 26.4 20.7lat,rest - 2.5 - 7.5 2.3 20.1 5.S 32.6 19.3total Debt Servlce _ - _ 1I5 _ _ - 3.1 0.3 12.3 10.2 33-7 16.4 44.7 39-8bt late-ral Ceb

Comurstim 53.8 38.5 66.8 52.0 75.9 73.8 94.I 77.4 116.8 14.-3 142-2 122.8 12.9 142-4 187.3 166.1

Gro at cotrlbutioea 134.1 149.0 60.S 174.6 24.6 198.3 5.4 152.4 - 174.6 - 227.0 - 626.8 - 237.9Sbert uAl 9.S 4.4 104.1 31.0 163.3 36.1 232.5 109.6 266.9 20S.1 358.1 172.2 3S6.1 220.0 439.1 478.3

Joorco 143.6 53.4 164.6 205.6 187.9 234.4 237.9 162-0 288.9 379-9 156.1 399.2 3461 646.6 439.1 716.2TOTAL SOURCES 197.4 191-9 231.4 257.6 261. 306.2 332.2 239-4 407.7 124.2 500.3 522.D0 5490 969.2 626.4 82.3

*19LCA?UBSFp1t el*sp nditwrs 193.0 160.9 222.7 257.9 252.8 294.1 314.2 328U. 395.S 449.1 473.9 480.1 543.0 953.9 624.6 979.3Yaroaticc ia cash adWdeid capital 4.4 31.0 8. (0.3) 11.0 14.1 18.0 10.9 11.9 75.1 26.4 41.9 6.0 3S.3 2.0 (97.0) 10AL APPLCATIONS 231.* 27 261.8 306.2 332.2 339.4 407.7 524.4 5003. 22.0 54.0 969.2 626.4 862.*3

197.4 i9-1-9~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~IJ

LOS

30 - ANMNX 6Table1 of 3

INDONESIA

SIXTH POWER PROJECT (LOAN 1365-IND)

PROJECT COMPLETION REPORT

Economic Reevaluation of Muara Karang Thermal Station Unit 4 & 5Fuel and Operations & Maintenance costs and Revenues

(in constant end 1981-82 prices)

Capital Investments

Expenditure/a Investment in(Rp billion) Revaluation constant end 1981/82

Year Generation TiDnb index /c prices (Rp billion)

1977/78 9.7 0 0.59 16.4

1978/79 9.7 0 0.72 13.5

1979/80 22.1 20 0.84 50.1

1980/81 19.6 20 0.92 43.0

1981/82 12.1 20 1.00 32.1

1982/83 7.4 20 1.14 24.0

1983/84 9.9 0 1.24 8.0

1984/85 7.4 0 1.33 5.6

1985/86 6.7 0 1.40 4.8

/a The expenditures are total expenditures on foreign aud local components(the foreign costs being converted to local costs by using the exchangerate prevailing in the particular year) and are exclusive of duties andtaxes and interest during construction. The Standard Conversion Tactorfor local cost component is assumed as 1.0.

/b T&D expenditures are assumed to be 75X of generation expenditures in linewith the SAR.

/c The revaluation index is based on price deflators used by PLN for revalua-tion of its assets (the 1985/86 figures is an assmed value).

- 31- ANNEX 6Table 2 of 3

INDONESIA

SIXTH POWER PROJECT (LOAN 1365-IND)

PROJECT COMPLETION REPORT

Economic Reevaluation of Muara Karang Thermal Station Unit 4 & 5

Fuel and Operations & Maintenance Costs and Revenues(in constant end 1981-82 prices)

Fuel cost Total Fuel cost O&M cost System RevenueRp/kWh loss /a Rp/kWh Muara Karan O&M cost realized

Year generated Z sold Rp billion Rp/kWh sold Rp/kWh sold

1981/82 34.3 24.2 45.3 8.7 8.3 42.1

1982/83 34.3 24.2 45.3 11.4 6.4 48.2

1983/84 34.3 26.5 46.7 4.3 8.1 60.1

1984/85 34.3 25.5 46.0 2.9 8.1 72.1

1985/86to 34.3 24.51/b 45.4 2.9 8.1 72.1

2006/07

/a Includes actual transmission and distribution loss and station consumption of 5.52.

/b This figure is expected to reduce following PLN's loss reduction program; however aconstant figure of 24.5% is assumed in the analysis.

Note: The subsidized fuel oil prices for 1981/82, 1982/83 and 1983/84 are Rp 50, Rp 80and Rp 125 per liter, respectively. In terms of 1981182 prices, these .igures areRp 50, Rp 70 and Rp 100 per liter, respectively.

- 2mI 6- 32 - S^b3u7 of 3

INDONSIA

8sX POR P CT (LAN 1365-tED)

PRWCT CO TION DOT

Economlc Rsevaluation of usrT arAvn lmal Station Unit 46 5

Investment in Plant Statton systemconstant end capacity Genera- ?Uel OW ON Grocs Net

1981/82 prices factor tion sale cost cost cost benefiit bnefitYear (lp billion) () ( ) (ONk) - He billion

1977/78 16.4 - - - - - - - -16.4

1978/179 13.5 - - - - - - - -13*5

1979/80 50.1 - - - - - - - -50.1

1980/81 43.0 - - - - - - - -43.0

1981/82 32.1 S.3 187 151 6.4 6.7 1.3 6.4 -42.1

1982/83 24.0 46.9 1,642 1,322 56.3 11.4 8.5 63.7 -36.5

1983/84 8.0 63.6 2,231 1,764 76.5 4.3 14.3 106.0 2.9

1984/8S 5.6 65.0 2,277 1,814 78.1 2.9 14.7 130.8 29.5

1985/86 4.8 65.0 2.277 1,829 78.1 2.9 14.8 131.9 31.3

1986/87 to1991/92 - 65.0 2,277 1,829 78.1 2.9 14.8 131.9 36*1

1992/93 to1997/98 - 55.0 1,927 1,548 66.1 2.9 12.5 111.6 30.1

1998/99 to2003/04 - 40.0 1,402 1,126 48.0 2.9 9.1 81.1 21.1

2004/05 to2006/07 - 30.0 1,051 844 36.0 2.9 6.8 60.9 15.2

IRR - 9.4Z.

IRa - 12.3S with fuel subsidy reflected as a benofit in the years 1981/82, 1982/83 and 1983/84.

I1n - 18.21 with OUl cost aseneed at 21 of capital cost.

106' Oe10

SUMATERA

JAKARTAA- \ ~~~~~~~~~See Inse mql

Krakakle SeelI

Ronkabdeet

lht /': IW \W d

&w I Y' I

?be,,,_ w4w eV*-* a" vWEST JAWA Kan.j-ngAy ht otwdwxo of ft P7 CENTRALJAWA >

c n w do D4f ft. I

mo""Xw ~ ~ ~ ~ ~ ~ ~ ~~~~&oko *a&mty FOM-ooa

c,~ ~ ~ ~ a ,,. aocapftmt, of\-

ior~~~~~~~

Ta*" st ''_

106' iF - - 4

Ko~/f D\1u,~iang SARSG URBY

Sangemng $ ,~GCakmiD SURABAYA kO'

S. Haro. -- /rD--Gandul &Pieegl egreuP

Bm~~~~~~~~~~~~~~~~~~~S

&Mm ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ M\ Gt -nff\ ' wz 's I _ -

ios iVo 11?

INDONESIATRANSMISSION AND DISTIMAJOR POWER PLANTS AND MAI

UNDM CONSION

EXISlING CMITIOS 1967) DHEWEPMENT

* L (

XIV PLIN' WA

PLN's Wi

C. Poiuaa

PaSwu (OCbon) SEMARNG p_ _ Td r _Tqa_ - i - -

SURABAYA

CENTRAL JAWA I T

.Tamkmilya * Wfp

_P I t | ... ... ko- I F-.

-, V' Gon u S EASTl JAWAP--*~~~~~~~~~~~~~~~~~~~~~~~~1

11~~~~~~~~~~~~~~~~~~~~~~~0

KKu"l ~~SURAMYA

candnh . .~~S

0 0 jIgo ~ KILOMETeRtS

/okeu 0

\ Mopi.o a > uS*dib o~~Ng 20 40 60 8 0 MItES

n , ,_ \ \ ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~112*\"

IBRD 17207V

INDONESIATRANSMISSION AND DISTRIBUTION PROJECTMAJOR POWER PLANTS AND MAIN TRANSMISSION LINES

UNDR coNSTRiN~ COMITED OIt FUTUR PROPOSEDEXaSNG C O MM ) DEVEOMT PRrET

Transmission Lines*- 500 kV

- O15kV + 70kV* , S Power Sttions

500 kV Substatos* - l * t50kV + 70 kV Sub*sl

XIV PLN's Wikyah Numbers0 Wibayah or Distribusi Headqurte

PLN's Wilayah Boundaries

NG I

Pan.kSURABAYA

;->4 % t "~ ~~ Tubni hve n

-- !------- *Geulso'^ v \ t-----S------P

Jeok* oW I ''.IJ 4. I W84-p.S. MadiN @iW &i

EAST JAWA ISdoleT. * s I 1

Svk oW-gi '* -' B0 o 0 E,S-4 VI# 116

4. I I

,,,'~ ~ ~ ~ ~~~~~~~~~~~3~

o~~~~~~~~~~~Mln Asmbo 10 E

DSelib ~~~ 5 0 18 0 80 150 K*IOEERS

11?2 11,4

MARKN 1985