ADB finances Indonesia-Malaysia transmission line project

On August 28, the Asian Development Bank (ADB) announced that it will finance a cross-border power transmission line linking West Kalimantan in Indonesia with Sarawak in Malaysia.

The project will be bringing cleaner, greener hydroelectricity to West Kalimantan and adding 8,000 households to its power grid.

“This is a win-win-win situation,” said ADB Energy Specialist Sohail Hasnie. “West Kalimantan gets renewable energy and will have the ability to exchange power; Sarawak starts its first export of hydropower; and the region moves one step closer to establishing a regional power transmission link that crosses Brunei Darussalam, Indonesia and Malaysia.”

Currently, Indonesian state-owned electricity company Perusahaan Listrik Negara (PLN) uses oil for power generation in West Kalimantan, which has pushed the cost up to $0.25 per kilowatt-hour (kWh).

Under the power exchange agreement signed with Sarawak, the cost of power in West Kalimantan could be cut to $0.18 per kWh, while carbon dioxide (CO2) emissions from fossil fuel-based generation could be cut by 400,000 tons each year by 2020.

The project will build a 145-kilometer distribution line, distribution feeder extensions, and a new substation to improve the reliability of power in West Kalimantan.

An 83- kilometer cross-border high-voltage transmission line and substation will connect the West Kalimantan power grid to that of neighboring Sarawak, Malaysia. An estimated 230 megawatt-hour (MWh) of power could be exchanged every hour between the two systems.

The interconnection project is expected to save PLN an estimated $100 million annually in avoided oil generation.

An estimated 8,000 households will also benefit from training on energy efficiency, provision of energy-efficient lighting, and improved community centers, such as hospitals and schools, which will have access to a reliable power source.

In addition to its $49.5 million loan, ADB will also administer a $49.5 million loan provided by the French development agency Agence Française de Dévelopment, as well as a $2 million grant provided by the Multi-Donor Clean Energy Fund under the Clean Energy Financing Partnership Facility.

Currently, ADB is preparing a second loan project to finance the transmission line on the Malaysia side.

Construction on the transmission project is expected to be completed by December 2014 and power flow will start from January 1, 2015.

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