Implementation Status & Results Indonesia Geothermal Power Generation Development (P099757)

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1 losure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Implementation Status & Results Indonesia Geothermal Power Generation Development (P099757) Operation Name: Geothermal Power Generation Development (P099757) Project Stage: Implementation Seq.No: 5 Status: ARCHIVED Archive : 29-Jun-2011 Country: Indonesia Approval FY: 2008 Product Line: Global Environment Project Region: EAST ASIA AND PACIFIC Lending Instrument: Technical Assistance Loan Implementing Agency(ies): Ministry of Energy and Mineral Resources Key s Board Approval Original Closing Planned Mid Term Review Last Archived ISR 29-Jun-2011 Effectiveness 23-Jun-2008 Revised Closing Actual Mid Term Review Global Environmental Objectives Global Environmental Objective (from Project Appraisal Document) The development objective of the proposed project is to promote the expansion of economic and environmentally friendly geothermal power generation in Indonesia, and to reduce CO2 emission from the power system. The project will assist the GoI to prepare and implement its geothermal sector reform program designed to remove the key policy and institutional barriers which presently prevent greater development of geothermal resources, and will assist in the transaction of geothermal power investments. The global environment objective of the project is to promote on-grid electricity from geothermal sources, reducing the need for coal-based generation capacity and avoiding associated greenhouse gas emissions. The proposed project is expected to have a sizable immediate impact as well as sustained log-term benefits. Has the Project Development Objective been changed since Board Approval of the Project? Yes Component(s) No Component Name Component Cost Policy Framework 1.10 Transaction Management 2.35 Technical Capacity Building 0.35 Overall Ratings Previous Rating Current Rating Progress towards achievement of GEO Moderately Satisfactory Moderately Satisfactory Overall Implementation Progress (IP) Moderately Unsatisfactory Moderately Unsatisfactory Overall Risk Rating Implementation Status Overview Page 1 of 5

2 The Government of Indonesia (GoI) is making progress in developing its world's leading geothermal resources, which it has mainstreamed by making geothermal a forty percent share of the Governments 10,000 MW accelerated power generation expansion program (Second Crash Program). Although the pace of the scale-up has been slow and behind schedule, geothermal capacity in the country has increased by 220 MW (23% increase) since the inception of the project, with another 260 MW having achieved financial closure (IBRD/CTF and JICA loans). Furthermore, the Government facilitated the signing of six (6) power purchase agreements in the public sector that will lead to over 450 MW of capacity, if successfully developed. The key challenge now is for the Government to covert these piecemeal yet important successes into systemic solutions that will continue to develop the full potential of its geothermal expansion program. The Ministry of Energy and Mineral Resources (MEMR) have issued a number of decrees on pricing,, yet the approach remains piecemeal; requiring additional work before a comprehensive policy can be implemented. Several geothermal fields are also under consideration by project to provide advisory services to carry out a demonstration transaction in coordination with the Indonesia Infrastructure Guarantee Fund (IIGF). has also assisted PGE, the leading public sector geothermal developer kick-start what is the largest geothermal scale-up in the world, with the approval of $300 million in loans from IBRD and the Clean Technology Fund (CTF). A grant of about $7 million from the Government of New Zealand was secured for bolstering PGE's capacity to carry out the globally unprecedented geothermal investment program. Given the high priority for geothermal development in Indonesia and the critical need for seeing through the reforms, the World Bank, in June, 2011, approved a request by the GoI to extend the project's closing date by two years to June 30, Locations No Location data has been entered Results Global Environmental Objective Indicators Indicator Name Core Unit of Measure Baseline Current End Target Installed geothermal power capacity (including Megawatt Value financial closure) resulting from reforms Wayang Windu (110 MW), Lahendong (40 MW), Kamojang (60 MW), Sibayak (10 MW) PLUS financial closure for Lahendong- Tompaso (40 MW), Ulubelu units 1-4 (220 MW), and Lumut Balai (110 MW). Reduction CO2 emissions by off-setting fossil Metric ton Value fuel based power generation (i.e. coal) with geothermal power TBD at end of project after per year basis operation of at least 1 (one) year Intermediate Results Indicators Page 2 of 5

3 Indicator Name Core Unit of Measure Baseline Current End Target Pricing mechanism to provide adequate Text Value N/A The GoI has issued several developed economic incentive developed decrees and faciltiated teh signing of 6 PPAs at premium price MEMR consultants have provided input into decrees. Issuance of regulations remain a piecemeal approach, which needs to be improved. Upstream resource risk mitigation mechanism developed Implementation regulations of the Geothermal Law issued Model procedures and standardized documentation for competitive bidding of geothermal power transactions developed Structure offers to mobilize investments for additional geothermal power in fields that are controlled by existing operators Text Value N/A Data validation to reduce risks developed in trasnactions agreed to under restructured project. 16-Jun-2011 Data validation exercise to be incorporated to transaction, as agreed during project restructuring Text Value N/A issued 07-May-2010 Regulation GR59 is already issued. It is currently being reviewed, project consultants providing input Text Value N/A Initial trasnaction procedures developed drafted. 16-Jun-2011 Will need to review for consistency with ultimate pricing decision. Text Value N/A Some one-off activities offer made underway, but it needs to be coordinated with pricing work. Await pricing decision. Page 3 of 5

4 Develop and implement a pilot transaction for one power project in a new geothermal field competitively tendered based on the Geothermal Law Relevant agencies for undertaking geothermal transactions trained through on-the-job programs as well as 5-10 workshops and seminars Awareness raising and information dissemination activities about sector policies and business opportunities conducted through promotional campaigns including 5-10 stakeholder dialogue seminars Strategy for domestic geothermal technology development formulated Text Value N/A Two potential fields proposed project tendered for development jointly with IIGF, next step is to review preliminary viability and ascertain stakeholder consensus Text Value N/A Considerable number of 5-10 workshops held training programs and seminars carried out including by Pricing and Transaction Consultants, and PGE technical and safegaurds consultants PGE's technical and safeguards consultants have also carried out training using Dutch grant facilitated by the Bank Text Value N/A MEMR has carried out more 5-10 workshops held than 10 workshops including the World Geothermal Congress. Text Value N/A considered completed. strategy drafted Alternate approach whereby World Bank has assisted PGE, largest public geothermal developer, with separate capacity building grant to enhance its efficiency and reduce costs by meeting industry and international standards. This has been successfully completed with the preparation of three projects. Private developers are not expected to need such assistance. Page 4 of 5

5 Data on Financial Performance (as of 06-Mar-2012) Financial Agreement(s) Key s Project Loan No. Status Approval Signing Effectiveness Closing P TF Effective 23-Jun Jun Jun-2008 Disbursements (in Millions) Project Loan No. Status Currency Original Revised Cancelled Disbursed Undisbursed % Disbursed P TF Effective USD Disbursement Graph Key Decisions Regarding Implementation Process extension of GEF grant closing date on the basis of GoI Action Plan. Restructuring History Level two Approved on 28-Jun-2011 Related Projects There are no related projects. Page 5 of 5