Wangan Aji Micro Hydro Power Project Indonesia

Final Report Wangan Aji Micro Hydro Power Project Indonesia Prepared for ASIAN DEVELOPMENT BANK Poverty and Environment Program TA 6150-REG, COSC/05-...
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Final Report Wangan Aji Micro Hydro Power Project Indonesia

Prepared for ASIAN DEVELOPMENT BANK Poverty and Environment Program TA 6150-REG, COSC/05-047

Submitted by KOPENINDO Indonesian Renewable Energy Cooperative

June 2008

Final Report -Wangan Aji Micro Hydro Project ADB-PEP TA REG 6150, Contract No.: COCS/05-047

Table of Contents

Page Table of Contents ………………………..……………………………………

ii

List of Abbreviation ………………………………………………………….

iii

Executive Summary ………………………………………………………….

1

1. Introduction..…………………………….……………………………….

6

2. The Stakeholders of Wangan Aji MHP …………………………………

9

3. Progress of Work …………………………………………..……………..

12

4. Financial Aspect ...…………………………………………….....……….

24

5. Training and Dissemination ……………………………………………..

26

6. Management and Operation …………………………………………….

29

Appendix Appendix 1. Work-scope Appendix 2. Millestone Appendix 3. Work Plan Assignment Appendix 4.

Implementation Schedule

Appendix 5. Picture of Wangan Aji MHP Appendix 6. List of Contractors Appendix 7. Community Development Operation Mechanism Appendix 8. Bussiness Plan Appendix 9. Organization Structure of Wangan Aji MHP

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Final Report -Wangan Aji Micro Hydro Project ADB-PEP TA REG 6150, Contract No.: COCS/05-047

List of Abbreviations ADB ASL CBO CDF DGEEU EA GoI GTZ HPP IPP IDR IU JICA KOPENINDO KOPONTREN kW kWh kV m MW mm MHP Pesantren PLN PSK Tersebar

Asian Development Bank Above Sea Level Community Based Organization Community Development Fund Directorate General of Electricity and Energy Utilization Executing Agency Government of Indonesia German Technical Co-operation Delivered Cost Electricity Independent Power Producers Indonesian Rupiah (Rp) Implementation Unit Japan International Cooperation Agency Indonesian Renewable Energy Cooperative Cooperative of Traditional Islamic School kilo Watt kilo Watt hour kilo Volt meter Mega Watt milimeter Micro Hydro Project Traditional Islamic School State Electricity Company Small Private Electricity Generated Scheme

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Final Report -Wangan Aji Micro Hydro Project ADB-PEP TA REG 6150, Contract No.: COCS/05-047

SC SME ToR UN USD VAC

Steering Committee Small - Medium Enterprise Terms of Reference United Nations United State Dollar Voltage Alternating Current

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Final Report -Wangan Aji Micro Hydro Project ADB-PEP TA REG 6150, Contract No.: COCS/05-047

MAP OF CENTRAL JAVA

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Lokasi PLTMH Wangan Aji Berjarak sekitar 5.5 Km dari Pusat Kabupaten Wonosobo, sangat mudah diakses karena terletak di pinggir jalan utama ke arah kawasan wisata Dieng. Secara geografis terletak di : 109°54’50’’BT & 7°18’27’’LS Ketinggian 900 m DPL Secara administratif terletak di : Dusun : Jawar Desa : Blederan Kecamatan : Mojotengah Kabupaten : Wonosobo Propinsi : Jawa Tengah.

Final Report -Wangan Aji Micro Hydro Project ADB-PEP TA REG 6150, Contract No.: COCS/05-047

KOPENINDO – Indonesian Renewable Energy Cooperative

Final Report -Wangan Aji Micro Hydro Project ADB-PEP TA REG 6150, Contract No.: COCS/05-047

Executive summary 1. Achievement 1.1.

Wangan Aji MHP is proposed as a pilot intervention project to be implemented under the framework of the PSK Tersebar at irrigation channel (small private electricity generated scheme) facility based on the Ministerial Decree No. 1122 K/30/MEM/2002, dated on 12 June 2002, aims to promote renewable energy based distributed small power generation. This legislation allows small independent power producers (IPP) to exploit renewable energy sources for electricity generation of up to 1 MW size and sell the electricity to PLN (State Electricity Enterprise) grid. The purchase price of PLN is determined by the delivery cost of electricity (HPP) at the interconnecting point and voltage. If it would be connected at low voltage (380 VAC) the purchase price will be 60% HPP, while at medium voltage (20 kV) the purchase price will be 80% HPP.

1.2.

Asian Development Bank (ADB) has under its Poverty and Environment Program (PEP) assists the Government of Indonesia (GoI) to implement a pilot Micro Hydro Project (MHP) at Wangan Aji. Directorate General of Electricity and Energy Utilization (DGEEU) is, on behalf of the Government of Indonesia, the Executing Agency (EA) for the project.

1.3.

Wangan Aji MHP plant is constructed as run - off river utilizing the irrigation channel of Wangan Aji, Wonosobo (Central Java), with installed capacity of 2 x 70 kW and expected to generate about 970,000 kWh every year. This installed capacity is higher than originally planned capacity of 124 kW. The MHP system is technically viable to be connected to national grid of PLN under PSK Tersebar legislation.

1.4.

Wangan Aji MHP has been commissioned and put into parallel operation through medium voltage of PLN grid since August 2007.

1.5.

The Cooperative of Islamic Traditional School Student Roudlotuth Tholibin (KOPONTREN) is assigned by District Government of Wonosobo to operate and manage Wangan Aji MHP. Experiences indicated that Wangan Aji MHP has properly managed by KOPONTREN that showed the capability of local resources to manage MHP.

1.6.

The power purchase agreement (PPA) between KOPONTREN and PLN Central Jawa & Jogyakarta Distribution Office was signed on January 25, 2008. The PPA are obtained at purchase price of Rp 618 per-kWh. Currently, the PPA contract is valid only for 1 year period and need to be renewed annually.

1.7.

A workshop to disseminate Wangan Aji MHP as a pilot model was conducted on March 13, 2008. It received positive responds from local

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Final Report -Wangan Aji Micro Hydro Project ADB-PEP TA REG 6150, Contract No.: COCS/05-047

participants, officials from the neighboring districts, as well as the delegates from the regional development banks, Workshops is able to generate awareness on the improvement of environment while harnessing the benefit of clean energy potential along Wangan Aji irrigation channel. 1.8.

The proposed subproject is expected to increase livelihood opportunities, improve sanitation and health facilities, and improve education and communication infrastructures for the community. To accommodate these expectations, a 10% from net profit after tax will be allocated as an expense for Community Development activities.

1.9.

The Community Development program will be conducted through, among others; provision of working capital to support small garment handicraft in the village, extension of electricity distribution line to some cottage industry around the MHP site, socialization of appropriate garbage dismissal methods for the community along the Wangan Aji irrigation channel, practical training related to education, health, technology, and entrepreneurship for the community, and information dissemination of Wangan Aji MHP benefits.

1.10.

Wangan Aji MHP specification

1.11.

Component

Specification

Capacity

140 kW (2 x 70 kW)

Production

919 MWh/a

Head

Gross = 13,47 m & Net = 12,6 m

Debit

1,42 m3/s

Turbine

Propeller Tubular Turbines TPT01-420

Efficiency

78%

Controller

Digital Turbine Controller

Accessibility

Power house 10 meter from main road

Distant to grid

10,3 m

Three things that unsuccessfully implemented are as follows: 

The revolving fund will be incorporated in the Provincial Government Budget mechanism; opening exclusive designated account to deposit the revolving fund was not allowed by law.



The definition of profits as revenue less operation and maintenance costs can not be implemented due to a letter that has issued by Office of Mines and Energy of Central Java to KOPONTREN ref no. 671/1018 dated on May 30, 2008 stated percentage from current net income (SHU).



DGEEU after having received the above mentioned letter from the Office of Mines and Energy of Central Java concluded that agreement among DGEEU, Provincial Government of Central Java, District Government of

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Final Report -Wangan Aji Micro Hydro Project ADB-PEP TA REG 6150, Contract No.: COCS/05-047

Wonosobo, KOPONTREN, and KOPENINDO, as ADB suggested is no longer relevant.

2.

Cost of Wangan Aji MHP Development

2.1.

The project cost for development of Wangan Aji MHP was estimated USD 278.500. ADB contributes with USD 182.000 (around 65%) as grant while the rest equal to USD 96.500 (around 35%) represents local contribution

2.2.

The actual cost to date escalate about 3% or equal to about USD 286,800. The actual ADB contribution is reduced to USD 172.000 (60%). The rest of about USD 114,800 comes from local contribution which is divided into KOPONTREN (as received from Local Government grant) and KOPENINDO of approximately USD 45,600 (16%) and USD 69,200 (24%), respectively.

2.3.

The cost deviation of around 3% is mostly caused by the price increase for materials (particularly steel price for penstock) and long process and sequence to obtain various documents, including water usage, PLN land utilization, building and construction permits, PLN permission to energized power generated to the grid, and power purchase agreement between PLN and KOPONTREN, and agreement among the involved parties. These have generated high overhead cost. In addition there some additional works and equipments are required, such us: interconnection equipments (it was assumed originally to be provided by PLN), installation crane, trash rack modification due to garbage problem.

3.

Lesson Learnt

3.1.

The success of Wangan Aji MHP is expected to generate awareness among the local community and governments to further explore the potential micro hydro sites in Wonosobo. Benefits for the Community

3.2.

The community through the cooperative activities, particularly the traditional school, will benefit from sale of electricity. At the latter stage, part of the electricity will also be connected directly to village hospital, traditional school and other productive usages. It will thus increase livelihood opportunities; provide better health, education and communication facilities.

3.3.

Wangan Aji MHP generates revenue by selling electricity to the utility grid, and directly to the community. Primarily, the utility will provide new electricity connections for the households to avoid any possible conflicts. In case the utility is not able to provide such connections the Wangan Aji MHP will provide the connection. In the latter case, the standard utility connection procedures and tariff must be applied. Potential consumers not already connected to the grid are likely to be the poorer households. The profits from the sub-project can be loaned to these households to obtain connections through a loan facility. In case of a connection for a productive use, a special direct connection procedure and electricity tariff would be applied.

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Final Report -Wangan Aji Micro Hydro Project ADB-PEP TA REG 6150, Contract No.: COCS/05-047

3.4.

During the course of the project the oil fuel price increased substantially and the subsidized oil supply, particularly kerosene, is reduced by the government. Many family houses are now indirectly forced to reduce their kerosene consumption especially for their lighting by indirect connection to the neighbor who directly connected to the PLN. From the MHP’s community development program would facilitate the poorest community develop business to improve their earnings in order to have capacity to pay PLN’s electricity connection and consumption.

3.5.

The use of diesel engines also a common practice in the village for providing mechanical energy for rice mills, bean grinders, workshop, etc. The MHP can augment the mechanical processing capacity without any environmental implications. In cooperation with business owner near MHP and through MHP’s community development program would facilitate them to development distribution line and change their diesel engine with electro motor. Benefits for the Government.

3.6.

The district government of Wonosobo will benefit for being able to utilize its local resources for electricity generation and thus reducing electricity imports from the neighboring districts. Additionally, the local government will also benefit from income tax revenue. Benefits for the Environment.

3.7.

There are two categories of local environmental benefits related to MHP. The first is catchment area protection and the second is the reduction of local air pollution.

3.8.

The sustainability of the MHP depends closely on how the environment and hydrological conditions of the catchments area are maintained. Therefore, the presence of a well performing micro hydro will encourage local community to preserve its surrounding catchments area.

3.9.

Environmental benefits include replacing fossil fuel based electricity generation, particularly from diesel powered generating sets. Every kWh of electricity generated by a diesel engine consumes approximately 0.27 kg of diesel releasing about 1 kg CO2 equivalent. Using renewable energy, the above CO2 emission will be reduced. The above micro hydro will potentially deliver 919,000 kWh/year saving 248 tonnes of diesel and reducing CO2 emissions by 919 tonnes every year. The project contributes to the overall objective of the convention and the protocol as electricity from MHP will displace fossil-fuel based energy, thereby reducing emissions of greenhouse gases. Interconnecting Process

3.10.

Wangan Aji MHP has been successfully interconnected with medium voltage of PLN Grid since Agustus 2007. However, the process to obtain the power purchase agreement (PPA) is very tough and time consuming. It took almost

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Final Report -Wangan Aji Micro Hydro Project ADB-PEP TA REG 6150, Contract No.: COCS/05-047

three years to get the contract signed, and many permits have to be obtained prior the contract signing 3.11.

The major obstacle is basically due to many different thought in interpreting the PSK Tersebar rules and steps, among others:   

Being a business entity, most of PLN officials assume that the PPA must be based on business to business negotiation; If it is mandatory, according to most PLN’s Officials, then the purchase price must be announced by the government; There is conflicting statement in the PSK Tersebar regulation, particularly with regard to which should come first: PPA (by PLN) or Electricity Business Permit (IUKU - by DGEEU). According to DGEEU, DGEEU will issue IUKU only after PPA is signed, while PLN assumes that PPA will be signed after the IUKU permit is issued.

Local Capacity

3.12.

Since August 2007, Wangan Aji MHP has been handled and operated by local operator assigned by the Local Cooperative. All the technical requirement for routine operation is basically managed by the assigned operator. These technical requirements include among others:     

Start-up ans shut-down procedures of the plant; Adjustment system parameter and setting for operation Carry lubrication activities for the moving parts, particularly: mechanical bearing; Add and/or replace the hydraulic oil for gate valve and guide vane operation; Maintenance for the civil building and intake

4.

Scaled up Opportunities

4.1.

As mentioned in the agreement between ADB and Government of Indonesia that Executing Agency will use such accumulated profits to support other sub project along the Wangan Aji canal.

4.2.

The study conducted by District Government of wonosobo identified there are 16 potentials of MHP could be developed, and two them located in Wangan Aji irrigation channel.

4.3.

There are also reported by community there are at least 11 of Picos hydro power developed by community with simple technology that need technology improvement to have better efficiency and increase their capacity.

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Final Report -Wangan Aji Micro Hydro Project ADB-PEP TA REG 6150, Contract No.: COCS/05-047

1. Introduction 1.1. This paper is served as final report that describes the 3 year services (which is officially commenced on 1 April 2005) of KOPENINDO in carrying out the development of Wangan Aji Micro Hydro Power (MHP) and the progress of the MHP project, at the village of Jawar, located at Sub-district of Mojo Tengah, District of Wonosobo, Central Java. Background 1.2. Widespread application of MHP will support the rural communities to have access to modern and clean energy form at affordable costs. As Indonesia endeavors to expand its electricity infrastructure in rural areas, installing more cost effective MHP plant will be one of an important option which is imperative and directly linked for rural economic development and poverty alleviation. 1.3. The commitment of the Government of Indonesia to stimulate the development of renewable energy is increasing. This is indicated by the government’s efforts in formulating policies that aim to promote investments in renewable energy. The established PSK Tersebar (small private electricity generated scheme) facility based on the Ministerial Decree No. 1122 K/30/MEM/2002, dated on 12 June 2002, aims to promote renewable energy based distributed small power generation. This legislation allows independent power producers (IPP) to exploit renewable energy sources for electricity generation of up to 1 MW size and sell the electricity to PLN (State Electricity Enterprise) grid. The purchase price of PLN is determined by the delivery cost of electricity (HPP) at the interconnecting point and voltage. If it would be connected at low voltage (380 V AC) the purchase price will be 60% HPP, while at medium voltage (20 kV) the purchase price will be 80% HPP. 1.4. On global environmental issues, the Government of Indonesia is committed to the United Nations (UN) Framework Convention on Climate Change and has been ratifying the Kyoto Protocol. Micro hydro power directly contributes to the reduction of greenhouse gas emissions. 1.5.

Although Wangan Aji MHP is referred as small MHP, but nevertheless it has received some attentions from various institutions to obtain CER (Certified Emission Reduction) by bundling with some others existing MHPs. Those institutions are among others Danish Embassy program that now the program had been transferred to World Bank and Southpole Carbon that execute CDM (Clean Development Mechanism) program of GTZ.

Aim of Wangan Aji MHP Development 1.6. Asian Development Bank (ADB) has under its Poverty and Environment Program (PEP) assist the Government of Indonesia (GoI) to implement a pilot Micro Hydro Project (MHP) at Wangan Aji. Directorate General of Electricity

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Final Report -Wangan Aji Micro Hydro Project ADB-PEP TA REG 6150, Contract No.: COCS/05-047

and Energy Utilization (DGEEU) is the Executing Agency (EA) for the project, on behalf of the Government of Indonesia. 1.7. Wangan Aji MHP is proposed as a pilot intervention project to be implemented under the framework of the PSK Tersebar at irrigation channel (small private electricity generated scheme) facility based on the Ministerial Decree No. 1122 K/30/MEM/2002, dated on 12 June 2002, aims to promote renewable energy based distributed small power generation.. This legislation allows small independent power producers (IPP) to exploit renewable energy sources for electricity generation of up to 1 MW size and sell the electricity to PLN (State Electricity Enterprise) grid. The purchase price of PLN is determined by the delivery cost of electricity (HPP) at the interconnecting point and voltage. If it would be connected at low voltage (380 VAC) the purchase price will be 60% HPP, while at medium voltage (20 kV) the purchase price will be 80% HPP. 1.8. Wangan Aji MHP plant is constructed as run - off river utilizing the irrigation channel of Wangan Aji, Wonosobo (Central Java), with installed capacity of 2 x 70 kilo Watt. The plant is estimated to generate about 970,000 kWh every year. This generated electricity is sold to the PLN through the local grid utilizing the government instrument of PSK Tersebar. Community Base Business Organization 1.9. The success of Wangan Aji MHP is expected to generate awareness among the local community and governments to further explore the potential micro hydro sites in Wonosobo in particular and the government of Indonesia in harvesting the energy potential at the existing irrigation channel as a mean for sustainable energy development. 1.10. There are five main stakeholders or partners involved in the development of Wangan Aji MHP, namely: the community of Wangan Aji, District Government of Wonosobo, Provincial Government of Central Java (represented by Provincial Office of Mines and Energy), State Electricity Company (PLN), and Directorate General for Electricity and Energy Utilization (DGEEU). 1.11. Provincial Education Office of Provincial Government of Central Java has its Technology Education and Dissemination program for Islamic Traditional School (Pondok Pesantren) in Central Java in the form of grant to the Pondok Pesantren. Pondok Pesantren Roudlotuth Tholibin”, village of Jawar District of

Wonosobo is one among others Pondok Pesantren that had been nominated to provide that grant. 1.12. Development of Wangan Aji MHP initiated by DGEEU and ADB, coincidently, also development of appropriate technology dissemination program for rural community. In coordination Provincial Office of Mines and Energy with Provincial Office of Education of Provincial Government of Central Java, then the program to be combined.

1.13. In coordination with DGEEU, Provincial Government of Central Java and District Government of Wonosobo, a general arrangement concept about the Wangan Aji MHP development and operation plan with local community is

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Final Report -Wangan Aji Micro Hydro Project ADB-PEP TA REG 6150, Contract No.: COCS/05-047

continuously discussed and formulated. A cooperative form organization is selected and this is also in line with the proposed concept. The cooperative selected to operate and manage the Wangan Aji MHP is “Kopontren API Roudlotuth Tholibin”, village of Jawar District of Wonosobo (in order to shorten the name, it will be called KOPONTREN throughout document). 1.14. With close cooperation with the cooperative and authorities, KOPENINDO has assisted Kopontren to acquire land required for the construction of intake, penstock, powerhouse, and tailrace. The land which Wangan Aji MHP developed is owned by PLN. PLN has provided permit to Kopontren to use the land for Wangan Aji MHP development on rental basis. PLN will collect the rental cost by deduction of 10% from sales price of power. 

KOPENINDO has assisted the Kopontren in the process of obtaining necessary official permits, among others: natural resource utilization, land used, power purchase agreement with PLN of Central Java, and PSK Tersebar permit, as the followings: Building Permits for Wangan Aji construction obtained from Sub-district Government of Garung, District of Wonosobo. (No. 648/01/IMB/2007, 13/1/2007)



Wangan Aji Water Resource Utilization permits provided by Integrated Services Office of District Government of Wonosobo and Provincial Office of Water Resources Management Central Java. (No. 545.1/64/2007, 20/4/2007)



PLN (who owned the site) has provided permit to KOPONTREN to use the land for Wangan Aji MHP development. (25/1/2008, No.067.PJ/041/DJTY/2008)



Certificate of Technical Recommendation of proper synchronous to PLN grid for Wangan Aji MHP by PLN Jasa Setifikasi. (No. 159/046A.07/SKT-JS/2007 and No. 160/046A.07/SKT-JS/2007, 23/8/07)



PSK Tersebar permit provided by DGEEU. (No.56-12/20/600.3/2008, 19/2/2008)



Power Purchase Agreement between PLN and KOPONTREN. (25/1/08, No.066.PJ/041/DJTY/2008)

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Final Report -Wangan Aji Micro Hydro Project ADB-PEP TA REG 6150, Contract No.: COCS/05-047

2. The Stakeholders of Wangan Aji MHP Asian Development Bank (ADB) 2.1. ADB has most important role as the project initiator and also financial support through its grant under Poverty and Environment Program (PEP), to develop

Wangan Aji Micro Hydro Project (MHP). 2.2. The ADB’s grant assisted the Government of Indonesia (GoI) to implement PSK Tersebar (Small Private Electricity Generated Scheme) a policy that aim to promote investments in renewable energy based distributed small power generation, stipulated in the Ministerial Decree No. 1122 K/30/MEM/2002, dated on 12 June 2002. 2.3. The grant from ADB will be managed as a revolving fund. Under this scheme,

ADB’s share in total project cost will determine the percentage of profits will later be revolved and invested for MHP or other renewable energy (RE) development in the region. Directorate General Electricity and Electricity Utilization (DGEEU) 2.4. DGEEU is, on behalf of the Government of Indonesia, the Executing Agency

(EA) for the project. 2.5. According the agreement between ADB and GoI, DGEEU as EA will provide the following:      

Coordinate with the Provincial Government of Central Java and District Government of Wonosobo. Supervise the sub-project progress and the activities of the Consultants, KOPENINDO. Endorse all progress and financial reports submitted by Consultants. Will counter sign disbursement from the sub-project account. Detail and approve total project cost ensuring that the share of ADB does not exceed 75 percent of total cost. Established and maintain account for revenue from Wangan Aji to be used for subsequent project.

Provincial Government of Central Java 2.6. Provincial Government of Central Java has contributed in Wangan Aji MHP project. Through its technology education and dissemination program the

Provincial Government of Central Java has provided fund to the community of Wangan Aji through the Islamic Traditional School Roudlotuth Tholibin (pesantren) as non-returnable grant. Later, this grant becomes community contribution to finance the civil work that consist of intake, power house and tail race in Wangan Aji MHP. 2.7. According to the regulation, DGEEU must transfer the assets of Wangan Aji

MHP to Provincial Government of Central Java, as a consequence Provincial

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Final Report -Wangan Aji Micro Hydro Project ADB-PEP TA REG 6150, Contract No.: COCS/05-047

Government of Central Java has to manage the assets and revolve the profit revenue of Wangan Aji MHP. District Government of Wonosobo 2.8. District Government of Wonosobo has provided support to community of Wangan Aji through the Islamic Traditional School Roudlotuth Tholibin

(pesantren) as non-returnable matching Provincial Government grant to facilitate community development and dissemination. 2.9. District Government of Wonosobo in addition also supports the project to get

land use permission from land owner, PLN. PT PLN (Persero) (State Electricity Company) 2.10. PT PLN (Persero) has special role as a buyer of electricity generated by Wangan Aji MHP. Roudlotul Tholobin Islamic Traditional School (Pondok Pesantren) 2.11. Podok Pesantren as the foundation (non profit institution) who has actually provided grant under technology education and dissemination program from Provincial Government of Central Java. Koperasi API Pondok Pesantren Roudlotul Tholobin (KOPONTREN) 2.12. KOPONTREN is student’s cooperative as organization where the students could exercise to become entrepreneur in order to be self-supporting after graduate in their societal life. 2.13. KOPONTREN as business unit under supervision of Pondok Pesantren will manage the grant that has provided by Provincial Government of Central Java to Pondok Pesantren, due to the grant is in the form of business activity. 2.14. KOPONTREN in addition also contributed in-kind such as: land clearance, and man-day during the construction period. Indonesian Renewable Energy Cooperative (KOPENINDO) 2.15. Based on contract No.: COCS/05-047 dated January 26, 2005, KOPENINDO (Indonesian Renewable Energy Cooperative) has been assigned as a consultant. 2.16. One of the KOPENINDO responsibility is to ensure that local cooperative provide counterpart contribution required by the project. If the local cooperative fails to do, it should be brought to the attention of ADB and executing agency, DGEEU. 2.17. To finalize the project, additional local contribution is required. During the discussion with local stake holders (Local Community, Office of Mines and Energy of Central Java and District Planning Board), there are two options are currently foreseen. The first option will be to invite local investor to participate

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Final Report -Wangan Aji Micro Hydro Project ADB-PEP TA REG 6150, Contract No.: COCS/05-047

in Wangan Aji MHP. Secondly, KOPENINDO may participate in Wangan Aji MHP investment. 2.18. Based on the DGEEU letter dated January 30th 2006 No. 422/09/6501/2006, stated that KOPENINDO is requested to cover additional local cooperative contribution as share in the Wangan Aji MHP. Community of Jawar 2.19. Community of Jawar is an important Stakeholder that through Community Development program of Wangan Aji MHP expected would provide benefits of Wangan Aji MHP. They are farmers, traders, small entrepreneur in sector such as; garment, food, wood, steel, and workshop. 2.20. Jawar and its surroundings are existed some social facilities owned by local community such as; a small hospital and several Islamic Traditional School with number of student quite a lot. 2.21. By getting benefit from Wangan Aji expected the community will support the sustainability of Wangan Aji MHP.

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Final Report -Wangan Aji Micro Hydro Project ADB-PEP TA REG 6150, Contract No.: COCS/05-047

3. Progress of Work Commencement of Work 3.1. Based on Notice to Proceed - TA 6150-REG: Poverty and Environment Program dated on 28 March 2005, the work of the KOPENINDO is officially commenced on 1 April 2005. However, KOPENINDO has carried out a preparatory and coordination works since January 2005. From the date of commencement of work under the contract until the preparation of the Interim Report, the following activities were carried out by KOPENINDO: Technical 3.2. As described in the contract, one of technical task of KOPENINDO is to conduct an engineering survey and detailed design study. This task has basically finalized prior the tendering and construction of the plant. The detailed engineering drawing is attached in the CD file. 3.3. There three technical options were considered during the technical assessment phase; 1 large cross flow turbine, two smaller and propeller turbine. For the low head of about 12 meters likes Wangan Aji, the Propeller Turbine would produce better efficiency and provide lower generation cost compared to Cross Flow Turbine. Description Turbine

Option I 2 units Propeller Turbine

Option II

Option III

1 unit Cross Flow Turbine

2 units Cross Flow Turbine

Net Head (m)

11.12

10.12

10.12

Design Flow (l/s)

1420

1420

2 x 710

System Efficiency (%)

79

68

67

Power Output (kW)

123

96

2 x 47.5

Annual Production (kWh)

1,064,580

723,399

724,619

Total Annual Production (kWh)

1,021,997

694,463

695,634

100

79

79

Mean Output (kW)

3.4. Based on the above requirement, KOPENINDO has undertaken ordering and tendering for the project equipment and civil works, in line with ADB procedures. Activities within these tasks include the identification of suitable Wangan Aji MHP equipment/component suppliers and civil contractors, preparation of technical specification and requesting for offer, evaluation of offers for electro-mechanical equipments and civil works, and submission the evaluation report to ADB.

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Final Report -Wangan Aji Micro Hydro Project ADB-PEP TA REG 6150, Contract No.: COCS/05-047

3.5. Conducting good practices in the procurement activities and in line with ADB procedures also to have good price offer, KOPENINDO has sent Request for Offer to several and specific companies to submit their proposal to carry two specific tasks, i.e. construction for civil work (i.e. construction for the weir, intake, forebay, powerhouse, and tailrace) and supply and installation the electrical – mechanical equipment (i.e. guide vane, water turbine, generator, and controller /synchronizer). Their offers are arrived by end of April 2005. The list of the company is attached in Appendix 6. Civil Works 3.6.

The civil works for Wangan Aji MHP are divided into two groups which include the following main items: Group 1: -

Construction of water intake, weir and forebay; Trust block for penstock Powerhouse Tailrace channel

Group 2: -

Steel pipe fabrication and installation of penstock; Enforcement block for water turbine – generator foundation

3.7. The civil works of Group 1 category is financed by the provincial grant fund and tendered by the District Government of Wonosobo. The local contractor nominated for this work is CV Putra Marga with contract value of IDR 388,956,000 or equal to USD 41,378. 3.8. The civil works of Group 2 category is financed by ADB grant. Selection of the contractor was done by requesting for offer to local contractors which were advised by District Government of Wonosobo. Based on the technical and financial evaluations, KOPENINDO proposed ADB to nominate CV Subarjo Group to be the contractor. After having approved by ADB through its letter dated May 23, 2005, CV Subarjo Group (SG) was given the order to carry the civil construction works with the contract value of IDR 550,000,000 or equal to USD 58,511. 3.9. The contract with CV Putra Marga was signed at June 13, 2005 for 180 calendar days until Dec 2005 for the construction periods, additional 180 calendar day until June 2006 for maintenance periods. While, the contract with CV Subardjo Grup was signed at July 11, 2005 for 150 calendar days until Dec 2005 for the construction period and additional 180 calendar day until June 2006 for maintenance periods. 3.10. KOPENINDO is continuously supervising and ensuring the quality of the civil work construction for the weir, intake, forebay, powerhouse, tailrace, and any

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Final Report -Wangan Aji Micro Hydro Project ADB-PEP TA REG 6150, Contract No.: COCS/05-047

other construction that may be required for the project. KOPENINDO also ensures that all project related construction is in compliance with ADB’s social safeguards through involving local workforce and maintaining communication with local community. 3.11. The overall physical progress of the civil works presented in picture in Appendix 5 is finish and summarized as the followings: • • •

Water intake Penstock & Power house Tail-race

3.12. Due to processing of Provincial Grant, ordering and tendering process that initially planned in March 2005 to April 2005 could be actually done in June 2005 to July 2005. 3.13. Problem that faced during development is existence of illegal building for motor bike workshop on the land that will be built Penstock and Tail Race had to pass under land owned by villager. After conducted discussion with both parties, finally illegal building owner agreed to move and land owner that passed by tail race gave permission to use the land for tail race. The cost for this land clearance was finance by District Government of Wonosobo. The electro-mechanical and interconnection 3.14. The electro-mechanical contractor to be differentiated with Civil Work contractor due to different activities and skills. When the project started in 2005 there were not available local electro-mechanical contractor could carry electromechanical job of Wangan Aji MHP. 3.15. Similar to the civil works tendering procedures, KOPENINDO also collecting offers from various suppliers. After having evaluated the offers, KOPENINDO proposed to ADB through its letter dated May 23, 2005 that PT Cihanjuang Inti Teknik (CIT) to be the candidate to carry the electro-mechanical construction. 3.16. Due to processing of Provincial Grant as mentioned previously, the contract signed with Cihanjuang Inti Teknik was took place at July 21, 2005 for 8 months period of work. The hand over expected in March 2006. The contract prices is as follows: 

EUR 28.000 for generator. This amount equivalent with equivalent USD 35,000 or IDR 329,000,000.



CHF 69.800 for controller. This amount equivalent with equivalent USD 56,747 or IDR 533,430,894.



IDR Rp.398.000.000 for turbine. This amount equivalent with equivalent USD 42,340.



Total estimated price USD 134,088 equivalent IDR 1,260,430,894. this contract price was lower than price offered as mentioned before USD 139,911 equivalent IDR 1,315,169,512.

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Exchange rates as of May 23, 2005 were USD 1 equivalent EUR 0.8, CHF 1.23, and IDR 9,400.

3.17. Because interconnection equipments was not included in the electrical mechanical contract, the separate contract was given to Cihanjuang Inti Teknik on October 2, 2006 for interconnection equipments and installation. The contract price was IDR 110,000,000. 3.18. The overall picture of electro-mechanical is presented in Appendix 5 and summarized as the followings: • • •

Turbine and generator The controller Interconnection

3.19. Problem that faced in procurring electrical and mechanical, as follows: •







Changes and modification of turbine design to increase the capacity from the initially proposed of 125 kW to 140 kW created a two-month delay in manufacturing. Originally the manufacturing process was expected to be finalized during 4 month (from August 2005 to November 2005). Because of that delay the manufacturing can be completed by January 2006. Delayed also encounter in generator shipment particularly because lost experienced during the shipment from Austria to Indonesia.Additional delay also occured during the custom clearence processes. The above situation contributes to the total delay of four months, from which originally expected that the goods would be received on December 2005 was actually receieved on April 2006. Those delayed mentioned above also coused postponed test run turbines in the workshop and in project site that had been done from April 2006 to July 2006. The stand alone operation of the plan was commissioned on October 2006. Due to energizing permission process from PLN, the commissioning for parallel or grid operation can only be done on August 2007.

Power Purchase Agreement and Electricity Usage 3.20. At the very beginning of initiative development of Wangan Aji MHP, the power produced will partly use directly to the community and only sell the excess power to PLN grid. After having analyzed the local electricity situation and limited budget for distribution line development and through intensive consultation with District as well as Provincial Governments and DGEEU concluded that all of power generated by Wangan Aji MHP is to be sold to PLN through the medium voltage (20 kV) network. 3.21. During the discussion with community of Wangan Aji and District Government of Wonosobo in implementing the sub-project, it is generally agreed that the local cooperative (KOPONTREN) will operate the sub-project, acting as energy service company (ESCO).

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3.22. The community surrounding of Wangan Aji MHP will receive benefit from the power sales through Community Development program that has to be done by KOPONTREN. The Community Development program could expected increase livelihood generation option and improve health, education, and communication facilities for the community. To accommodate these expectations, MHP budgeted 5% to 10% from net profit after tax as expense for Community Development program. 3.23. With regards to electricity purchase agreement, KOPENINDO has initiated a communication between the Kopontren of Wangan Aji and PLN Central Java Distribution since early 2005. Through its letter dated on 15 March 2005, PLN originally offers a purchase price of IDR 246.42 per-kWh (approximately UScent 2.5 per-kWh). This is very low and not in accordance to the defined price as mandated by the “PSK Tersebar” regulation. 3.24. After several meetings and discussion with the PLN of Central Java together with representative of local community and officials, principally PLN will purchase the electricity from the Wangan Aji based on the negotiated price instead of using standard price as defined on the regulation. KOPENINDO has an impression that the process will take sometimes as PLN Central Java is not fully understand about PSK Tersebar concept. KOPENINDO has also reported this case to DGEEU and PLN Head Office in Jakarta. 3.25. During the consultative the meeting with the PLN on 16 March 2007, PLN notified that the purchase price is IDR 742 per-kWh. This was a good sign from the PLN for the progress of Power Purchase Agreement. 3.26. However, PLN was not provide permission to energize the power generated by Wangan Aji MHP to the PLN grid before the power purchase agreement (PPA) contract is signed. Through the consultative meetings and agreement that KOPONTREN would not claimed payment of electricity connected before power purchase agreement (PPA) to be signed, finally, Wangan Aji MHP has been successfully interconnected with medium voltage of PLN Grid in Agustus 2007. 3.27. After having intensively in consultation with DGEEU, Provincial Government of Central Java and PLN Head Quarter, on the meeting in December 3rd 2007 PLN agreed purchase the electricity in accordance to the defined price as mandated by “PSK Tersebar”. However, the process to obtain the power purchase agreement (PPA) is very tough and time consuming. 3.28. During the meeting on December 2007 participated by PLN, Kopontren, Kopenindo, District Government of Wonosobo PLN announced that the delivery cost of electricity at medium voltage interconnecting point in Wangan Aji is IDR 772,67 / kWh (approximately US-cent 8,2 per-kWh), therefore according to PSK Tersebar legislation the purchase price at medium voltage will equal to 0,8 x Rp.772,67 / kWh = Rp 618,13 / kWh. 3.29. PLN also facilitate for the issue for land rental permit that used for the micro hydro with rental cost 10% from power sales.

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3.30. The major obstacle is basically due to many different thought in interpreting the PSK Tersebar rules and steps, among others: • • •

Being a business entity, most of PLN officials assume that the PPA must be based on business to business negotiation; If it is mandatory, according to most PLN’s Officials, then the purchase price must be announced by the government; There is conflicting statement in the PSK Tersebar regulation, particularly with regard to which should come first: PPA (by PLN) or Electricity Business Permit (IUKU - by DGEEU). According to DGEEU, DGEEU will issue IUKU only after PPA is signed, while PLN assumes that PPA will be signed after the IUKU permit is issued.

Revolving Fund 3.31. It is proposed that grant from ADB will be managed as a revolving fund. Under this scheme, some portion of the profits (i.e. revenue less the costs for operation and maintenance of MHP) will later be revolved and invested for MHP or other renewable energy (RE) development in the region. DGEEU in coordination with Provincial Government of Central Java and District Government of Wonosobo will establish the designated account for deposit profits of ADB’s share in total project cost. 3.32. DGEEU had sent letter to the Provincial Office of Mines and Energy of Central Java dated 21 Aprils 2008 to open special account for deposit revenue from electricity sales of Wangan Aji MHP. 3.33. The opening designated account in order to implement as guided in the agreement between ADB and DGEEU is very crucial. According to State Treasury Regulation, all of Government Revenues and Expenditures have to be incorporated in the State or Regional Budget. All state revenues and expenditures are conducted through State or Regional General Cash Account (Rekening Kas Umum Negara or Rekening Kas Umum Daerah). 3.34. On May 27, 2008 The Provincial Office of Mines and Energy of Central Java organized a coordination meeting. The participants in this meeting were; Finance Bureau of Central Java Government, Treasurer Office of Central Java Government, Planning Board of District Government of Wonosobo and KOPONTREN. DGEEU was absent to this meeting and KOPENINDO presented in this meeting as resource party. The proceedings of the meeting are as follows: •



Finance Bureau of Central Java Government would create Special Code of Account instead of opening special Bank Account (which was not allowed by law). Parts of Wangan Aji MHP which is financed by ADB grant (which has been handed over from DGEEU to Provincial Government) will become Provincial Government Assets.

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From Provincial Government point of view the above partial asset at Wangan Aji MHP (approximately 60% of the overall costs) should be maintained as Government Participation in the business unit. The revenue generated by this government participation will be managed by Provincial Office of Mines and Energy Central Java and treated as revolving fund. The revenue of Government Participation in the Wangan Aji MHP is calculated based on share portion from Net Income after tax (Sisa Hasil Usaha) of the Wangan Aji MHP. KOPONTREN will be appointed by Provincial Office of Mines and Energy Central Java as Operator and responsible for the Provincial Government assets. Provincial Government will issue an official instruction about tasks and work scopes to KOPONTREN. Office of Mines and Energy of Central Java will annually request to the Regional Government Budget to utilize revenue from Wangan Aji MHP for other renewable energy project or new MHP investment.

3.35. Following the above coordination meeting, Office of Mines and Energy of Central Java has issued a letter to KOPONTREN ref no. 671/1018 dated on May 30, 2008 stated as follows: • •



KOPONTREN is authorized to conduct electricity sale to PLN Central Java & Jogyakarta Distribution. Responsible for operation, technical maintenance, administration, prepare revenue and expenditure report (Financial Report) of Wangan Aji MHP in accordance with government regulation. Once every 3 months (Quarterly) transfer the 60% from current net income (SHU) to Regional General Cash Account (Rekening Kas Umum Daerah) No. 1.034.01.5047 at PT Bank Jateng Main Branch office by using account code 2.03.01.00.4.3.1.05.04.

3.36. Due to the above proceedings can be concluded as follows: •





The definition of profits that guided by agreement between ADB and DGEEU as revenue less operation and maintenance costs can not be implemented. The revolving fund will be incorporated in the Provincial Government Budget mechanism; opening designated account to deposit the revolving fund can not be implemented. Office of Mines and Energy of Central Java has to propose revenue budget for next subsequent year base on income projection of Wangan Aji MHP and also has to propose expenditure budget for next subsequent year development of new MHP in the Provincial Government Budget.

3.37. DGEEU after having received the above mentioned letter from the Office of Mines and Energy of Central Java concluded that agreement among DGEEU, Provincial Government of Central Java, District Government of Wonosobo, KOPONTREN, and KOPENINDO, as ADB suggested is no longer relevant. 3.38. As stated in the Financial Projection in Appendix 8, the progress of replenishment of revolving fund as follows:

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Final Report -Wangan Aji Micro Hydro Project ADB-PEP TA REG 6150, Contract No.: COCS/05-047

Table 1: Revenue, operation & maintenance, community development, and replenishment of revolving fund (Rp dlm jutaan/amount in million IDR) Total 5 years A. Jum lah penerim aan (Total revenue)

2008

2009

2010

2011

2012

2,587.9

260.8

548.0

575.9

592.5

610.7

B. Biaya Operasi dan Pemeliharaan (O&M)

506.7

50.4

105.9

111.2

116.7

122.6

C. Comm unity developm ent

589.0

24.7

150.1

138.5

137.9

137.9

97.7

4.7

23.8

23.5

22.9

22.9

491.3

20.0

126.3

115.0

115.0

115.0

477.0

22.7

116.2

114.8

111.8

111.6

1. Sebagai biaya (As expenses) 2. Sebagai pinjaman (as loan) D. Pem b. Dana Bergulir (Replenishm ent of RF)

Community Development Activities 3.39. The community development activities would transfer of knowledge to community, facilitate the community, and create community participation, to have awareness on the environment issues, sanitation, and income generation. 3.40. As stated in the agreement between DGEEU and ADB, Wangan Aji MHP “expected to increase livelihood generation options and improve health, education and communication facilities for the community”. In order to support mission, to be allocated fund as expense and also fund as investment for Community Development activities. 3.41. The expense for community development activities is budgeted 10% from net profit. This percentage is higher than State Owned Company obligation which is only 5% from the net profit. Fund for Community Development from state enterprise is known as “Program Kemitraan” which is the business support for small and medium enterprises. Business volume Wangan Aji MHP is not as big as state owned company, therefore, in order to have significant support amount for Community Development activities, 10% ratio from net profit is proposed. The utilization of this fund will be focused on the disseminations activities, facilitation, grant for the poorest to start their business. As an expense Community Development is non deductible expense for tax calculation purpose. 3.42. As investment activities, the fund generated by Wangan Aji may be allocated as loan to community to finance their business related with income generation, increase utilization of locally natural and renewable resources, woman participation, and energy efficiency. Basically business activities that could be generated are quite large, but it will depend on availability its fund, and the most relevant income generating activities the community. 3.43. Activities of Community Development in public health improvement may covers the followings: 

Support As Syifa Hospital (near by Wangan Aji MHP) in promoting community awareness on health and epidemic disease and medical equipment needed.

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Final Report -Wangan Aji Micro Hydro Project ADB-PEP TA REG 6150, Contract No.: COCS/05-047



Information distribution about types of epidemic disease and how to overcome.



Facilitate community on the up-stream of Wangan Aji MHP to increase their sanitation due to their problem in garbage, by providing garbage can, cart, and in cooperation with government to transport to the garbage dump.



Facilitate the school and Pesantren in creating hygienic environment in the school building and facilities (e.g. construction of anaerobic digester or biogas plant for human feces).

3.44. Activities of Community Development in education sectors may include as follows: 

Promoting Wangan Aji MHP as a Study Tour object for technology education.



Equip with computer and internet facility in Pondok Pesantren that can be accessed by students or communities.



Facilitate training and seminar of practical knowledge on business, industry and technology.

3.45. Community Development activities to support income generation of the community may be conducted by provision of soft loan or grant to start business especially for the poorest, increase business volume and generate job opportunity, and improve production cost efficiency (especially energy efficiency and promoting new appropriate rural technology) to support the existing business. Business opportunity that has been collected from observation is presented in the following Table 2. The selected business is based on local resources that generate fast business revolving. Cow and goat husbandries, small scale garment industries (mostly women in this industry) to be prioritized. 3.46. Community development operation mechanism presented in Appendix 7

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Final Report -Wangan Aji Micro Hydro Project ADB-PEP TA REG 6150, Contract No.: COCS/05-047

Table 2 BUSINESS OPPORTUNITY OF COMMUNITY DEVELOPMENT FOR GENERATE LIVELIHOOD OPTION AND RURAL RENEWABLE ENERGY SOURCES DEVELOPMENT A. Investm ent Hydro Pow er Micro hydro 1) Pico hydro (Topengan Village) Biogas Tofu industry (Kongsi & Bumiroso Villages) Sm all cow husbandry (Kalijeruk & Manggisan Village) 2) Sm all tapioca industry (Binangun, Topengan Village) B. Working Capital Hom e garm ent industry (Kongsi village) 3) Sm all brick industry

4 unit

100 kW to

11 unit

0.5 W to

700 kW 25 million IDR/kW

20,000.0 Million IDR

1 kW 25 million IDR/kW

275.0 Million IDR

10 hh

4 m3 to

10 m3 15 million IDR/unit

150.0 Million IDR

25 hh

4 m3 to

10 m3 20 million IDR/unit

500.0 Million IDR

2 hh

4 m3 to

10 m3 15 million IDR/unit

30.0 Million IDR

10 million IDR/unit

300.0 Million IDR

30 hh 1 unit

10 million IDR/unit

10.0 Million IDR

Sm all cow husbandry 2)

25 hh

20 million IDR/unit

500.0 Million IDR

Sm all goat husbandry 4)

25 hh

5 million IDR/unit

125.0 Million IDR

3 million IDR/unit

900.0 Million IDR

C. Other Hom e PLN electricity connection support 5) Electrified sm all industry (w elding, ricemills, brick)

300 hh 3 unit

450 W to

900 W

11.84 kW to 14.8 kW

Total

5 million IDR/unit

15.0 Million IDR 22,805.0 Million IDR

Notes: 1) Participation w ith other investor or government program 2) 3 to 4 cow s for each household farmer 3) 3 to 5 family w orkers mostly w omen 4) 5 to 10 goat for each farmer 5) The potencies is estimated 15% to 25% each village w ith 300 hh in total

Business Plan 3.47. Wangan Aji MHP to be developed under Poverty and Environment Program (PEP) of Asian Development Bank to assist the Government of Indonesia (GoI) to implement a pilot Micro Hydro Project (MHP) at Wangan Aji. Its consequence is the business conducted should have Vision to improve the living standard of the community and creating better environment. 3.48. The mission of Wangan Aji MHP, is promoting utilization renewable energy source and provide service for the community to increase their living standard. 3.49. Several things that must paid attention in the future that possibly could be facilitated by Wangan Aji MHP as follows: 

The Wangan Aji MHP “expected to increase livelihood generation options and improve health, education and communication facilities for the community”.



From evaluation indicate that garbage dissolve in the Wangan Aji canal is significantly affect to the electricity production.



Community sanitation especially waste management conducted by Government does not work in good manner.

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Final Report -Wangan Aji Micro Hydro Project ADB-PEP TA REG 6150, Contract No.: COCS/05-047



There are many small rural business activities performed by community potentially could be exploited as renewable energy sources; tofu industry and animal husbandry as example.



Recently timber industry is competitive compare to other crops; this could be good opportunity to promote the social forestry in the community around Wangan Aji MHP.



In the Kongsi village, there are many households running small garment industry that mostly women participate in this industry.



Villages’ arround Wangan Aji MHP is electrified but estimated 25% of the households not officially PLN customers, their electricity connecting indirectly to the official PLN customers.



There is a Village Hospital near by Wangan Aji MHP that its role in the community health care needs to be improved.



There are many Pesantren (Islamic Traditional School) in the villages around Wangan Aji MHP with 100 students to more than 500 students male and also female. The students study and stay in the Pesantren usually come from low income families that not afford to send student to formal school. Most of the Pesantren has sanitation problem.

3.50. To respond those things mentioned above such importance mission could be done within next five years as follows: 1. Build Participations Close cooperation or partnership with stakeholders, e.g. government, institutions concerned, and community will be maintained. The following studies and activities are foreseen: 

Study and application of waste management that suitable implemented in the community surrounding Wangan Aji MHP



Study of socio-economic and implementation of biogas digester application to improve community sanitation and income generation for rural community business. Also biogas digester application especially for human manure to improve sanitation in the Pesantren.



Study of socio-economic of indirect customer of PLN to find out their willingness to pay electricity bills and connection cost and also find out the business activities could be applied in order to increase their income.



Study of socio-economic and implementation of social forestry.



Study of socio-economic and implementation of scale up garment industry in Kongsi village also possibility of replication to other villages

2. Increase Productivity

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Final Report -Wangan Aji Micro Hydro Project ADB-PEP TA REG 6150, Contract No.: COCS/05-047



Invest for suitable equipment to capture garbage at the MHP intake in order to prevent garbage entering to forebay and penstock that will affect to the operation and productivity of MHP.



Scale up community investment in renewable resources for their business.

3.51. In order to execute the mission mentioned in the 3.50 above will be allocated fund as expense and also fund as investment assets for Community Development activities. As expense, the fund dedicated for study, community facilitation, and donation. As investment assets, the fund dedicated for financial assistance in the form of loan to the community to improve their business capacity and income. 3.52. Detail business plan consist of assumption and financial projection are presented in Appendix 8. 3.53. Summaries of certain important financial ratios presented in Table 3 bellow: Table 3 Financial ratios Ratios

2008

Return on assets Return on equity Operating expense to operating income Net income to total income

2009

1.6% 1.6% 19.5% 16.0%

7.8% 7.9% 19.8% 39.0%

2010

7.6% 7.7% 20.2% 36.6%

2011

7.3% 7.5% 20.6% 34.7%

2012

7.2% 7.4% 21.0% 33.6%

The ratio presented shows that ratio tend lower in the future years due to increasing Income Tax gradually in next following year. Tax Office use double declining balance method for depreciation expense calculation that expense will decrease in the next following year. The significant expense for operation and maintenance are needed for Salary (about 50%) and Water Tax or Water Retribution (about 27%). Please refer (Appendix 8 3.4.) 3.54. Summaries of certain important financial account from Financial Projection in Appendix 8 (Appendix 8. 4.1, 4.2, and 4.3) presented in the Table 4 as follows: Table 4: List of importance accounts (Rp dlm jutaan/amount in million IDR)

Accounts Revenue Operation and maintenance expenses Net income Total assets Equity Community development Revolving fund

2008

2009

2010

2011

2012

261.0

548.9

577.7

594.2

612.4

50.4

105.9

111.2

116.7

122.6

46.5

238.1

235.1

229.0

228.6

2,700.8

2,732.0

2,777.8

2,813.7

2,845.1

2,700.0

2,721.4

2,742.6

2,763.2

2,783.7

24.7

150.1

138.5

137.9

137.9

22.7

116.2

114.8

111.8

111.6

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4.

Financial Aspect of Wangan Aji MHP Development

4.1. The approved project cost for development of Wangan Aji MHP is USD 278.500. ADB contributes with USD 182.000 (around 65%) as grant while the rest equal to USD 96.500 (around 35%) represents local input. The breakdown of cost and agreed sharing is presented in following table 2: 4.2. Due to Workshop & Dissemination that had been conducted on March 13, 2008, the actual cost of Wangan Aji MHP to be closed as of March 31, 2008. 4.3. The actual cost totally USD 286,847.23 as presented in the following table 2: Table 5

Budgeted & Actual Cost Comparison - Wangan Aji Project (MWA1) (in USD) Approved Cost

Rincian (Description)

Actual cost

ADB

Community

Total budget

ADB

Community

Total Actual

USD

USD

USD

USD

USD

USD

Deviation %

Project Manajement

5,000.00

5,000.00

10,000.00

5,000.00

6,114.93

11,114.93

11%

Survey/Preparatory Work

5,000.00

3,500.00

8,500.00

5,000.00

2,324.98

7,324.98

-14%

8,000.00

8,000.00

4,149.83

4,149.83

-48% 125%

Land aquisition Civil Work Electro-Mechanical (CIT) Transmision Line and Interconnection

46,000.00 100,000.00

75,000.00

6,000.00

46,000.00

57,867.45

45,677.42

103,544.87

175,000.00

88,132.55

46,096.91

134,229.46

-23%

6,000.00

6,000.00

8,977.44

14,977.44

150%

10,000.00

10,000.00

1,505.71

11,505.71

Training & Dessimination

10,000.00

Contingencies

10,000.00

5,000.00

15,000.00

182,000.00

96,500.00

278,500.00

Total Pengeluaran

Komposisi (Composition)

65%

35%

-

100%

172,000.00 60%

114,847.23 40%

286,847.23

15% -100% 3%

100%

4.4. The different between approved and actual cost as seen in Table 2 are mainly occurred in the Civil Works, Electro Mechanical, and Transmission Line and Interconnection. 4.5. The actual cost of ADB share less than ADB cost approved due to not implemented the contingencies. 4.6. Local input from the government came from District Government of Wonosobo and Provincial Government of Central Java which is provided to the community of Wangan Aji through the Islamic Traditional School (Pesantren) at Wangan Aji as non-returnable grant, in addition to the in-kind contributions (such as: land, materials, and man-day during the construction period) of the community. 4.7. This government and community participation stated in 4.4 is equal to an amount of about USD 45,648.15. As presented in the Table 3, to cover actual cost amounting to USD 114,847.23 additional local contribution amounting to USD 69,199.08 is required. 4.8. During the discussion with local stake holders (Local Community, Office of Mines and Energy of Central Java and District Planning Board), there are two options are currently foreseen. The first option will be to invite local investor to participate in Wangan Aji MHP. Secondly, KOPENINDO may participates in Wangan Aji MHP investment. Based on the DGEEU letter dated January 30th 2006 No. 422/09/6501/2006, stated that KOPENINDO is requested to cover

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Final Report -Wangan Aji Micro Hydro Project ADB-PEP TA REG 6150, Contract No.: COCS/05-047

additional local contribution as share in the Wangan Aji MHP. The detailed local input contribution is presented in the following Table 3. Table 6

Realisasi Kontribusi Lokal PLTMH Wangan Aji (MWA1) (Actual Local contribution - Wangan Aji Project (MWA1)) (in USD)

Rincian Description

Local contribution

Total

Prov. Gov Reg. Gov Kopenindo USD

USD

USD

USD

Project Manajement

6,114.93

6,114.93

Survey/Preparatory Work

2,324.98

2,324.98

Land aquisition

4,149.83

Civil Work

41,498.31

-

4,149.83

4,179.11

45,677.42

46,096.91

46,096.91

Transmision Line and Interconnection

8,977.44

8,977.44

Training & Dessimination

1,505.71

1,505.71

Electro-Mechanical (CIT)

Contingencies

-

Total Pengeluaran

41,498.31

Kom posisi (Composition)

36%

4,149.83

-

69,199.08

4%

114,847.23

60%

100%

4.9. The actual cost to date for the development of Wangan Aji MHP compare with Approved Cost as mentioned in table 2 getting result unfavourable deviation about 3%. 4.10. When preparing proposal there was not clear yet about PLN or developer have to provide interconnection equipment because it’s related with PLN’s standard of equipment. At that time assumed PLN would do, that was reason of not included in the procurement electrical mechanical contract with Cihanjuang Inti Teknik. 4.11. Finally when MHP ready energized to the PLN’s grid concluded that developer have to provide interconnection equipment, then separate contrat signed up for interconnection equipments and installation with Cihanjuang Inti Teknik on October 2, 2006 with contract price was IDR 110,000,000. The total cost of interconnection presented in Table 4 as follows: Table 7

Keterangan (Description)

No 1 2

PLN UPJ Wonosobo (interconnection)

3

Transf ormator & transmission dist. line

4 5

Comisioning PLN Jaser (Certif ication)

kWh meter

Customer PLN pow erhouse Total Interconnection

KOPENINDO – Indonesian Renewable Energy Cooperative

IDR

USD

2,600,000

274

10,500,000

1,168

110,000,000

11,949

12,831,500

1,410

1,600,000

176

137,531,500

14,977.44

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Final Report -Wangan Aji Micro Hydro Project ADB-PEP TA REG 6150, Contract No.: COCS/05-047

5. Training and Dissemination Training of management and technical 5.1.

The first training of management to Local Cooperative had conducted in cooperation with BAPPEDA (District Planning and Development Agency) Wonosobo in November 14, 2005 until November 17, 2005. Actually this training for KOPONTREN, because of the agenda of the training is more general about cooperative management practice, basic concept of renewable energy, and micro hydro system, Bappeda also invited other cooperative in District of Wonosobo. This event is more dissemination and promotion to the cooperative on the business opportunity in the MHP.

5.2.

The second training is technical training to selected operator of KOPONTREN, conducted at the same time with installation and testing of the turbine, learning by doing, so that participants understand the function of every part in the equipment to be installed. This training conducted in the periods of July to September 2006. These technical requirements include among others:

5.3.



Start-up ans shut-down procedures of the plant;



Adjustment system parameter and setting for operation



Carry lubrication activities for the moving parts, particularly: mechanical bearing;



Add and/or replace the hydraulic oil for gate valve and guide vane operation;



Maintenance for the civil building and intake

The third training discussing on Operation and Management of MHP that consist of general management, finance and accounting, administration. 

Opening bank account



Transaction evidence



Set up chart of account



Posting book of account



Generally Accepted Accounting Principle



Prepare financial report



Incoming and outgoing letters



Prepare Work plan and Budget



Annual general meeting of the cooperative

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Final Report -Wangan Aji Micro Hydro Project ADB-PEP TA REG 6150, Contract No.: COCS/05-047

Workshop dissemination 5.4.

The workshop conducted at March 13, 2008 located in Tambi, Wonosobo. Presenter in this workshop come from various 1.

Mrs. Ratna Ariati Director of New and Renewable Energy and Conservation Energy (DGEEU) explained Government policy on development of Small Scale Distributed Power Generation Ministerial (PSK Tersebar Decree No: 1122 K/30/MEM/2002) and their attainment.

2.

Mr. Sohail Hasni, Sen. Energy Specialist, Infrastructure Division (ADB) submit presentation about Virtual Power Generation.

3.

Bp. Ir. Mr. Teguh, Msi, Head of Mining and Energy Office of Central Java presented about renewable energy development, Policy and Implementation in Central Jawa.

4.

Bp. Syaiful Anwar, Phd (Directorate General Forest Rehabilitation and Social Forestry, Department of Forestry. Presented about impact of the climate change to the sustainability of MHP, policy and implementation on water conservation and social forestry.

5.

Bp. Totok Sunarto, Head of Small Electricity Power Generation Ministry of Cooperative and SME. Explain about financing scheme for small scale MHP investment by SME&C. Financing opportunity for development of small RE through empowering SME&C in form of revolving fund called Capital Strengthen Help, which dedicated to strengthen the SME&C’s capital.

6.

Bp. M. Sofyan, Manager of Planning PLN Central Jawa & Jogyakarta Distribution presented the PLN on the development perspective of renewable energy sources for power generation.

7.

Bp. Suroso (Head of Kali Maron Community), presented the Socioeconomic benefit for rural community of MHP development as an experience of Kali Maron Community (NGO) in development of MHP facilitated by PSK Tersebar.

8.

The last presenter was Bp. Robby Rachmat Badrudin from KBP Chakra Tea Plantation and Industry, presented opportunity and threat of implementing the MHP for commercial purposes in Dewata tea plantation West Jawa.

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Final Report -Wangan Aji Micro Hydro Project ADB-PEP TA REG 6150, Contract No.: COCS/05-047

5.5.

Invitation letters was increase from the initially planned around 64 people to become 90. The addition was caused by request or recommendation from parties that already getting the invitation letter (participants get participants). Institutional proxies that attend to the workshop were as planning.

1. Government officer 2. NGO 3. Business & FI 4. Education Total

5.6.

Inv. Letters sent from Wonosobo

Total

13 2 9 9 33

17 12 9

30 14 18 29 91

20 58

Participants that attended to the workshop as follows:

1. Government officer 2. NGO 3. Business & FI 4. Education Total

5.7.

Inv. Letters sent from Jakarta

Inv. Letters sent from Jakarta

Inv. Letters sent from Wonosobo

Total

16 1 15 8 40

10 8 9 7 34

26 9 24 15 74

Several issues to be noted as proceedings of the workshop as follows: 1.

In general, renewable energy technology has been understood properly.

2.

Initial investment in renewable energy technology is very high that become the main constraint in utilizing renewable energy source to generate electric power.

3.

Referring to item no. 1 and 2 above, commitment from stakeholder is needed especially in financing support.

4.

Development of MHP has positive impact on the socioeconomic of the community and will generate clean global environment.

5.

Currently, most of MHP development focusing on households for lighting, it would be better if development of MHP also to support or to create productive activities of the community.

6.

Although Ministry of SME&C has a program to finance development MHP, but the budget is very limited. Participation of financial institution and banking in MHP development has to be scaled up.

7.

Institutional matter is very important to have effective development of MHP and sustainability of MHP. Coordination among government offices or institutions still becomes bottle neck especially to have permits.

8.

Energy efficiency is very valuable by that will reduce fund to develop new power generator.

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Final Report -Wangan Aji Micro Hydro Project ADB-PEP TA REG 6150, Contract No.: COCS/05-047

6. Operational and Management Structure Basic Consideration 6.1.

The operational and management of Wangan Aji MHP will be interpreted based on the instructive letter to KOPONTREN issued by Central Java Office of Mines and Energy with ref. no. 671/1018 dated on May 30, 2008.

6.2.

Based on the Asset Transfer Document, between the Secretary General of Electricity and Energy Utilization and Central Java Office of Mines and Energy with ref.no. 645/05/610.0/2008 dated Feb 22, 2008, Office of Mines and Energy is defined as the receiving party for the asset financed by the ADB grant which will be utilized as a revolving fund. Hence, Office of Mines and Energy assumes to be the institution which is responsible to manage this revolving fund.

6.3.

The above instructive letter authorizes KOPONTREN to manage and operate Wangan Aji MHP with the following responsibilities: 

KOPONTREN is authorized to sign a cooperation agreement with the PLN Regional Office for Central Java and Yogyakarta regarding the electricity sales to PLN grid.



KOPONTREN is responsible to carry the technical maintenance, administration management (incl. book keeping), and financial reporting in accordance to the government rule.



Transfer the revolving fund, i.e. 60% from the net profit, to the general regional government account no. 1.034.01.5047 at PT. Bank Jateng Cabang Utama with cost center no. 2.03.01.00.00.4.3.1.05.04.

Procedures 6.4.

Based on the above consideration and general practice of government rule, the following operational and management structure are assumed: 1. At the end of the year KOPONTREN should issue the annual report, covering:  Income statement  Annual expenditure of Wangan Aji MHP  The technical report and any event occurred during the one year operation of Wangan Aji MHP  Community Development activities and results over the year  Budget proposal for the coming year operation

2. Based on the above Annual Report, Office of Mines and Energy may carry a financial audit to KOPONTREN and/or request KOPONTREN to

KOPENINDO – Indonesian Renewable Energy Cooperative

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Final Report -Wangan Aji Micro Hydro Project ADB-PEP TA REG 6150, Contract No.: COCS/05-047

provide detailed presentation in front of Office of Mines and Energy officials 3. Every three month KOPONTREN issue a quarterly report which covers the following items:  Actual cash flow report of the last three month;  Estimated revenue from the electricity sales for the next three month;  Estimated costs and expenses for operation and maintenance of Wangan Aji MHP for the next three month;  Budget or fund mobilized for Community Development. 6.5.

KOPONTREN’s Bank Account as follows: Bank

: Bank Rakyat Indonesia

Address

: Jl. Ahmad Yani No.1, Wonosobo

Account No.

: 0112-01-018028-50-0

Name of account

: Koperasi API PP Roudlotuth Tholibin

Management 6.6.

6.7.

Expected that transaction of electricity sales going to in the reality, in the coordination meeting on June 27, 2008 with Pesantren (Foundation), Community Leader, KOPONTREN, and KOPENINDO had decided the following: 

Organization Structure has to set up.



There have to be divided the policy body in the form of Committee and implementation body conducted by KOPONTREN.



To have good governance there is a chair for independent person as community representative.



The Organization Structure that had been set up is open to be amended when stakeholders develop agreement in the next future.

Organization Structure that had been set up will be informed to the DGEEU, Provincial Government of Central Java, and District Government of Wonosobo. Steering Committee (SC)

6.8.

This committee will be responsible for: 

Framing policy and guidelines for MHP operation and CDF operation;



Liaising with other government, private (social or business) institution



Reviewing and approval program / proposal for operation of MHP operation and CDF operation,



Approval requisition of fund for operation of the MHP and CDF.

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Final Report -Wangan Aji Micro Hydro Project ADB-PEP TA REG 6150, Contract No.: COCS/05-047

6.9.

The committee will consist of representatives from Kopontren Leader, Pesantren leader, committed community leader arround Wangan Aji MHP, and KOPENINDO, and will be headed by Community Leader.

6.10. No organization or body can intervene or interfere with the policy and guidelines for MHP and CDF other than the Steering Committee. 6.11. The Steering Committee (SC) will be support by a Implementation Unit (IU) for MHP operation and CDF operation for managerial, administrative, secretarial and logistical functions. 6.12. Name of Chairman and Member of Committee as follows: Chairman

:

H Muttaqin from Community

Membre

:

1. H Ahmad Saerozi from Pesantren 2. Suyud Subakti from Kopenindo 3. From province still in process

Implementation Unit (IU) 6.13. The IU will also coordinate with and report to stakeholders and shareholders of Wangan Aji MHP for the operation of MHP and CDF with endorsement of the Steering Committee. The IU will be formed from staff members of KOPONTREN and will be headed by Chairman of KOPONTREN. 

Selecting suitable contractor and facilitators for MHP operation and CDF operation



Studying and creating program / proposal for MHP operation and CDF operation and to be submitted to the SC



Submitting the program and the budget including the estimate of expenditure to the Steering Committee for approval / endorsement



Disbursing funds to contractor and facilitators to carry out their activities as per their program for MHP operation and CDF operation as endorsed by the Steering Committee



Submitting to the Steering Committee for endorsement requisitions for funds MHP operation and CDF operation



Preparing monthly, quarterly, and annually financial reports from carrying out MHP operation and CDF operation on progress and status of work; and submitting to the Steering Committee



Evaluating the performance of MHP operation and CDF operation, preferably on a semi – annual basis, and and reporting the evaluation findings to the Steering Committee.



Arranging for annual financial audit

KOPENINDO – Indonesian Renewable Energy Cooperative

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Final Report -Wangan Aji Micro Hydro Project ADB-PEP TA REG 6150, Contract No.: COCS/05-047

6.14. Name of KOPONTREN management as follows: Chairman

:

Slamet Zakariya

Secretary

:

Fatchul Manan

Treasury

:

Yunus Chamdani

6.15. The Organization of Wangan Aji MHP presented in Appendix 9

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Final Report -Wangan Aji Micro Hydro Project ADB-PEP TA REG 6150, Contract No.: COCS/05-047

Appendix 1

Work-scope of Consultant

The scope of services of KOPENINDO, as stated in the term of reference (TOR), includes: 1. Conduct an engineering survey and detailed feasibility and design study. 2. Assist the local cooperative to obtain necessary official permits including those for recourse utilization, land ownership, Power Purchase Agreement, PSK Tersebar permit, and others. 3. Ensure that local cooperative provide counterpart contribution including the land required by the project. If the local cooperative fails to do, it should be brought to the attention of ADB and executing agency, DGEEU. 4. Based on the requirement identified in (a) above, undertake ordering and tendering for the project equipment and civil works, in line with ADB procedures. 5. Mobilized the land required for the project in association with the village cooperative. Ensure that all land acquired for the project is in compliance with ADB’s social safeguards. 6. Supervise and ensure the quality of the civil work construction for the weir, intake, forebay, powerhouse, tailrace, and any other construction that may be required for the project. Ensure that all project related construction is in compliance with ADB’s social safeguards. 7. All electro-mechanical work will be procured. The consultant will manage and supervise the procurement and ascertain the quality of the equipment, and ensure that the installation is proper and timely and of suitable standard. 8. The consultant will conduct a workshop disseminating the processing of the project and its implementation to the stakeholders. Stakeholders will include representatives of the local cooperative, the people affected by Wangan Aji MHP, local government officials, the EA, and representatives of proposed downstream projects. 9. The consultant will train the representatives of the local cooperative to operate and maintain the project. This will require training for financial management, book keeping, and administrative purposes and in technical aspects after the installation of the equipment. 10. Consultant will provide progress reports every two months to the EA, and an

inception report to ADB (3 months after the start to the contract), interim report (6 months after the start to the contract) and the final report after 12 months on project completion. All reports will be endorsed by the EA.

KOPENINDO – Indonesian Renewable Energy Cooperative, Appendix 1

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Final Report -Wangan Aji Micro Hydro Project ADB-PEP TA REG 6150, Contract No.: COCS/05-047

Appendix 2

Millestone

No.

Deliverable

Completion

1. 1.1. 1.2. 1.3. 1.4. 1.5. 1.6.

Civil works Weir Intake Fore bay Tailrace Power House Penstock

Jul 2005 Aug 2005 Aug 2005 Aug 2005 Nov 2005 Oct 2005

2. 2.1. 2.2. 2.3.

Electro-mechanical Works Installation of turbines, associated equipments, and test Installation of generator, electrical equipments, and test Interconnection to PLN grid.

Sep 2006 Sep 2006 Aug 2007

3. 3.1. 3.2. 3.3. 3.4. 3.5.

Non-physical deliverable Water utilization permit issued Land use permit issued Commissioning and Certification Power Purchase Agreement between PLN and Kopontren Inauguration of plant by Governor of Central Java and Ministry of Information & Communication

Activities 1

Civil Works + Penstock Work

2

Electro - Mechanical Works

3

Non-physical deliverable

Q1-05 Q2-05 Q3-05 Q4-05 Q1-06 Q2-06 Q3-06 Q4-06 Q1-07 Q2-07

Apr 2007 Jan 2008 Aug 2007 Jan 2008 Jan 2008

Q3-07 Q4-07 Q1-08 Q2-08

Assign. Implem. Assign. Implem. Assign. Implem.

KOPENINDO – Indonesian Renewable Energy Cooperative, Appendix 2

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Final Report -Wangan Aji Micro Hydro Project ADB-PEP TA REG 6150, Contract No.: COCS/05-047

No 1

Activities

Q1-05 Q2-05 Q3-05 Q4-05 Q1-06 Q2-06 Q3-06

Q4-06

Q1-07

Q2-07

Q3-07

Q4-07 Q1-08 Q2-08

Civil Works + Penstock Work

1.1. Weir

Assign. Implem.

1.2. Intake

Assign. Implem.

1.3. Forebay

Assign. Implem.

1.4. Pow er House

Assign. Implem.

1.5. Tailrace

Assign. Implem.

1.6. Penstock

Assign. Implem.

2

Electro - Mechanical Works

2.1. Installation of turbine & associated eq.Assign. Implem. 2.2. Installation of generator & electrical eq. Assign. Implem. 2.3. Interconnection

Assign. Implem.

3

Non-physical deliverable

3.1. Water utilization permit issued

Assign. Implem.

3.2. Land use permit issued

Assign. Implem.

3.3. Commissioning and Certification

Assign. Implem.

3.4. Pow er Purchase Agreement

Assign. Implem.

3.5. Inauguration

Assign. Implem.

KOPENINDO – Indonesian Renewable Energy Cooperative, Appendix 2

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Final Report -Wangan Aji Micro Hydro Project ADB-PEP TA REG 6150, Contract No.: COCS/05-047

Appendix 3 No.

Work Plan Assignment ACT IVIT Y

2005 1

2

3

4

5

6

2006 7

8

9

10

11

12

1

2

1 Preparatory Works Engineering Survey Feasibility Study and Detailed Design Land Acquisition Official Permits: - Resource Utilization - Land ownership - PSK Tersebar Agreement Ordering & Tendering 2 Civil Works Construction Site Mobilization Weir Intake Forebay Power House Tailrace 3 Electro - Mechanical Works Manufacturing of turbines Manufacture of DTC Controller, Protection & Synchronizer Procurement of switchgear & associated equip. Procurement of generator Procurement of Penstock & Installation International transport & custom clearance Local Transport Installation of turbine & associated equip. Installation of generator & electrical equipment Comissioning and testing of plant 4 Progres Report Inception and Interim Report to Adb Bimonthly Reports to EA

5 Draft Final Report 6 Workshop and Training of Local ESCO 7 Final Report

KOPENINDO – Indonesian Renewable Energy Cooperative, Appendix 3

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Final Report -Wangan Aji Micro Hydro Project ADB-PEP TA REG 6150, Contract No.: COCS/05-047

Appendix 5

Picture of Wangan Aji MHP Progress Work

(refer paragraph 3.11) Picture 1: Water Intake

Picture 2: Penstock and Power House

Picture 3: Tailrace

KOPENINDO – Indonesian Renewable Energy Cooperative, Appendix 5

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Final Report -Wangan Aji Micro Hydro Project ADB-PEP TA REG 6150, Contract No.: COCS/05-047

Appendix 5

Picture of Wangan Aji MHP Progress Work (2)

(refer paragraph 3.18)

Picture 5:Controller

Picture 4: Turbine & Generator

Picture 6: Interconnection

KOPENINDO – Indonesian Renewable Energy Cooperative, Appendix 5

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Final Report -Wangan Aji Micro Hydro Project ADB-PEP TA REG 6150, Contract No.: COCS/05-047

Appendix 6

List of the Contractors (refer paraagraph 3.5)

A. Civil Works The contractors for the Civil Works are selected from local enterprise from the District of Wonosobo (Where the project is situated). The listed company is as follows: 1.

PT. Hikmah Kurnia Jl. Raya Selomerto No.12 B, Wonosobo Jawa Tengah, Indonesia Tel./Fax. +62 286 323420

2.

CV. Putra Marga Jl. Masjid 1 No.80, Kauman Utara, Wonosobo Jawa Tengah, Indonesia Tel./Fax. +62 286 321663

3.

CV. Subardjo Group Jl. Jend.Ahmad Yani No.30, Wonosobo Jawa Tengah, Indonesia Tel./Fax. +62 286 321666

The comparison of the submitted offers from: PT. Hikmah Kurnia, CV. Putra Marga, and CV. Subardjo Group.

Preliminary Intake Forebay Power House Tail Race Penstock Value Added Taxes (10%) Total Price (in original currency)

IDR IDR IDR IDR IDR IDR

PT. Hikmah Kurnia Price 34,000,000 65,255,200 50,011,000 264,306,000 160,996,300 497,990,000

IDR

107,352,830

IDR 1,180,881,130

IDR 1,217,650,335

Total Price (in USD)

USD

USD

Civil Work and Penstock

125,626

IDR IDR IDR IDR IDR IDR

CV. Subardjo Group (Winner) Price Price 39,000,000 IDR 34,115,000 71,600,000 IDR 62,884,348 50,810,000 IDR 48,047,830 257,082,850 IDR 241,917,831 165,495,000 IDR 146,629,936 522,967,000 IDR 466,588,045

IDR

110,695,485

CV. Putra Marga

IDR

100,018,299

IDR 1,100,201,289

129,537 USD

117,043

1 IDR = 9,400 USD, Source: Mandiri Bank, Date: May 13, 2005

When KOPENINDO proposed CV Subardjo Group to ADB as a winner, the contributions in the form of grant from Provincial Government of Central Java had

KOPENINDO – Indonesian Renewable Energy Cooperative, Appendix 6

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Final Report -Wangan Aji Micro Hydro Project ADB-PEP TA REG 6150, Contract No.: COCS/05-047

not yet been decided. After decided, grant to be given in the form of civil work without penstock. Hereinafter Education Office of District Government of Wonosobo executed tender that CV Putra Marga as a winner with contract value IDR 388,956,000 or equal to USD 41,378. Following this situation KOPENINDO conducted renegotiation with CV Subardjo Group for penstock and enforcement block for turbine (turbine foundation) in the powerhouse. The new price was agreed IDR 550,000,000 or equal to USD 58,511. As a whole total cost for civil works and penstock became IDR 938,956,000 or equal to USD 99,889, this total price was cheaper than that initially offered by CV Subardjo Group IDR 1,100,201,289 or equal to USD 117,043. Exchange rate applied was IDR 9400/1USD.

Total

Civil Work and Penstock Preliminary Intake Forebay Power House Tail Race Penstock Value Added Taxes (10%) Total Price (in original currency) Total Price (in original currency) rounded

IDR IDR IDR IDR IDR IDR IDR

Price 18,572,000 63,595,867 49,543,207 230,762,279 118,936,219 423,091,688 35,359,692

IDR IDR

Total Price (in USD)

USD

CV. Putra Marga (Winner) Price IDR 12,572,000 IDR 63,595,867 IDR 49,543,207 IDR 108,949,630 IDR 118,936,219

CV. Subardjo Group (Winner) Price IDR 6,000,000

IDR 121,812,649 IDR 423,091,688

IDR

35,359,692

939,860,952

IDR

388,956,615

IDR 550,904,337

938,956,000

IDR

388,956,000

IDR 550,000,000

99,889

USD

41,378

USD

58,511

1 IDR = 9,400 USD, Source: Mandiri Bank, Date: May 13, 2005

KOPENINDO – Indonesian Renewable Energy Cooperative, Appendix 6

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Final Report -Wangan Aji Micro Hydro Project ADB-PEP TA REG 6150, Contract No.: COCS/05-047

B. Electro-Mechanical Kopenindo sent request for offer to 4 (four) Electro-Mechanical Manufacturer as listed bellow: 1.

Toshiba Plant System and Services Corporation 66-2, Horikawa-Cho, Saiwai-Ku Kawasaki 212-8551, Japan Tel. +81 44 5487773 Fax. +81 44 5487888

2.

PT. VA TECH Indonesia VATECH Building 2nd Floor JL. Talang No.3, Proklamasi Tel. +62 21 390 5006 Fax. +62 21 390 6929

3.

PT. Cihanjuang Inti Teknik (CIT) Jl. Cihanjuang 204, Cimahi 40513 Jawa barat, Indonesia Tel. +62 22 6640814 Fax. +61 22 6640814

4.

Wasserkraft Volk AG Am Stollen 13 D-79261 Gutach, German Tel. +49 7685-9106-10

Kopenindo received offers from 3 (three) manufacturers, namely: 1. 2. 3.

Toshiba Plant System and Services Corporation (Toshiba) PT. Cihanjuang Inti Teknik (CIT) Wasserkraft Volk AG (WKV-AG)

The comparison of the submitted offers from: Thosiba Plant System & Service Corporation (Toshiba), PT. Cihanjuang Inti Teknik (CIT), and Wasserkraft Volk AG (WKV-AG).

KOPENINDO – Indonesian Renewable Energy Cooperative, Appendix 6

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Final Report -Wangan Aji Micro Hydro Project ADB-PEP TA REG 6150, Contract No.: COCS/05-047

ElectroMechanical -Equipment (EME) Turbine

Guide Vane

Emergency Valve

Generator

Control panel & Synchronize r

Insurance & Freight Installation and transport

Toshiba Specificatio n 2 units 64 kW Propeller Turbine 13m 0.71m3/s

Price

¥ 10,800,000

2 units ¥ Guide vane 5,400,000 operating system 2 units Inlet ¥ valve 6,000,000 (automatic shut down type) 2 units ¥ synchronous 6,400,000 generator 75 kVA400/380V50Hz-0.8pf1000rpmclassF-Dip proof-Self CoolingCW 2 units ¥ Dummy 11,400,000 load contol, AVR Control, Protection relays, & ¥ outomatic 1,880,000 syncronizer 2 units Water level control Lump-sum Lump-sum

¥ 5,000,000 ¥ 3,075,500

CIT (Winner) Specification

2 units 78 kW propeller turbine TPT01-420 13m 0.710m3/s with coupling to the generator

Price

IDR 343,000,00 0

WKV-AG Specificatio Price n 2 units 70 kW with load controller (ELC)

EUR 142,000

EUR 42,600

Speed governor & flywheel

2 units

Included in turbine price

Not yet offered

2 units emergency shut down valve ESV01-800V3

IDR 90,000,000

Not yet offered

2 units Hitzinger synchronous generator 80 kVA-400V50Hz-1000rpm

EUR 26,400

Include d in turbine price

2 units DTCVario turbine controller, aotumatic syncronizer, data acquisition, full featured electric protection, speed&frequenc y control, water level control

CHF 64,800

Not yet offered

EUR 5,000 IDR 18,000,000

Not yet offered Not yet offered

Lump-sum Lump-sum

KOPENINDO – Indonesian Renewable Energy Cooperative, Appendix 6

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Final Report -Wangan Aji Micro Hydro Project ADB-PEP TA REG 6150, Contract No.: COCS/05-047

ElectroMechanicalEquipment (EME) Total Price (in original currency)

Total Price (in USD)

Toshiba Specification

CIT (Winner) SpecifiPrice cation

WKV-AG SpecifiPrice cation

¥ 49,955,500

IDR 451,000,000 EUR 31,400 CHF 64,800

EUR 184,600

USD 460,376.92

USD 139,911.65

USD 230,750.00

Price

1 USD

= 9,400.00 IDR = 108.51 JPY = 0.80 EUR = 1.23 CHF Source: Mandiri Bank, Date: May 13, 2005

KOPENINDO – Indonesian Renewable Energy Cooperative, Appendix 6

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Appendix 7

COMMUNITY DEVELOPMENT OPERATION MECHANISM

INTRODUCTION 1.1.

As part of Wangan Aji MHP activities, separate funds (referred to as Community Development Fund) will be set up for community facilitation, financial assistant, or donation.

OBJECTIVE OF CDF 1.2.

CDF will aim to provide financial assistance to the community surroundings Wangan Aji MHP in order to increase livelihood generation options; provide better health, education and communication facilities.

ACTIVITIES OF CDF 1.3.

1.4.

1.5.

Activities of Community Development in public health improvement would be conducted as follows: 

Support As Syifa Hospital (near by Wangan Aji MHP) in promoting community awareness on health and epidemic disease and medical equipment needed.



Information distribution about epidemic disease and how to overcome.



Facilitate community on the up-stream of Wangan Aji MHP to increase their sanitation due to their problem in garbage, by providing garbage can, cart, and in cooperation with government to transport to the garbage dump. The objective of this activity is also to secure the MHP from the garbage.



Facilitate the school and Pesantren in creating hygienic environment in the school building and facilities.

Activity Community Development in order to improve education facilities and communication conducted as follows: 

Promoting Wangan Aji MHP as Study Tour object of technology education for the students.



Equip with computer and internet facility in Pondok Pesantren that can be accessed by students or communities.



Facilitate training and workshop of practical knowledge on business, industry, leadership, and technology.

Activity Community Development in order to support the community in generating income will be conducted by provide loan or grant as follows: 

Loan or grant to start new business especially for the poorest.



Loan to improve business volume and generate job opportunity.



Loan to improve cost efficiency especially energy efficiency and promoting new appropriate rural technology to support the existing business.



Loan to obtain electricity connection to households.



Loan to use electricity for economic activities.

KOPENINDO – Indonesian Renewable Energy Cooperative, Appendix 7

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Final Report -Wangan Aji Micro Hydro Project ADB-PEP TA REG 6150, Contract No.: COCS/05-047

MANAGEMENT 1.6.

CDF will be managed through an institutional structure as stated below: STEERING COMMITTEE (SC) This committee will be responsible for framing policy and guidelines for CDF; liaising with other government, private (social or business) institution reviewing and approval program / proposal for operation of CDF, and approval requisition of fund for operation of the scheme. The committee will consist of representatives from Kopontren Leader, Pesantren leader, committed and well-known informal leader of the community surround Wangan Aji MHP and will be headed by Pesantren leader. IMPLEMENTATION UNIT (IU) The Steering Committee (SC) will be support by a Implementation Unit (IU) for CDF for managerial, administrative, secretarial and logistical functions. The IU will also coordinate with and report to stakeholders of Wangan Aji MHP for the operation of CDF with endorsement of the Steering Committee. The IU will be formed from staff members of KOPONTREN and will be headed by KOPONTREN leader.

ASSISTANCE FROM CDF ELIGIBILITY

1.7.

Eligible Social Organization is Non Government Organization (NGO) that:   

1.8.

Eligible Household for households electricity connection is a household that:    

1.9.

The organization and activities situated in area surrounding Wangan Aji MHP The organization and personnel behind the organization is well-known and has good reputation in the community Has performance in community facilitation and advocating in community health, education, social empowerment, and religion Situated in a rural area surrounding Wangan Aji MHP Has no electricity connection Has income that affords to pay electricity bills and other needs As owner of the house

Eligible household for financial assistance for business is households that:     

Owner of the business Has good business reputation in the community More than 2 years in the business Owner of house or business place and equipment Business location (production) situated in area surrounding Wangan Aji MHP

KOPENINDO – Indonesian Renewable Energy Cooperative, Appendix 7

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Final Report -Wangan Aji Micro Hydro Project ADB-PEP TA REG 6150, Contract No.: COCS/05-047

PURPOSE

1.10. CDF will give donation or other support to NGO or perform by Implementation Unit to facilitate community surrounding Wangan Aji MHP to create their awareness on health, education, environment, and religion. The activities will be done by this program:     

Published leaflet, poster or banner Invite experts Conduct workshop dissemination Conduct community gathering Procure equipment needed

1.11. As stated earlier, the objective of financial assistance from CDF is to facilitate an eligible household to obtain loan or grant in order to improve earnings level and living condition. Types of activity will be supported as follows:     

Loan or grant to start new business especially for the poorest. Loan to improve business volume and generate job opportunity. Loan to improve cost efficiency especially energy efficiency and promoting new appropriate rural technology to support the existing business. Loan to obtain electricity connection to households. Loan to use electricity for economic activities.

FORM OF ASSISTANCE

1.12. The Assistance is donation, credit/ loan, which may be either in kind or in cash. 1.13. In case of assistance for community facilitation and advocating, CDF will make direct payment to an approved supplier on a turnkey contract; and no donation in form of cash will be given. 1.14. In case of loan for connection of electricity to household, CDF will make direct payment to an approved contractor on a turnkey contract basis for connecting electricity to the household concerned; and no loan in form of cash will be given to the borrowers. 1.15. In case of loan for economic activities (e.g., sewing machine for garment; welding; mills; biogas digester, cow or goat, etc.), CDF will procure the required equipment and hand it over to the household concerned. CDF will pay directly to an approved contractor for the job on a turnkey contract basis. Thus, no loan in form of cash will be given to the borrowers. 1.16. Only in exceptional cases where CDF is unable to provide a suitable contractor or suppliers and/or is unable to procure the required materials or equipment, donation or loan in form of cash may be given to the borrowers or NGO. APPLICATION FOR ASSISTANCE

1.17. IU or NGO that need assistance and a person desirous of loan will have to apply to the SC. 1.18. Application from IU or NGO have to support by proposal about activities will be performed. The proposal have to cover detail activities will be done, community segment will be targeted, result to be expected; create awareness, develop community participation, etc. KOPENINDO – Indonesian Renewable Energy Cooperative, Appendix 7

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Final Report -Wangan Aji Micro Hydro Project ADB-PEP TA REG 6150, Contract No.: COCS/05-047

1.19. To maintain equitability by facilitating rotation of financial assistance amongst the NGO or borrowers, an application for assistance cannot be made unless previous activities or credit/loan, if any, has been fully finalized and reported (Performance Report) or loan has been repaid. 1.20. Date of receipt will be stamped on every application received and an acknowledgement receipt will be given to the applicant. The applications will be chronologically filed in separate folders for donation and loan for economic activities. All applications received up-to the 15th of the month will be placed before the immediately next monthly meeting of the SC for scrutiny and approval; and decision should be taken preferably in the said meeting and not later than in the next monthly meeting. 1.21. The decision of the SC will be intimated to the applicant within seven (7) days from the date of the decision taken. When intimating the decision of the SC of approval of the application the terms and conditions of the approval will also be sent to the applicant. The terms and conditions of approval of assistance will be signed by the applicant duly witnessed by two other members and returned to the SC as his / her confirmation of acceptance of the terms and conditions for assistance. The applicant may retain a copy of the same. It is only after the terms and conditions for assistance is signed by the applicant that the donation, loan will be disbursed. TERMS AND CONDITIONS

1.22. The term and condition of donation for NGO or activity will be performed by IU will be as follows: a)

Amount of assistance is reasonable due to fund availability

b)

The activity has to relate with community awareness on health, education, environment, and religion

c)

The implementation method; realistic and effective

d)

The activity is currently needed by community

1.23. The terms and conditions for loan for connection of electricity to household will be as follows: a)

Ceiling amount of credit/loan per household will be the cost of electricity connection

b)

Rate of interest will be decided by the SC so as to protect erosion of value of money due to inflation and to cover administration cost. However, interest in the range of 10% to 12% per annum may be considered

c)

Repayment of loan and payment of interest will commence from the first month after the disbursement of credit/loan

d)

Principal amount of loan and interest will be repaid over a period as may be determined by the SC

e)

The equipment or goods procured from out of the proceeds of loan will be hypothecated by the borrower member to CDF.

1.24. The terms and conditions for loan for economic activities will be as follows: KOPENINDO – Indonesian Renewable Energy Cooperative, Appendix 7

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Final Report -Wangan Aji Micro Hydro Project ADB-PEP TA REG 6150, Contract No.: COCS/05-047

a)

Ceiling amount of credit/loan per proposal for use of electricity for economic activities will determined by the SC depending on the nature of activity and the type of investment required.

b)

Rate of interest will be decided SC so as to protect erosion of value of money due to inflation and to cover administration and opportunity cost

c)

Repayment of loan and payment of interest will commence from the first month after the disbursement of credit/loan

d)

Principal amount of credit/loan and interest will be repaid in equal monthly installments as may be prescribed at the time of sanction of the loan depending on the potential for revenue generation from the proposal for use of electricity for economic activities.

e)

The equipment procured from out of the proceeds of loan will be hypothecated by the borrower to CDF

DEFAULT 1.25. The default is defined as non performing community facilitation or non performing loan. NON PERFORMING COMMUNITY FACILITATION

1.26. In the event of not conducted parts or whole activities as had been proposed and approved would be defined as default. If evidence shows there is intentionally the penal will be imposed in form; not participate next activities supported by CDF and must repay the fund had disbursed. 1.27. However, if the default due to force majeure or evidence shows without intention the penal provisions for the default will not be applicable. NON PERFORMING LOAN

1.28. In the event of default in repayment of two consecutive installments, it is suggested that a penal interest at the rate of 1 % per month should be charged for the period of default. The penal interest will be charged in addition to the regular interest. Should the default continue for six consecutive installments, the equipment financed from the CDF and/or the equipment will be withdrawn from the borrowers. 1.29. However, if the default in repayment of installments arises due to force majeure factors such as natural calamity, fire, etc. the penal provisions for the default will not be applicable. MANAGEMENT OF CDF 1.30. Management of CDF will rest with the SC that will have monthly meeting preferably in the second half of the third week of every month. The agenda with respect to CDF will generally include review of the operations of the fund, scrutiny of applications for assistance and decision thereon, follow up action plan for collection from defaulters, if any, and such other matters as may be pertinent to CDF. KOPENINDO – Indonesian Renewable Energy Cooperative, Appendix 7

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Final Report -Wangan Aji Micro Hydro Project ADB-PEP TA REG 6150, Contract No.: COCS/05-047

ACCOUNTS AND AUDIT OF CDF 1.31. Separate books of account will be maintained for CDF Donations and CDF loan. ACCOUNT OF CDF DONATION

1.32. The accounts of CDF donation will record activities and payments of money; transactions with each facilitator or organizer (IU or NGO) covering activities approved by SC. 1.33. At the end of each financial year, the annual accounts of CDF will be prepared showing: 

Fund allocated as expenses and Balance Outstanding



Summarized activities implemented, reported, and cost.



List of methodology implemented

ACCOUNT OF CDF LOAN

1.34. The accounts of CDF loan will record receipts and payments of money; transactions with each borrower covering credit/loan given, interest due, repayment made, balance outstanding and defaults, if any. 1.35. At the end of each financial year, the annual accounts of CDF will be prepared showing: 

Receipts and Payments



Summarized Statement of Credit/Loan, Interest, Repayment, and Balance Outstanding



List of Default, if any.

REPORT AND AUDIT

1.36. The annual accounts will be audited by the internal auditor (Pengawas) of the KOPONTREN with reference to the books of accounts, vouchers and other relevant documents. The auditor will submit to the SC an audit report on the accounts of CDF. 1.37. The annual report containing a report of the SC on the operation of CDF, the annual accounts and the auditor’s report will be sent to each member of KOPONTREN within sixty days from close of the financial year along with a notice for annual general meeting. The annual report on operation of CDF should specifically contain information on: 

Number of donation and loans applied and approved (this will help to monitor the number of target beneficiaries served)



Value of donation and loans disbursed (this will help to determine how much of the fund have been given for social and economic activities)



Average donation and loan size (this will help to reflect the type of livelihood that the beneficiaries are engaged in).

KOPENINDO – Indonesian Renewable Energy Cooperative, Appendix 7

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Final Report -Wangan Aji Micro Hydro Project ADB-PEP TA REG 6150, Contract No.: COCS/05-047

ANNUAL GENERAL MEETING 1.38. Annual General Meeting of the members of KOPONTREN will be held before ninety days from close of the financial year to discuss and adopt the annual report. 1.39. CDF will be part of agenda in Annual General Meeting. 1.40. All of Wangan Aji MHP stakeholders; ADB, DGEEU, Provicial Government of Central Java, District Government of Wonosobo, PLN, Kopenindo, and Community Leader, will be invited in the Annual General Meeting in order to share experience.

KOPENINDO – Indonesian Renewable Energy Cooperative, Appendix 7

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Final Report -Wangan Aji Micro Hydro Project ADB-PEP TA REG 6150, Contract No.: COCS/05-047

Appendix 8

Business Plan

(refer paragraph 3.38, 3.52, 3.53, 3.54.)

1. Vision Being a community managed micro hydro plant (MHP), Wangan Aji MHP should be able to facilitate and generate sustainable socio-economic development on the related hamlets and villages of Wangan Aji. Vision statement:

Community participation is the key issue for reaching better life and green environment 2. Mission 2.1.

Build Participations Close cooperation or partnership with stakeholders, e.g. government, institutions concerned, and community will be maintained. The following studies and activities are foreseen:

2.2.



Study and application of waste management that suitable implemented in the community surrounding Wangan Aji MHP



Study of socio-economic and implementation of biogas digester application to improve community sanitation and income generation for rural community business. Also biogas digester application especially for human manure to improve sanitation in the Pesantren.



Study of socio-economic of indirect customer of PLN to find out their willingness to pay electricity bills and connection cost and also find out the business activities could be applied in order to increase their income.



Study of socio-economic and implementation of social forestry.



Study of socio-economic and implementation of scale up garment industry in Kongsi village also possibility of replication to other villages

Increase Productivity 

Invest for suitable equipment to capture garbage at the MHP intake in order to prevent garbage entering to forebay and penstock that will affect to the operation and productivity of MHP.

 Scale up community investment in renewable resources for their business.

KOPENINDO – Indonesian Renewable Energy Cooperative, Appendix 8

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Final Report -Wangan Aji Micro Hydro Project ADB-PEP TA REG 6150, Contract No.: COCS/05-047

3. Business Profile Assumption 3.1. Electricity Sales Table 1: Plant capacity and availability Plan capacity & efficiency Total available hours / year

140 kW

80%

112

95%

Annual generation

kW

8,208

hours

919,296

Transm issian losses

kWh

4.0%

Grid availability

95.0%

Availability

838,398

kWh

Based on the purchase price of IDR 618 per-kWh, Wangan Aji MHP will generate revenue of about IDR 518,000,000, annually. 3.2. CER (Certified Emission Reduction) revenue The CER Revenue of Kyoto Protocol CDM Policy do not implemented in this business plan, nevertheless, as the potential figures as follows: Table 2: Analysis of CO2 emission reduction Annual energy production / year

919,296

kWh

Sales of GHG em ission reduction Base line: diesel engine CO2 release

0.74

CO2 em ission reduction

kg CO2/kw h

680.28

Ton CO2

Danish Embassy and Southpole Carbon have approached KOPENINDO to possibly purchase CO2 emission reduction generated by Wangan Aji MHP. Program from Danish Embassy is transferred to World Bank and the CO2 emission reduction from Wangan Aji MHP is relatively too small for the World Bank. Alternatively, Southpole Carbon (SC) which executes CDM (Clean Development Mechanism) program of GTZ, shows its interests to put Wangan Aji MHP to SC program. 3.3. Investment cost Breakdown of the overall investment cost of Wangan Aji MHP is presented as follows: Table 3: Initial investment cost of Wangan Aji MHP Cost (USD)

Cost (IDR)

Civil w ork

Description

103,544.87

962,000,000

Electrical, m echanical, and Equipm ent

149,206.90

1,417,216,611

Land acquisition

4,149.83

39,000,000

Survey, FS, Design

7,324.98

70,071,100

Training

11,505.71

105,262,803

Project Managem ent

11,114.93

102,231,738

-

-

286,847.23

2,695,782,251

Contingency Total investm ent cost

The investment to be depreciated for 20 years of useful life using straight line method, for tax calculation purposes depreciation expenses calculated in accordance with tax regulation.

KOPENINDO – Indonesian Renewable Energy Cooperative, Appendix 8

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Final Report -Wangan Aji Micro Hydro Project ADB-PEP TA REG 6150, Contract No.: COCS/05-047

Additional equipment to be installed at the intake to prevent garbage entering forebay and penstock will be studied, designed, and invested. Estimated cost for this equipment is IDR 20 million, whereas IDR 5 million for study and design and IDR 15 million for material and fabrication. This cost will be budgeted in 2009 program. 3.4. Operation and Maintenance Cost Table 4: Estimated operation and maintenance expenses IDR/pa Labour Skilled labour

24

mm

750,000

IDR/month

18,000,000

Uns killed labour

72

mm

450,000

IDR/month

32,400,000

Maint. and re pair of civil w orks

0.75%

to invst

7,215,000

Maint. and re pair of e lect & me ch

0.75%

to invst

10,629,125

IDR/kWh

27,578,880

Wate r tax

30

Adm inis tration e xpenses Total annual operation cos t

5,000,000 100,823,005

Normally, Wangan Aji MHP requires little labor force, but due to much garbage in the canal, 6 unskilled labors have to be employed to optimize performance and sustainability of the equipment. From the above table, the significant expense expenses for operation and maintenance are needed for Salary (about 50%) and Water Tax or Water Retribution (about 27%). Please refer to paragraph 3.53 for the detail. 3.5. Monitoring and Audit In order to have good governance in the Wangan Aji MHP management, 1% of electricity sales will be allocated as an expense for monitoring and audit. 3.6. Land Rental As mentioned in the progress report, that land where Wangan Aji MHP situated owned by PLN, the rental rate for the land has been agreed between KOPONTREN and PLN at 10% from sales. 3.7. Community Development Activities As stated in the agreement between DGEEU and ADB that Wangan Aji MHP is “expected to increase livelihood generation options and improve health, education and communication facilities for the community”. In order to support the mission, an expense and/or fund as investment for Community Development (CD) activities will be allocated. The community development activities include knowledge transfer to community to be aware on the environment issues, sanitation, and income generation. The expense for CD activities is proposed to be 10% from net profit. Expense for CD Activities will be focused on the disseminations activities, facilitation, grant for the poorest to start their business. As an expense, Community Development budget is non deductible expense for tax calculation purpose. The expense will support the following activities:

KOPENINDO – Indonesian Renewable Energy Cooperative, Appendix 8

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Final Report -Wangan Aji Micro Hydro Project ADB-PEP TA REG 6150, Contract No.: COCS/05-047

1. Activities in public health improvement: 

Support As Syifa Hospital (near by Wangan Aji MHP) in promoting community awareness on health and epidemic disease.



Information distribution about types of epidemic disease and how to overcome.



In cooperation with local government, conduct socialization and facilitation for appropriate garbage dismissal methods for the community along the Wangan Aji irrigation channel,



Facilitate the school and Pesantren in creating hygienic environment in the school building and facilities.

2. Activities in education and communication: 

Promote Wangan Aji MHP as education.



Facilitate an internet connection in Pondok Pesantren or Wangan Aji MHP that can be accessed by students or communities.



Conduct training and seminar on practical knowledge for business and industry.

study tour object for green technology

As investment activities, the fund generated by Wangan Aji MHP will be allocated as loan to finance community business that will promote income generation, increase utilization of locally natural and renewable resources, woman participation, and energy efficiency. Basically business activities that could be generated are quite large, but it will depend on availability its fund, and the most relevant income generating activities the community. Business opportunities that can be developed in Wangan Aji area are presented in the following page. However, not every opportunity can be fully supported by Wangan Aji MHP Community Development budget. As business investment, the fund allocated for this activities will be treated as loan to community to finance their business related with income generation, The priority will be given to those businesses that would fastly revolve its business capacity or generate new business activities. These possibly include cow and goat husbandries, garment industries mostly women in this industry. The investment loan will be focused on promoting appropriate technologies to support the existing business, increase utilization of locally natural and renewable resources and energy efficiency. Some business activities in villages surrounding Wangan Aji MHP that potentially could be supported as follows:

KOPENINDO – Indonesian Renewable Energy Cooperative, Appendix 8

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Final Report -Wangan Aji Micro Hydro Project ADB-PEP TA REG 6150, Contract No.: COCS/05-047

Table 5: List of rural business opportunity INVESTMENT OPPORTUNITY IN COMMUNITY DEVELOPMENT FOR GENERATE LIVELIHOOD OPTION AND RURAL RENEWABLE ENERGY SOURCES DEVELOPMENT A. Investm ent Hydro Pow er Micro hydro 1) Pico hydro (Topengan Village) Biogas Tofu industry (Kongsi & Bumiroso Villages) Sm all cow husbandry (Kalijeruk & Manggisan Village) 2) Sm all tapioca industry (Binangun Village) B. Working Capital Hom e garm ent industry (Kongsi village) 3)

4 unit

100 kW to

11 unit

0.5 W to

700 kW 25 million IDR/kW

70,000.0 Million IDR

1 kW 25 million IDR/kW

275.0 Million IDR

10 hh

4 m3 to

10 m3 15 million IDR/unit

150.0 Million IDR

25 hh

4 m3 to

10 m3 20 million IDR/unit

500.0 Million IDR

2 hh

4 m3 to

10 m3 15 million IDR/unit

30.0 Million IDR

10 million IDR/unit

300.0 Million IDR

30 hh

Sm all brick industry

1 unit

10 million IDR/unit

10.0 Million IDR

Sm all cow husbandry 2)

25 hh

20 million IDR/unit

500.0 Million IDR

Sm all goat husbandry 4)

25 hh

5 million IDR/unit

125.0 Million IDR

3 million IDR/unit

900.0 Million IDR

C. Other Hom e PLN electricity connection support 5) Electrified sm all industry (w elding, ricemills, brick)

300 hh 3 unit

450 W to

900 W

11.84 kW to 14.8 kW

5 million IDR/unit

Total

15.0 Million IDR 72,805.0 Million IDR

1) Participation w ith other investor or government program 2) 3 to 4 cow s for each household farmer 3) 3 to 5 family w orkers mostly w omen 4) 5 to 10 goat for each farmer 5) The potencies is estimated 15% to 25% each village w ith 300 hh in total

Table 6: Projection of working capital loan Description

Potencies

Working capital (Loan) total disb.

2008

2009

2010

2011

2012

20.0

70.0

70.0

70.0

70.0

Financing

50%

50%

50%

50%

50%

Interest

12%

12%

12%

12%

12%

Tenor (year)

1.0

1.0

1.0

1.0

1.0

Term

Home garm ent industry Unit

30

Cost Loan am ount Sm all cow husbandry Unit

4.0

4.0

4.0

4.0

4.0

40.0

40.0

40.0

40.0

40.0

20.0

20.0

20.0

20.0

20.0

4.0

4.0

4.0

4.0

Cost

25

80.0

80.0

80.0

80.0

Loan am ount

40.0

40.0

40.0

40.0

Sm all goat husbandry Unit

4.0

4.0

4.0

4.0

Cost

25

20.0

20.0

20.0

20.0

Loan am ount

10.0

10.0

10.0

10.0

KOPENINDO – Indonesian Renewable Energy Cooperative, Appendix 8

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Final Report -Wangan Aji Micro Hydro Project ADB-PEP TA REG 6150, Contract No.: COCS/05-047

Table 7: Projection of investment loan Description

Potencies

Investment (Loan) total disb.

2008

2009

2010

2011

2012

-

56.3

45.0

45.0

45.0

Financing

75%

75%

75%

75%

75%

Interest

10%

10%

10%

10%

10%

Tenor

10.0

10.0

10.0

10.0

10.0

Term

Form of investm ent Pico hydro Unit

1.0

1.0

1.0

1.0

Cost

11

25.0

25.0

25.0

25.0

Loan am ount

18.8

18.8

18.8

18.8

Biogas Tofu industry

10

Unit

1.0

1.0

1.0

1.0

Cost

15.0

15.0

15.0

15.0

11.3

11.3

11.3

11.3

Loan am ount Small cow husbandry

25

Unit

1.0

1.0

1.0

1.0

Cost

20.0

20.0

20.0

20.0

15.0

15.0

15.0

15.0

Loan am ount Small tapioca industry Unit

2

1.0

Cost

15.0

Loan am ount

11.3

KOPENINDO – Indonesian Renewable Energy Cooperative, Appendix 8

-

-

-

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Final Report -Wangan Aji Micro Hydro Project ADB-PEP TA REG 6150, Contract No.: COCS/05-047

Loan disbursement and interest income from loan activities as follows: Table 8: Projection of Loan Outstanding and Interest Income Description

2008

2009

2010

2011

2012

Loan disbursem ent 56.3

45.0

45.0

45.0

20.0

-

70.0

70.0

70.0

70.0

20.0

126.3

115.0

115.0

115.0

20.0

146.3

261.3

376.3

491.3

Investm ent loan Working capital loan Total Loan Outstanding Interest incom e Investm ent loan

-

3.4

8.3

7.2

7.2

Working capital loan

0.6

7.4

13.4

13.4

13.4

0.6

10.8

21.8

20.6

20.6

Accrued interest

0.2

0.9

1.8

1.7

1.7

Interest received

0.4

9.9

20.0

18.9

18.9

Total

3.8. Other Assumptions 

Operation and maintenance expenses estimated increase by 5% per year as estimated average inflation rate, but the sales price increase by 3%. The reason of this assumption is conservatism also it is common that increase in percentage of cost is higher than income.



Interest of time deposits is 6% per annum.



Exchange rate IDR 9398/USD 1



Profits distributed to the shareholders 90% from yearly profits. The reason of this policy is to increase equity to have better figures to be published.



Business to be started at middle of year 2008.

KOPENINDO – Indonesian Renewable Energy Cooperative, Appendix 8

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Final Report -Wangan Aji Micro Hydro Project ADB-PEP TA REG 6150, Contract No.: COCS/05-047

4. Financial Projection 4.1. Cash Flow Projection (refer paragraph 3.54) PROYEKSI ARUS KAS (Projected Cash Flow) PLTMH WANGANAJI (Rp dlm jutaan/amount in million IDR) 2008

2009

2010

2011

2012

PENERIMAAN (Revenue) Penjualan Listrik (Pow er Sales)

258.9

533.3

549.3

565.8

582.8

CER Revenue

-

-

-

-

-

Interest on time deposits

1.5

4.8

6.6

7.8

9.0

Interest on Investment

0.4

9.9

20.0

18.9

18.9

260.8

548.0

575.9

592.5

610.7

Biaya Operasi dan Pemeliharaan (O&M)

50.4

105.9

111.2

116.7

122.6

Sew a tanah (Land rent)

25.9

53.3

54.9

56.6

58.3

Biaya Monitoring & Audit (Monitoring & Audit exp.)

2.6

5.3

5.5

5.7

5.8

Community development

4.7

23.8

23.5

22.9

22.9

0.8

10.6

35.2

50.5

20.0

126.3

115.0

115.0

115.0

103.5

315.4

320.7

352.1

375.0

157.3

232.7

255.2

240.5

235.7

Jumlah penerimaan (Total revenue) PENGELUARAN (Disbursem ent)

Pajak (Income Tax) Investment Jumlah pengeluaran (Total disbursement) SURPLUS (DEFICIT) KAS (Cash) PEMBAGIAN LABA (Profits Dsitribution)

37.7

192.8

190.4

185.5

185.2

Dana Bergulir (Revolving fund)

60%

22.7

116.2

114.8

111.8

111.6

Koperasi API

16%

6.0

30.7

30.3

29.5

29.5

Kopenindo

24%

9.0

46.0

45.4

44.2

44.1

SURPLUS (DEFICIT) KAS Neto (Net Cash) KAS AWAL (Cash begining balance) KAS AKHIR (Cash ending balance )

119.6

39.8

64.8

55.0

50.5

-

119.6

159.4

224.2

279.2

119.6

159.4

224.2

279.2

329.7

KOPENINDO – Indonesian Renewable Energy Cooperative, Appendix 8

10 - 8

Final Report -Wangan Aji Micro Hydro Project ADB-PEP TA REG 6150, Contract No.: COCS/05-047

4.2. Income Statement Projection (refer paragraph 3.54) PROYEKSI LABA RUGI (Projected Income Statement) PLTMH WANGANAJI (Rp dlm jutaan/amount in million IDR) 2008

2009

2010

2011

2012

PENDAPATAN (Revenue) Penjualan Listrik (Pow er Sales)

258.9

533.3

549.3

565.8

582.8

CER revenue

-

-

-

-

-

Interest on deposits

1.5

4.8

6.6

7.8

9.0

Interest on Investment

0.6

10.8

21.8

20.6

20.6

261.0

548.9

577.7

594.2

612.4

Biaya Operasi dan Pemeliharaan (O&M)

50.4

105.9

111.2

116.7

122.6

Sew a tanah (Land rent)

25.9

53.3

54.9

56.6

58.3

Total Pendapatan (Total Revenue) BIAYA (Expenses)

Biaya Monitoring & Audit (Monitoring & Audit exp.)

2.6

5.3

5.5

5.7

5.8

134.8

135.8

135.8

135.8

135.8

213.7

300.3

307.4

314.7

322.4

47.3

248.6

270.3

279.5

290.0

0.8

10.6

35.2

50.5

61.4

LABA BERSIH (Net Incom e)

46.5

238.1

235.1

229.0

228.6

Community development

4.7

23.8

23.5

22.9

22.9

41.9

214.3

211.6

206.1

205.7

Penyusutan (Depreciation) Total Biaya (Total Expenses) LABA SEBELUM PAJAK (Profit Before Tax) TAKSIRAN PAJAK (Tax Estim ate)

LABA DIBAGI (Distributable profits)

KOPENINDO – Indonesian Renewable Energy Cooperative, Appendix 8

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Final Report -Wangan Aji Micro Hydro Project ADB-PEP TA REG 6150, Contract No.: COCS/05-047

4.3. Balance Sheet Projection (refer paragraph 3.54) PROYEKSI NERACA (Projected Balance Sheet) PLTMH WANGANAJI (Rp dlm jutaan/amount in million IDR) 2008

2009

2010

2011

2012

As sets Kas & Bank (Cash & Bank) Deposito (Time Deposits)

19.6

59.4

94.2

129.2

159.7

100.0

80.0

110.0

130.0

150.0

Piutang usaha (Account Receivable) Aktiva lancar lainnya (Other current assets) Jumlah Aktiva Lancar (Total Current assets)

0.2

1.1

2.9

4.6

6.4

119.8

140.5

207.1

263.8

316.0

2,695.8

2,715.8

2,715.8

2,715.8

2,715.8

134.8

270.6

406.4

542.2

677.9

2,561.0

2,445.2

2,309.4

2,173.6

2,037.8

20.0

146.3

261.3

376.3

491.3

2,700.8

2,732.0

2,777.8

2,813.7

2,845.1

Aktiva Tetap (Fixed Assets) Harga Perolehan (Acquisition cost) Cadangan Penyusutan (Accumulated Depreciation) Neto (Net) Aktiva lainnya (Other assets) Total Assets Kew ajiban (Liabilities) Hutang Usaha (Account payable)

-

-

-

-

-

Biaya Masih Harus Dibayar (Accrued expenses)

0.8

10.6

35.2

50.5

61.4

Jumlah Hutang Lancar (Total current liabilities)

0.8

10.6

35.2

50.5

61.4

-

-

-

-

-

0.8

10.6

35.2

50.5

61.4

Hutang Jangka Panjang (Long term loan) Jumlah Kew ajiban Ekuitas (Equity) Modal (Capital) Dana Bergulir (Revolving f und)

1,624.3

1,624.3

1,624.3

1,624.3

1,624.3

Koperasi API

429.0

429.0

429.0

429.0

429.0

Kopenindo

642.5

642.5

642.5

642.5

642.5

2,695.8

2,695.8

2,695.8

2,695.8

2,695.8

Jumlah modal (Total capital) Laba tahun lalu (Previous years prof its)

-

46.5

284.6

519.7

748.7

46.5

238.1

235.1

229.0

228.6

46.5

284.6

519.7

748.7

977.3

-

(42.3)

(259.0)

(472.9)

(681.3)

(42.3)

(216.6)

(214.0)

(208.4)

(208.0)

(4.7)

(23.8)

(23.5)

(22.9)

(22.9)

Dibagi untuk Dana Bergulir (Distr. For Revolving f und)

(22.7)

(116.2)

(114.8)

(111.8)

(111.6)

Dibagi untuk Kopontren API (Distr. f or Kopontren API)

(6.0)

(30.7)

(30.3)

(29.5)

(29.5)

Dibagi untuk Kopenindo (Distr. for Kopenindo)

(9.0)

(46.0)

(45.4)

(44.2)

Laba berjalan (current years prof its) Jumlah laba (Total profits) Penggunaan laba tahun lalu (Prev. years prof its usage) Penggunaan laba th berjalan (Curr profits usage) Community development

Jumlah Ekuitas (Total equities) Total Kew ajiban & Ekuitas (Total Liabilities & Equities)

(44.1)

2,700.0

2,721.4

2,742.6

2,763.2

2,783.7

2,700.8

2,732.0

2,777.8

2,813.7

2,845.1

KOPENINDO – Indonesian Renewable Energy Cooperative, Appendix 8

10 - 10

Final Report -Wangan Aji Micro Hydro Project ADB-PEP TA REG 6150, Contract No.: COCS/05-047

Appendix 9

Wangan Aji MHP Organization Structure

(refer paragraph 6.15)

ORGANISASI PLTMH WANGAN AJI (Wangan Aji MHP Organization Structure)

Provincial Government

Pesantren

Kopenindo

Community Representative

Steering Committee (SC)

KOPONTREN as Implentation Unit (IU)

WA MHP Manager

Finance & Administration

MHP Operation and Technical

Community Development

KOPENINDO – Indonesian Renewable Energy Cooperative, Appendix 9

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