Indonesia's state-owned power company will build a 145-kilometer-long electric line linking customers in West Kalimantan with hydroelectric plants in neighboring Sarawak, Malaysia, under a plan that has been heralded as a commitment to green energy in Indonesia but is rife with environmental concerns in Malaysia.
The Asian Development Bank (ADB) funded project is expected to provide 8,000 homes in West Kalimantan with cheaper electricity and cut carbon emissions by 400,000 tons a year by 2020. The state-run Perusahaan Listrik Negara (PLN) currently uses oil to provide power to the province.
“This is a win-win-win situation,” ADB Energy Specialist Sohail Hasnie said. “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.”
The Malaysian government-run Sarawak Energy aims to turn the state into a regional producer of cheap hydroelectric power by 2020, according to Reuters' reports. But the $110 billion plan has its share of detractors, from local indigenous people, who would likely lose their land, to environmental activists, who have mobilized against the flooding of vast tracts of rainforests to create reservoirs.
Sarawak's Chief Minister Abdul Taib Mahmud, the man behind the lucrative hydroelectric plan, has also been the focus of a litany of corruption accusations involving the state's timber industry.
In Indonesia, the project is expected to save PLN some $100 million a year in oil costs. The integrated grid, which includes the construction of high-voltage lines and a power substation, is expected to exchange an estimated 230 megawatt-hours of power per hour.
“This will make a long-term relationship with our neighbors and a step forward to making the Asean interconnection a reality,” I Made Ro Sakya, head of power system planning at PLN, said on Wednesday.
ADB will provide a $49.5 million loan to partially fund the construction of the power lines and substation. The Manila-based bank will also administer a separate $49.5 million loan from the French development agency Agence Francaise de Development and a $2 million grant from the Multi-Donor Clean Energy Fund.
The bank will provide a second loan to help fund work on the Malaysia side, ADB said in a statement.
Work is expected to be complete by December 2014, the statement read.