The World Bank Indonesia Sustainable Least-cost Electrification Technical Assistance (ISLE TA) (P169259) REPORT NO.: RES58494 FOR OFFICIAL USE ONLY RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF INDONESIA SUSTAINABLE LEAST-COST ELECTRIFICATION TECHNICAL ASSISTANCE (ISLE TA) APPROVED ON JULY 8, 2021 TO PT PERUSAHAAN LISTRIK NEGARA (PERSERO) OCTOBER 2023 Energy & Extractives Global Practice East Asia and Pacific Region Regional Vice President: Manuela V. Ferro Country Director: Satu Kristiina Jyrintytar Kahkonen Global Director: Demetrios Papathanasiou Practice Manager/Manager: Jie Tang Task Team Leader(s): Sabine Cornieti, Claire Nicolas, Puguh Imanto The World Bank Indonesia Sustainable Least-cost Electrification Technical Assistance (ISLE TA) (P169259) ABBREVIATIONS AND ACRONYMS CTF Clean Technology Fund DDD Disbursement Deadline Date ESMAP Energy Sector Management Assistance Program ISLE Indonesia Sustainable Least-cost Electrification ISLE TA Indonesia Sustainable Least-cost Electrification Technical Assistance NTB Nusa Tenggara Barat/West Nusa Tenggara NTT Nusa Tenggara Timur/East Nusa Tenggara PDO Project Development Objective PforR Program for Results PLN PT Perusahaan Listrik Negara (Persero) RETF Recipient-Executed Trust Fund SRMI Sustainable Renewables Risk Mitigation Initiative The World Bank Indonesia Sustainable Least-cost Electrification Technical Assistance (ISLE TA) (P169259) BASIC DATA Product Information Project ID Financing Instrument P169259 Investment Project Financing Environmental and Social Risk Classification (ESRC) Substantial Approval Date Current Closing Date 08-Jul-2021 30-Oct-2023 Organizations Borrower Responsible Agency PT PLN (Persero) PT PLN (Persero) Financing (in USD Million) FIN_SUMM_PUB_TBL SUMMARY Total Project Cost 0 Total Financing 0 Financing Gap 0 DETAILS -NewFin3 Project Development Objective (PDO) Original PDO The Project Development Objective is to support the Recipient in endorsing a framework approach to electrify the Indonesian Eastern Islands in a sustainable and affordable manner, and in preparing the investments needed to implement the approach in identified Pilot Islands. OPS_TABLE_PDO_CURRENTPDO The World Bank Indonesia Sustainable Least-cost Electrification Technical Assistance (ISLE TA) (P169259) Summary Status of Financing (US$, Millions) Net TF Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed TF-B3923 08-Jul-2021 12-Aug-2021 31-Jan-2023 30-Oct-2023 1.20 .14 1.06 Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No I. PROJECT STATUS AND RATIONALE FOR RESTRUCTURING 1. The Project is part of an overall framework that aim to support the development of low-carbon, affordable and reliable electricity supply to enable increased electricity access and improved climate resilience in Indonesia’s Eastern Regions. In 2019-2020, PT Perusahaan Listrik Negara Persero (PLN), the electricity State utility, with technical assistance from the World Bank, developed a step-by-step methodology to reduce the cost of generation in eastern Indonesia while promoting last-mile electrification, PLN’s Indonesia Sustainable Least-cost Electrification (ISLE) Framework. The ISLE Framework is divided in three phases: (i) Framework Development – developed under the energy sector programmatic technical assistance [P173293] financed by the Energy Sector Management Assistance Program (ESMAP) under the Sustainable Renewables Risk Mitigation Initiative (SRMI)1, (ii) Preparation of investment activities – financed by a US$ 2.15 million recipient executed trust fund (RETF) grant from ESMAP and the Clean Technology Fund (CTF) under the ISLE technical assistance (ISLE TA) [P169259], the present Project; and (iii) Implementation of the Framework in selected islands – under the ISLE-1 Program for Results (PforR) Program [P174350] (ISLE-1) approved in FY23. The ISLE Framework aims to provide a set of solutions to: (i) reduce the cost of generation in the Eastern Islands by increasing the share of least-cost RE generation and such by increasing the grid technical capacity and flexibility to integrate more VRE and improving PLN’s dispatch operations capacity, (ii) improve grid efficiency and reliability by developing clear steps on how to assess electricity losses and system reliability, and (iii) reduce the financial burden on PLN for system expansion by mobilizing private investments. The ISLE Framework is piloted in Maluku, Nusa Tenggara Barat (NTB) and Nusa Tenggara Timur (NTT) with the ambition of replicating the Framework in other regions. 2. The Project requires a restructuring due to a change in closing date of the ESMAP grant portion. The closing date of the ESMAP Grant Number TF0B3923 under the Project will need to be extended until November 30, 2023, before it can be extended to 2025, similarly to the CTF closing date. This is due to the limitations with regards to the ESMAP parent trust fund account that has not been extended yet to 2025. 3. The Project status is as follow: 1 https://www.esmap.org/srmi The World Bank Indonesia Sustainable Least-cost Electrification Technical Assistance (ISLE TA) (P169259) a. Disbursement. Disbursements have started on the Project. b. Procurement. The STEP account was completed. Draft Terms of Reference (TORs) for the feasibility studies, environment and social (E&S) instruments, climate resilient guidelines and E&S experts have been developed and cleared by the Bank. PLN started the procurement of most contracts. c. Financial Management and Disbursement. The designated account discussions were completed, and PLN has identified the account they will use. PLN submitted the entity's FY2021 audited financial statements to the Bank on time with clean opinion. d. Safeguards. The Grievance Redress Mechanism (GRM) was set-up. II. DESCRIPTION OF PROPOSED CHANGES 4. The closing date of the ESMAP grant is proposed to be extended from October 30, 2023, to November 30, 2023. This will be the third extension of the closing date for ESMAP. With that change, the Bank is extending the Trust Fund Closing Date and Disbursement Deadline Date (DDD) of the ESMAP Grant from October 30, 2023 to November 30, 2023 as an interim measure as we await the extension of both the parent CTF Grant and the ESMAP grant to January 30, 2025. The implications of eliminating the grace period between the Closing Date and the DDD are that, in the absence of a further extension of the parent ESMAP Grant: (i) PLN we will not have time after the Closing Date to submit any withdrawal applications; and (ii) withdrawal applications received after the DDD (which will also be the Closing Date) will not be paid by the Bank. However, this is noted that the ESMAP parent trust fund will be extended within the next few months and a new restructuring for 2025 will be conducted. III. SUMMARY OF CHANGES Changed Not Changed Loan Closing Date(s) ✔ Disbursement Estimates ✔ Implementing Agency ✔ Project's Development Objectives ✔ Results Framework ✔ Components and Cost ✔ Cancellations Proposed ✔ Additional Financing Proposed ✔ Reallocation between Disbursement Categories ✔ v The World Bank Indonesia Sustainable Least-cost Electrification Technical Assistance (ISLE TA) (P169259) Disbursements Arrangements ✔ Change in Overall Risk Rating ✔ Legal Covenants ✔ Institutional Arrangements ✔ Financial Management ✔ Procurement ✔ Implementation Schedule ✔ Other Change(s) ✔ Economic and Financial Analysis ✔ Technical Analysis ✔ Social Analysis ✔ Environmental Analysis ✔ IV. DETAILED CHANGE(S) OPS_DETAILEDCHANGES_LOANCLOSING_TABLE LOAN CLOSING DATE(S) Original Revised Proposed Proposed Deadline TF Status Closing Closing(s) Closing for Withdrawal Applications 30-Jun-2023, 30-Oct- TF-B3923 31-Jan-2023 30-Nov-2023 30-Nov-2023 2023 OPS_DETAILEDCHANGES_DISBURSEMENT_TABLE DISBURSEMENT ESTIMATES Change in Disbursement Estimates Yes Expected Disbursements (In US$) Fiscal Year Annual Cumulative 2019 0.00 0.00 2020 0.00 0.00 2021 0.00 0.00 vi The World Bank Indonesia Sustainable Least-cost Electrification Technical Assistance (ISLE TA) (P169259) 2022 0.00 0.00 2023 0.00 0.00 2024 0.00 0.00 2025 0.00 0.00 vii