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 The World Bank Implementation Status & Results Indonesia Geothermal Power Generation Development (P099757) Operation Name: Geothermal Power Generation Development (P099757) Project Stage: Implementation Seq.No: 6 Status: ARCHIVED Archive : 13-Apr-2013 Country: Indonesia Approval FY: 2008 Product Line: Global Environment Project Region: EAST ASIA AND PACIFIC Lending Instrument: Technical Assistance Loan Implementing Agency(ies): Key s Board Approval Original Closing Planned Mid Term Review Last Archived ISR 27-Apr-2012 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 for Mobilizing Investments 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 Substantial Implementation Status Overview Page 1 of 5

2 The project has achieved one very important milestone, namely that MEMR has issued a ministerial decree No. 22/2012 to provide a feed-in-tariff scheme for geothermal development. In parallel, MEMR has drafted a revision of the Government Regulation No. 59/2007 regarding Geothermal Business Activities to make the tender process compatible with the new feed-in-tariff scheme. The draft revised regulation has been under review by other concerned ministries. These steps are expected to lead to a more enabling policy environment for geothermal development in Indonesia. Due to the changed circumstances after the introduction of a feed-in-tariff policy for geothermal development, MEMR has decided to cancel a number of sub-components that are no longer considered priorities. This means that the project will be unable to disburse the entire amount of the GEF grants before the current closing date of 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). These projects are under implementation. It is unlikely they will be commissioned by the closing date of the project Reduction CO2 emissions by off-setting fossil fuel based power generation (i.e. coal) with geothermal power Metric ton Value The target is unlilkely to be achieved by the closing date of the project. Intermediate Results Indicators Indicator Name Core Unit of Measure Baseline Current End Target Pricing mechanism to provide adequate Text Value N/A The regulation on Feed-in- FIT tariff regulation effective economic incentive developed Tariff issued August Aug-2012 The regulation has not been effective in practice The regulation become effective when the modified regulation on tender is approved by GoI Page 2 of 5

3 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 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 Partially addressed Risk Mitigation Mechanism develop for PGE fields 29-May-2008 MOF established Geothermal Funds to support upstream exploration activiites 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 Under preparation developed Will need to review for consistency with ultimate pricing decision. Text Value N/A No activity underway 31-Dec-2011 Await pricing decision. Text Value N/A Dropped Dropped 31-Dec-2011 for development jointly with IIGF, next step is to review preliminary viability and ascertain stakeholder consensus Text Value N/A Several workshops were 5-10 workshops held organized on pricing isues Text Value N/A Dropped 5-10 workshops held 29-Feb-2012 MEMR uses its own resources for the awareness program Text Value N/A strategy drafted Page 3 of 5

4 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. Data on Financial Performance (as of 06-Mar-2012) Financial Agreement(s) Key s Project Ln/Cr/Tf Status Approval Signing Effectiveness Original Closing Revised Closing P TF Effective 23-Jun Jun Jun-2008 Disbursements (in Millions) Project Ln/Cr/Tf Status Currency Original Revised Cancelled Disbursed Undisbursed % Disbursed P TF Effective USD Disbursement Graph Page 4 of 5

5 Key Decisions Regarding Implementation The Grant will close on June 30, 2013 unless a decision is made to restructure the project and extend the closing date. Restructuring History Level two Approved on 28-Jun-2011 Related Projects There are no related projects. Page 5 of 5