Study on Economic Partnership Projects

in Developing Countries in FY2014

Study on Karai Mini-Hydro Power Project in the Province of

Sumatera Utara, the Republic of Indonesia

Final Report

February 2015

Prepared for:

Ministry of Economy, Trade and Industry

Ernst & Young Shin Nihon LLC

Japan External Trade Organization

Prepared by:

Chodai Co., Ltd.

IDI infrastructures Inc.

Kiso-jiban Consultants Co.,Ltd.

Preface

This report represents the collated results of the “FY 2014 Infrastructure System Export Promotion Study

Project ((Study on Formation of Yen Loans and Private-Sector Infrastructure Projects)),” which was awarded by

the Ministry of Economy, Trade and Industry to CHODAI CO., LTD., IDI infrastructures Inc. and Kiso-jiban

Consultants Co., Ltd..

The study that was conducted, “Study on Karai Mini-Hydro Power Project in the Province of Sumatera Utara,

the Republic of Indonesia” was an investigation into the placement of flow-through style small hydro-power

stations on the Karai River in the Province of Sumatera Utara, the Republic of Indonesia, in order to consider the

feasibility of spending of JPY 1.47 billion on the construction of power stations and associated facilities with the

goal of helping to resolve the inherent serious power shortage in the Province of Sumatera Utara.

This report is intended to aid in the realization of the above project, as well as providing reference material for

those participants based in Japan.

February 2015

Chodai Co., Ltd.

IDI infrastructures Inc.

Kiso-jiban Consultants Co.,Ltd.

Geographical Location of the Project Sites

Source: Created by the Survey Commission

The Republic of Indonesia, North Sumatra Province

Simalungun Regency

Plan 1, Plan 2 Site Map

List of Abbreviations

Abbreviation Official Name / Term

AMDAL ANALISIS MENGENAI DAMPAK

LINGKUNGAN

B/C Benefit / Cost

BHE Bumi Hidro Engineering Constuction

BIE Bumi Investco Energi

BKPM Badan Koordinasi Penanaman Modal

BPS Badan Pusat Statistik

CIF Cost, Insurance and Freight, named port of

distination

EIA Environmental Impact Assessment

EIRR Economic Internal Rate of Return

EPC Engineering, Procurement and Construction

F/S Feasibility Study

FIRR Financial Internal Rate of Return

FIT Feed-in Tariff

FOB Free on Board

FS Feasibility Study

GDP Gross Domestic Product

GFS Government Finance Statistics

HIDA The Overseas Human Resources and Industry

Development Association

IDI-I IDI infrastructures Inc.

IDR Indonesian Rupiah

IMF International Monetary Fund

IPP Independent Power Producer

IPPKH Izin Penjam Pakan Kawasan Hutan

IRR Internal Rate of Return

IUPTL IJIN USAHA PENUNJANG TENAGA LISTRIK

JBIC Japan Bank for International Cooperation

JETRO Japan External Trade Organization

JICA Japan International Cooperation Agency

KLH Kementrian Lingkungan Hidup

MEMR The Ministry of Energy and Mineral Resources

MIGA Multilateral Investment Guarantee Agency

MP3EI Master Plan for Acceleration and Expansion of

Indonesian Economic Development

Abbreviation Official Name / Term

NEDO New Energy and Industrial Technology

Development Organization

NPV Net Present Value

O&M Operation & Maintenance

ODA Official Development Assistance

PKS Palm Kernel Shells

PLN Perusahaan Listrik Negara

PPA Power Purchase Agreement

RUPTL Rencana Usaha Penyediaan Tenaga Listrik

SCF Standard Conversion Factor

SMADA Stormwater Management and Design Aid

SMI Sarana Multi Infrastruktur

SPC Special Purpose Company

UKL/UPL Upaya Pengelolaan Lingkungan dan Upaya

Pemantauan Lingkungan

USD United States Dollar

Contents

Preface

Geographical Location of the Project Sites

List of Abbreviations

Contents

Executive Summary

（1）Project Background & Necessity ............................................................................................................... 1

（2）Basic Policy for Deciding Project Details ................................................................................................. 3

（3）Project Overview ....................................................................................................................................... 5

（4）Project Schedule ...................................................................................................................................... 11

（5）Project Feasibility .................................................................................................................................... 11

（6）Technological Advantages of Japanese Firms ......................................................................................... 13

（7）Maps of Project Target Location .............................................................................................................. 14

Chapter 1 Overview of Host Country and Sector

（1）Economic and Financial Situation of Host Country ...............................................................................1-1

1）Economic Overview ...............................................................................................................................1-1

2）Trade ...............................................................................................................................................1-2

3）Investment from Overseas ......................................................................................................................1-2

4）Industrial Composition ...........................................................................................................................1-3

5）Fiscal Balance .........................................................................................................................................1-3

6）Population ...............................................................................................................................................1-4

（2）Outline of Project’s Target Sector ...........................................................................................................1-6

1）Electrical Power Situation in Indonesia ..................................................................................................1-6

2）Energy Demand in the Sumatra Islands ..................................................................................................1-7

（3）State of Target Regions ......................................................................................................................... 1-10

1）Geography and Climate ........................................................................................................................ 1-10

2）Land Usage ........................................................................................................................................... 1-11

3）Population ............................................................................................................................................. 1-12

4）Simalungun Power Demand ................................................................................................................. 1-12

5）Industry 1-13

6）Resources .............................................................................................................................................. 1-14

Chapter 2 Study Methodology

（1）Details of Study ......................................................................................................................................2-1

1）Existing Studies on this Project ..............................................................................................................2-1

2）Investigation Points ................................................................................................................................2-4

..............................................................................................................................................

（2）Study Methodology and System .............................................................................................................2-6

（3）Investigation Schedule ............................................................................................................................2-8

Chapter 3 Justification, Objectives and Technical Feasibility of the Project

（1）Project Background and Necessity .........................................................................................................3-1

1）Project Scope ..........................................................................................................................................3-1

2）Supply and Demand for Project’s Core Products and Services ..............................................................3-3

3）Current Situation Analysis, Future Predictions (Including Demand Predictions), and Potential

Problems if Project is not Executed ........................................................................................................3-3

4）Results and Effects if Project is Executed ..............................................................................................3-4

5）Comparison of Proposed Project with Other Options (Alternative Energy Study).................................3-5

（2）Increased Rate of Energy Consumption and Rationalization ............................................................... 3-10

（3）Studies Necessary to Finalize Project Contents .................................................................................... 3-11

1）Predicted Demand ................................................................................................................................. 3-11

2）Problem points and analysis required to finalize project contents ........................................................ 3-12

3）Examination of Technical Methods ...................................................................................................... 3-66

（4）Project Plan Summary .......................................................................................................................... 3-72

1）Basic Policy for Deciding Project Details ............................................................................................ 3-72

2）Design Summary and Specifications of Applicable Equipment ........................................................... 3-72

3）Contents of Proposed Projects (Site and Scale of Project Budget, etc.) ............................................... 3-96

4）Solutions for Issues Regarding Proposed Techniques and System Use ................................................ 3-99

Chapter 4 Evaluation of the Environment and Social Impacts

（1）Analysis of the Current State of the Environment and Society ..............................................................4-1

1）Current Environment and Society Data Analysis ...................................................................................4-1

2）Future Predictions (If Project is not Carried Out) ................................................................................. 4-13

（2）Environmental Improvements Achieved through this Project .............................................................. 4-14

1）Setting a Baseline ................................................................................................................................. 4-14

2）Calculating these Results ...................................................................................................................... 4-16

（3）Environmental and Social Improvements Achieved through the Implementation of this of this Project

of this of this ................................................................................................................................................ 4-18

1）Screening of Economic and Social Topics Referred to in the JICA and JBIC

Guidelines ..................................................................................................................................... 4-18

2）Other Options and Comparisons for Less Environmental and Social Impact .................................... 4-21

（4）Overview of the Laws and Regulations Regarding Environmental and Social Issues in Indonesia ..... 4-22

1）Outline of laws and regulations regarding environmental and social issues related to this project ...... 4-22

2）Contents of the EIA (Environmental Impact Assessment) Required for Implementation

of of the Project ........................................................................................................................................ 4-25

3）Measures required to Satisfy Related Rules and Regulations ............................................................... 4-26

（5）Necessary Actions from Indonesia (Implementing Agencies and Other Organizations) to

Fulfill Fulfill this Project this Project ............................................................................................................. 4-27

Chapter 5 Financial and Economic Evaluation

（1）Estimated Project Cost ............................................................................................................................5-1

（2）Results Summary of Preliminary Financial/Economic Analyses ...........................................................5-1

1）Fundraising .............................................................................................................................................5-1

2）Detailed Statement ..................................................................................................................................5-2

3）Project Plan .............................................................................................................................................5-4

4）Summary of Financial Analysis Results .................................................................................................5-7

5）Summary of Economic Assessment Results ...........................................................................................5-8

Chapter 6 Planned Project Schedule

Chapter 7 Implementing Organization

Chapter 8 Technical Advantages Japanese Company

（1） Expected Form of Participation of Japanese Firms (Financing, Parts/Equipment Provision,

Facility Facility Management, etc.) ..................................................................................................................8-1

（2） Advantages of Japanese Firms for this Project (Technological, Economical) ......................................8-2

（3） Necessary Policies to Facilitate Successful Bid for Japanese Firms.....................................................8-3

Chapter 9 Project Financing Prospects

（1） Funding Sources and Financing Plan ....................................................................................................9-1

1） Confirming the Amount of Debt Contributable by Senior Lenders ......................................................9-1

2） Feasibility of Assembling Mezzanine Lenders .....................................................................................9-1

（2） Feasibility of Funding ...........................................................................................................................9-3

1） Feasibility of Financing from Local Indonesian Banks ........................................................................9-3

2） Feasibility of Funding from Mezzanine Lenders ..................................................................................9-4

（3） Cash Flow Analysis ..............................................................................................................................9-5

1） Sensitivity Analysis for Changes in Construction Costs .......................................................................9-5

2） Sensitivity Analysis for Changes in Interest .........................................................................................9-5

3） Sensitivity Analysis of the FIT Price ....................................................................................................9-6

4） Sensitivity Analysis of Power Generation Capacity .............................................................................9-6

Chapter 10 Plan of Action and Issues to Consider Moving Forward to Implementation

（1） Status of Work Moving Forward to Implementation of the Project .................................................... 10-1

1） Acquisition and Renewal of Necessary Permits and Licenses............................................................ 10-1

2） Detailed Engineering/Technical Considerations ................................................................................. 10-2

3） Financing Necessary Funds for Construction ..................................................................................... 10-2

4） History of Formation of the Project and Future Intentions ................................................................. 10-4

（2） Status of Work with Affiliated Government and Implementing Agencies Moving

Forward Forward to Implementation of the Project ....................................................................................... 10-6

（3） Indonesia Legal and Financial Restrictions ........................................................................................ 10-7

（4） Necessity for Additional Detailed Analyses ....................................................................................... 10-8

1） River Flow Study ................................................................................................................................ 10-8

2） Topographical Survey ......................................................................................................................... 10-8

3） Geological Survey .............................................................................................................................. 10-8

4） Basic Execution Plan Draft ................................................................................................................. 10-9

5） Environmental and Social Considerations .......................................................................................... 10-9

6） Operation Scheme, Funding Method .................................................................................................. 10-9

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Figure Contents

Fig.1 Electricity Demand Forecast in North Sumatra Province ...................................................................1

Fig.2 Amended FIT Price .............................................................................................................................2

Fig.3 Conceptual Figure of Candidate Project Layout .................................................................................5

Fig.4 Concept Figure of Study Cases of Plan2 .............................................................................................6

Fig.5 Layout Drawing of Selected Project ...................................................................................................7

Fig.1-1-1 Indonesia Population Pyramid (2014) ............................................................................................ 1-4

Fig.1-2-1 Change in energy capacity by type ................................................................................................. 1-6

Fig.1-2-2 North Sumatra Islands Power Demand Assessment ....................................................................... 1-9

Fig.1-3-1 Investigation Target Region Map (Outline) .................................................................................. 1-10

Fig.1-3-2 Map of Precipitation in Sumatra................................................................................................... 1-11

Fig.1-3-3 Map of Sei Mangkei Special Economic Zone (Outline) .............................................................. 1-13

Fig.2-2-1 Study System .................................................................................................................................. 2-7

Fig.3-1-1 Project Location ............................................................................................................................. 3-1

Fig.3-1-2 Project Plan 1 Summary ................................................................................................................. 3-2

Fig.3-1-3 Project Plan 2 Summary ................................................................................................................. 3-2

Fig.3-1-4 Average Amount of Insolation in Indonesia ................................................................................... 3-6

Fig.3-1-5 Indonesia’s Geothermal Potential ................................................................................................... 3-8

Fig.3-3-1 Project Area Topographical Map .................................................................................................. 3-13

Fig.3-3-2 Geological Map around the Site ................................................................................................... 3-15

Fig.3-3-3 Site Reconnaissance Records and Locations of Photographs ....................................................... 3-19

Fig.3-3-4 Karai12 Lower Stream 1 Schematic Profile ................................................................................. 3-21

Fig.3-3-5 Karai12 Lower Stream 2 Schematic Profile ............................................................................... 3-21

Fig.3-3-6 Rainfall and Air Temperature in Medan ....................................................................................... 3-39

Fig.3-3-7 Map of Rainfall Observation Locations Near Project Site ........................................................... 3-40

Fig.3-3-8 Location of Pulau Tagor River Flow Observation Site................................................................. 3-41

Fig.3-3-9 Karai12 Site Flow Capacity.......................................................................................................... 3-43

Fig.3-3-10 Karai12 Design Flood ................................................................................................................ 3-44

Fig.3-3-11 Karai7 Flow Duration Curve ...................................................................................................... 3-46

Fig.3-3-12 Karai13 Flow duration Curve ..................................................................................................... 3-46

Fig.3-3-13 Karai7 Design Flood Hydrogragh ............................................................................................ 3-48

Fig.3-3-14 Karai13 Design Flood Hydrogragh ............................................................................................ 3-48

Fig.3-3-15 Transmission Network in Sumatra Island ................................................................................... 3-61

Fig.3-3-16 Electrical System Diagram in North Sumatra ............................................................................ 3-62

Fig.3-3-17 General Map of Intake Equipment Renovation .......................................................................... 3-69

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Fig.3-3-18 Example of Sand Trap Remodeling Method .............................................................................. 3-69

Fig.3-3-19 Suggested Intake Remodeling for Karai7 Power Plant .............................................................. 3-71

Fig.3-4-1 Topographical Map of Candidate Site Area for Karai12 Project .................................................. 3-75

Fig.3-4-2 Cross-Section Diagram of the Pulung River ................................................................................ 3-76

Fig.3-4-3 Discharge－Construction Unit Cost Curve .................................................................................. 3-77

Fig.3-4-4 General Ground Plan of Karai12 Mini-hydro power Power Plant ............................................... 3-79

Fig.3-4-5 Map of Karai River Diversion Locations ..................................................................................... 3-82

Fig.3-4-6 River Diversion Plan 1 (Sigambur River) Catchment Area .......................................................... 3-83

Fig.3-4-7 Flow Duration Curve of the Sigambur River ............................................................................... 3-84

Fig.3-4-8 River Diversion Plan 2 (Pulung River) Catchment Area .............................................................. 3-84

Fig.3-4-9 Flow Duration Curve of the Karai River ...................................................................................... 3-85

Fig.3-4-10 Karai13 Power Plant Load Duration Curve ................................................................................ 3-87

Fig.3-4-11 Karai7 Power Plant Load Duration Curve .................................................................................. 3-87

Fig.3-4-12 Plan 2 Case 1 (Output Increase via River Diversion) Karai13 General Layout ......................... 3-89

Fig.3-4-13 Plan 2 Case 1 (Output Increase via River Diversion) Karai7 General Layout ........................... 3-90

Fig.3-4-14 Plan 2 Case 2 (Plant Augmentation via River Diversion)

Karai13 General Layout .................................................................................................................................. 3-91

Fig.3-4-15 Plan 2 Case 2 (Plant Augmentation via River Diversion)

Karai7 General Layout .................................................................................................................................... 3-92

Fig.3-4-16 Map of Karai12 Electrical System (New Facility Proposal) ...................................................... 3-93

Fig.3-4-17 Map of Karai7 & 13 Electrical Systems (Augmentation Proposal) ............................................ 3-94

Fig.3-4-18 Map of Planned Location for Karai12 ........................................................................................ 3-97

Fig.3-4-19 Overview of Karai Region Power Transmission and

Power Distribution System ............................................................................................................................ 3-102

Fig.4-1-1 State of Land Use ........................................................................................................................... 4-4

Fig.4-1-2 State of Forest Reserves ................................................................................................................. 4-5

Fig.4-1-3 State of Conservation Areas ........................................................................................................... 4-6

Fig.4-1-4 Dolok Tinggi Raja Nature Conservation Area (Hot spring Location） ......................................... 4-7

Fig.4-1-5 Dolok Tinggi Raja Nature Conservation Area (Hot spring Location) Map .................................. 4-8

Fig.4-1-6 Buntu Siantar and Dolok Marawa Villages Map .......................................................................... 4-13

Fig.4-4-1 Indonesia Ministry of Environment (KLH) Organizational Map

(As of October, 2012) ...................................................................................................................................... 4-22

Fig.6-1 Project Implementation Schedule ...................................................................................................... 6-1

Fig.6-2 Construction Schedule for Karai 12 Mini-Hydro Power Plant .......................................................... 6-1

Fig.9-1-1 Mezzanine Finance (Image) ........................................................................................................... 9-2

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Table Contents

Table1 Evaluation of Study Plans .......................................................................................................................6

Table2 Selected Project Outline .........................................................................................................................8

Table3 Selected Project Costs ............................................................................................................................9

Table4 Financial and Economic Analysis Results ............................................................................................10

Table5 Project Enactment Schedule ................................................................................................................. 11

Table6 Technical Advantageous of Japanese Enterprises .................................................................................13

Table1-1-1 Basic Economic Indicators .......................................................................................................... 1-1

Table1-1-2 Trade Balance (unit: million dollars) ........................................................................................... 1-2

Table1-1-3 Foreign Direct Investment (Execution Based) ............................................................................. 1-3

Table1-1-4 GDP by Sector ............................................................................................................................. 1-3

Table1-1-5 Fiscal Balance .............................................................................................................................. 1-4

Table1-2-1 Fast Track Program ...................................................................................................................... 1-7

Table1-2-2 Renewable Energy Development Potential .................................................................................. 1-7

Table1-2-3 Electrification rates in the islands of Sumatra (2012) .................................................................. 1-8

Table1-3-1 Land Usage Situation ................................................................................................................. 1-11

Table1-3-2 Simalungun Population by Area ................................................................................................ 1-12

Table1-3-3 Simalungun Poverty Rate .......................................................................................................... 1-12

Table1-3-4 Agricultural Produce Yield of Simalungun ................................................................................ 1-13

Table2-1-1 Summary of Existing Study Reports of Karai12 Project ............................................................. 2-1

Table2-1-2 Summary of Existing Study Reports of Karai7 Project ............................................................... 2-2

Table2-1-3 Summary of Existing Study Reports of Karai13 Project ............................................................. 2-3

Table2-1-4 Summary of Existing Study Reports of River Diversion Plan ..................................................... 2-4

Table2-3-1 Investigation Schedule ................................................................................................................. 2-8

Table2-3-2 First Site Survey Results Outline (Site Inspection) ......................................................... 2-9

Table2-3-3 First Site Survey Results Outline (Visits to Related Agencies) ................................................. 2-10

Table2-3-4 Second Site Survey Results Outline ........................................................................................... 2-11

Table2-3-5 Third Site Survey Results Outline ............................................................................................. 2-12

Table2-3-6 Forth Site Survey Results Outline .............................................................................................. 2-12

Table3-1-1 Peak Electricity Demand Forecast in North Sumatra Province ................................... 3-4

Table3-1-2 Current Project and Solar Power Comparison ............................................................................. 3-7

Table3-1-3 Solar Power (2,000kW) Project Estimated Cost Conditions........................................................ 3-7

Table3-1-4 Average Yearly Wind Speed in Medan ........................................................................................ 3-7

Table3-1-5 Geothermal Potential of Each Island ........................................................................................... 3-8

ii

Table3-1-6 Current Project and Geothermal Power Comparison ................................................................... 3-9

Table3-2-1 Renewable Energy Resources and Amount Introduced to Market (2011) ................................. 3-10

Table3-3-1 North Sumatra Electrical Demand Survey ................................................................................. 3-11

Table3-3-2 North Sumatra Equipment Capacity .......................................................................................... 3-11

Table3-3-3 North Sumatra Electrical Grid Data ........................................................................................... 3-12

Table3-3-4 Site Reconnaissance Schedule ................................................................................................. 3-18

Table3-3-5 Summary of Site Reconnaissance Results ................................................................................. 3-33

Table3-3-6 Average Monthly Rainfall at Observation Locations Near Project Site..................................... 3-40

Table3-3-7 Pulau Tagor Observed River Flow ............................................................................................. 3-42

Table3-3-8 Comparison of Karai7 and Karai13 Flow Conditions ................................................................ 3-47

Table3-3-9 North Sumatra’s Electrical Demand and Supply Capability ...................................................... 3-60

Table3-3-10 Electrical Supply and Demand of the Karai Area .................................................................... 3-64

Table3-3-11 Karai13 Monthly Sales Volume and Utilization Rate (Oct. 2014 Survey Data) ...................... 3-65

Table3-4-1 Existing Survey Report on the Karai12 Plan ............................................................................. 3-74

Table3-4-2 Results of Optimum Scale Determination ................................................................................. 3-77

Table3-4-3 Elements of the Karai12 Power Plant Plan ................................................................................ 3-78

Table3-4-4 Elements of Existing Karai13 and Karai7 Power Plants ............................................................ 3-81

Table3-4-5 Summary of Karai River Diversion Plan ................................................................................... 3-82

Table3-4-6 Case Examinations of Existing Power Plant Output Increases via River Diversion .................. 3-86

Table3-4-7 Plan 2 (River Diversion Proposal) Elements of Existing Power Plant Output Increase ............ 3-88

Table3-4-8 Overview of Salient Points for Each Plan Under Consideration ............................................... 3-95

Table3-4-9 Other Construction Costs for Each Plan .................................................................................... 3-95

Table3-4-10 Evaluation of Each Case Under Consideration ........................................................................ 3-96

Table3-4-11 Karai12 Power Plant Outline ................................................................................................... 3-98

Table3-4-12 Future Geological Investigation Items ................................................................................... 3-100

Table4-2-1 Calculation Conditions............................................................................................................... 4-14

Table4-2-2 Emissions Based on CO2/Crude Oil Conversions ..................................................................... 4-16

Table4-2-3 CO2 Reduced Emissions ............................................................................................................ 4-17

Table4-3-1 Investigation Results Based on Environmental Checklists ........................................................ 4-19

Table4-4-1 Laws and Regulations Regarding Environmental Issues (Basic Laws) ..................................... 4-23

Table4-4-2 Laws and Regulations Regarding Environmental Issues (Air Pollution) ................................... 4-24

Table4-4-3 Laws and Regulations Regarding Environmental Issues (Water Pollution) .............................. 4-24

Table4-4-4 Laws and Regulations Regarding Environmental Issues (Noise, Vibration, Smells) ................ 4-25

Table5-1-1 Case-by-case Project Cost Breakdown ........................................................................................ 5-1

Table5-2-1 Detailed Statement of the Confirmed Business Plan ................................................................... 5-3

Table5-3-1 Plan 1 Project Plan ....................................................................................................................... 5-5

Table5-3-2 Plan 2 Case 1 Project Plan ........................................................................................................... 5-6

Table5-3-3 Plan 2 Case 2 Project Plan ........................................................................................................... 5-7

iii

Table5-4-1 Financial Analysis Results ........................................................................................................... 5-7

Table5-5-1 SCF Calculation ........................................................................................................................... 5-8

Table5-5-2 Economic Cost Calculation .......................................................................................................... 5-9

Table5-5-3 Cash Flow for Economic Analysis (Plan 1) ............................................................................... 5-10

Table5-5-4 Cash Flow for Economic Analysis (Plan 2 Case 1) ................................................................... 5-10

Table5-5-5 Cash Flow for Economic Analysis (Plan 2 Case 2) ................................................................... 5-11

Table7-1 Implementation capability of host country’s organizations ............................................................. 7-2

Table9-2-1 Financing Conditions for Local Financial Institutions (Projected) .............................................. 9-3

Table9-3-1 FIRR Sensitivity Analysis of Construction Cost Changes ........................................................... 9-5

Table9-3-2 FIRR Sensitivity Analysis of Interest Changes ............................................................................ 9-6

Table9-3-3 FIRR Sensitivity Analysis of FIT Price Changes ......................................................................... 9-6

Table9-3-4 FIRR Sensitivity Analysis of Power Generation Capacity Changes ............................................ 9-7

Table10-1-1 Karai12 Permit/License Acquisition (Survey Commission Confirmation Status) ................... 10-1

Table10-1-2 Projected Risks ........................................................................................................................ 10-3

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Picture Contents

Photo 3-3-1 Welded tuff with Development of Joints (Cracks) Occurring along River ............................... 3-16

Photo3-3-2 Columnar Joints of Welded tuff (View from Top) ..................................................................... 3-16

Photo3-3-3 Gully Erosions on Shirasu Slope Shirasu Covered Ravine ....................................................... 3-17

Photo3-3-4 Secondary deposited Shirasu along River ................................................................................. 3-17

Photo3-3-5 Karai 12 Lower Stream 1 Photographed from Upper to Lower Stream ................................. 3-22

Photo3-3-6 Karai 12 Lower Stream 1 Photographed from Lower to Upper Stream ................................. 3-22

Photo3-3-7 Karai 12 Lower Stream 1 Photographed from Upper to Lower Stream ................................. 3-22

Photo3-3-8 Karai 12 Lower Stream 2 Taken from Lower to Upper Stream (Low Gradient Parts) ......... 3-23

Photo3-3-9 Karai 12 Lower Stream 2 Secondary deposited Shirasu on River Bed ..................................... 3-23

Photo3-3-10 Karai 12 Lower Stream 2 Secondary deposited Shirasu (Close-up Photo) ............................. 3-23

Photo3-3-11 Karai 7 Intake Weir under construction Welded tuff occurs at Excavation ............................. 3-25

Photo3-3-12 Karai 7 Cut Slope at Right Bank of Sand Trap Facility ........................................................ 3-25

Photo3-3-13 Karai 7 Open Headrace from Sand Trap to Surge Tank .......................................................... 3-25

Photo3-3-14 Karai 7 Cut Slope around Power House .................................................................................. 3-26

Photo3-3-15 Karai 13 Intake Weir................................................................................................................ 3-27

Photo3-3-16 Karai 13 Cut Slope near Intake Weir ....................................................................................... 3-27

Photo3-3-17 Karai 13 CL Class Rock at River Bed of Intake Weir ............................................................. 3-28

Photo3-3-18 Karai 13 Headrace with Cover ................................................................................................ 3-28

Photo3-3-19 Karai 13 Penstock Blue Sheets are deteriorated ...................................................................... 3-28

Photo3-3-20 Karai 13 Discharged Water from Power House (Water is very muddy) .................................. 3-29

Photo3-3-21 River Conditions at Planned Location of No1 River diversion ............................................... 3-29

Photo3-3-22 Outcrops at Lower Stream of Planned No1 River diversion ................................................... 3-30

Photo3-3-23 Upper Stream River Conditions of No2 River diversion ......................................................... 3-30

Photo3-3-24 Outcrops at Upper Stream of Planned No2 River diversion .................................................... 3-31

Photo3-3-25 Outcrops at Upper Stream of Planned No2 River diversion Welded tuff (D Class Rock) ...... 3-31

Photo3-3-26 Sand Scour Gate Installed on Right Bank of Intake Weir

(Taken Downstream from Intake Weir) ........................................................................................................... 3-51

Photo3-3-27 Condition of the Intake Weir on the Upstream Side ................................................................ 3-51

Photo3-3-28 Dike on Right Bank Not Constructed ...................................................................................... 3-52

Photo 3-3-29 Dike on Right Bank Not Constructed ..................................................................................... 3-52

Photo3-3-30 Sand Trap Drainage Valve Pit .................................................................................................. 3-53

Photo3-3-31 Sand Trap Excavation .............................................................................................................. 3-53

Photo3-3-32 Headrace Channel Site ............................................................................................................ 3-54

Photo3-3-33 Headrace Swamp Crossing ...................................................................................................... 3-54

Photo3-3-34 Status of the “Masonry Concrete ............................................................................................. 3-55

Photo3-3-35 Head Pond Rebuilt Using Steel ............................................................................................... 3-55

Photo3-3-36 Penstock .................................................................................................................................. 3-56

ii

Photo3-3-37 Intake Equipment .................................................................................................................... 3-56

Photo3-3-38 Headrace .................................................................................................................................. 3-57

Photo3-3-39 Head Pond Under Construction ............................................................................................... 3-57

Photo3-3-40 Penstock .................................................................................................................................. 3-58

Photo3-3-41 Pulung River Intake Site .......................................................................................................... 3-59

Photo3-3-42 Shirasu Particles (Left: Magnified Photo, Right: Electron Microscope Photo)....................... 3-66

Photo3-3-43 Temporary Drainage Channel for Construction of Intake Weir ............................................... 3-70

Photo4-1-1 Dolok Tinggi Raja Nature Conservation Area ........................................................................... 4-8

Photo4-1-2 Buntu Siantar ............................................................................................................................. 4-9

Photo4-1-3 Local Resident Hearing ............................................................................................................... 4-9

Photo4-1-4 Investigation of Community ........................................................................................................ 4-9

Photo4-1-5 State of Private Water System ..................................................................................................... 4-9

Photo4-1-6 Water Tank ................................................................................................................................... 4-9

Photo4-1-7 Buntu Siantar Villagers ............................................................................................................ 4-10

Photo4-1-8 Plantation (Palm Oil) ................................................................................................................. 4-10

Photo4-1-9 Electricity System ...................................................................................................................... 4-11

Photo4-1-10 Buntu Siantar Village Road ................................................................................................... 4-11

Photo4-1-11 Church ..................................................................................................................................... 4-11

Photo4-1-12 Going to School ....................................................................................................................... 4-11

Photo4-1-13 Dolok Marawa Entrance ........................................................................................................ 4-11

Photo4-1-14 Plantation (Palm Oil) ............................................................................................................... 4-11

Photo4-1-15 Electricity System .................................................................................................................... 4-12

Photo4-1-16 Water System ........................................................................................................................... 4-12

Photo4-1-17 Dolok Marawa road ............................................................................................................... 4-12

Photo4-1-18 Fork to Buntu Siantar ............................................................................................................ 4-12

Photo4-1-19 Church ..................................................................................................................................... 4-12

Photo4-1-20 Going to School ....................................................................................................................... 4-12

Photo4-1-21 Elementary School .................................................................................................................. 4-12

1

Executive Summary

(1) Project Background & Necessity

The population of Indonesia is estimated to exceed 247 million people, and the average age is 28.9 years

old, with those under 30 making up half of the population; a large business market. There is a continuing

trend of steady population increase, and in the ten years from 2010-2020 there is a projected growth of 30

million people. The population is estimated to increase to 300 million people by 2050. Indonesia’s

economy has also seen what was a 3.6% economic growth rate in 2001 increase to over 5.5% and into 6%

after 2005. The growth rate is estimated to fall from 5.8% in 2013 to 5.5% in 2014, but as domestic

demand drives economic growth, the rate is projected to continue to hold steady.

Along with Indonesia’s economic growth, the country-wide demand for power is estimated to increase

from 26,246MW in 2010 to 59,863MW by 2019, with that growth of 33,617MW rivaling the total power

demand in 2011. In order to keep up with the 3,000MW/year growth in demand, it is anticipated that there

will be a need to increase the output of power output facilities by 5,500MW/yr. To stay abreast of this

vigorous demand, coal, geothermal, gas, and hydro power methods are all being anticipated, with the

renewable energies of gas and hydropower expected to triple.

Fig. 1 Electricity Demand Forecast in North Sumatra Province

Source: Heraring from PLN Medan

North Sumatra’s power demand is estimated to increase about 10% every year. There is a gap between

current power output capabilities (2012: 1,549MW) and the projected peak demand in 2030 (3,493MW) of

almost 2,000MW. The 2022 estimated maximum power demand will climb to 1.88 times the amount in

2013, becoming a very serious power shortage.

(MW) Demand forecast in 2022

Supply capacity in 2012

(MW)

2

As desire for coal, geothermal, gas, and hydropower to cover the energy demand increases, if this project

or some other energy projects are not implemented, it is clear that the existing present electricity shortage

will be continued. The prolonged shortage of power in North Sumatra has reached 200MW, and is even

being taken up as a national issue. Because of instability in the power supply, it is difficult for other

Japanese firms to advance into the area; there is truly a great need for more power there.

At first the Indonesian government planned to enact the “Fast Track Program,” which involved only the

establishment of new coal-fired power plants. However, in recent years, with the increase of environmental

awareness, as well as large delays in development and construction have caused them to reconsider their

coal-centered stance. The new second Fast-Track Program (FTP-2) has been established, which considers

the aggressive use of not just PLN, but also Independent Power Producers (IPP) as well. This second

Fast-Track Program incorporates renewable energies such as mini-hydro power, and aims to quadruple the

current power generation capacity to 18,100MW by 2030. The same program, while beginning the

development of 1,204MW of hydroelectric power generation, has introduced the FIT system, a long term

fixed-price contract for selling power to PLN, to which mini-hydro power projects are also subject.

The Ministry of Energy and Mineral Resources announced the new FIT (Feed-in Tariff) system. According

to this plan, the selling price to PLN will be IDR1,182.5/kWh from the commencement of power

generation on the island of Sumatra for a period of 8 years. This is significantly higher than the current

selling price of IDR787/kWh. It can be said that this is another factor that is leading the government to

eagerly promote mini-hydro power projects, which can be used as base supply.

Fig. 2 Amended FIT Price

FIT price implemented

Transmission Medium Voltage(Rp/kWh) Java, Madura, Bali 656 Sumatera, Sulawesi 787.2 Kalimantan, Nusa Tenggara 852.8 Maluku, Papua 984

FIT price implemented in May 2014

Transmission Medium Voltage(Rp/kWh)

Java, Madura, Bali 1,075

Sumatera, Sulawesi 1,182.5

Kalimantan, Nusa Tenggara 1343.8

Maluku, Papua 1397.5

Source: Ministerial Decree No.12 of Year 2014 by Ministry of Enerfy and Mineral Recources.

FIT Price Amended In May 2014

3

As far as sources of energy to reduce current and future power sources, hydroelectric, geothermal, solar,

wind, and tidal energy sources are being considered. However, geothermal is risky, and solar and the others

don’t provide steady and reliable energy generation, so are not suited to primary power generation. The

area in question is mountainous with significant rainfall; the environmental conditions make it an ideal

location for mini-hydro power projects. Also, considering demand and potential to aid economic growth,

this project is well suited for the task.

This background leads us to the present, where the servicing of several mini-hydro power development

plans are being pursued. Among these, plans for new facilities as well plans to increase the output of

current facilities or those under construction are also underway in other areas nearby. Paying close

attention to these other projects, comparing and investigating them to create the most appropriate feasible

plan is the best course of action. Additionally, Japan has a history of over 100 years in the hydro power

industry, and Japanese corporations possess a high level of technological skill in the field, enabling this

project to fully capitalize on these advantages.

(2) Basic Policy for Deciding Project Details

In order for this project to make full use of the natural water resources present in the Karai river basin in

Simalungun North Sumatra, Indonesia, the best development plan must be chosen from a comprehensive

drainage system development point of view, making maximum power supply the basic policy therein. In

addition, by making applicable hydro power facilities into run-of-river type, this project will prevent

wide-area submersion caused by construction, and bring harmony to natural and social considerations.

At the time of drafting the development plan, technical assessments of geographical terrain, meteorology,

and upstream/downstream development plans will be performed, as well as economical assessments of

future operation and maintenance management. Ultimately, the most appropriate plan will be decided

based on the intentions of local business enterprises. Lastly, the possibility of participation of Japanese

investigators in operations to bring Japanese technical expertise to the project will also be considered.

Given these findings, this project’s basic policy has been defined as follows:

- Draft a plan that ensures facilities last long and become social capital for the public good

- Have consideration for environmental and social impact through natural and social

environment assessments

- Select hydro-mechanical and hydro-electrical equiment with the intent of reducing

maintenance management cost

- Select the most economical development plan making the most use of natural water power

4

resources that have drainage systems

This study has conducted an assessment and analysis of the necessary items to implement this project.

i. Contrast and examine establishment of new power generation facilities as well as

augmentation of existing facilities

ii. Select power generation facilities for project implementation

iii. Consider mini-hydro power project policy, effectiveness, and profitability

iv. Verify the feasibility of the project

Additionally, bear in mind the following when considering “i”.

a． Hydraulic studies will be enacted to calculate FIRR and EIRR to ensure power generation

capacity, the key to this project.

b． To ensure stable continued operation of facilities, ground strength, as well as river water flow

will be assessed. Counter measures for natural disasters such as floods and earthquakes will be

considered.

c． Consider environmental and social impact on the local area and residents who live along the

river.

d． Create a plan for the construction of the power production facilities and assess the economic

and business value of the project based upon financial analysis.

e． In order to perform a comparative analysis of the effectiveness of the power generation, make a

thorough study of the site conditions (head/flow).

5

(3) Project Overview

1) Proposal outline and total project costs

This study reviewed the existing plans for Karai 12 mini-hydro power development at the Pulung River

in the Karai River drainage system, and compared alternative plans to divert the upper-stream portion of

the Pulung River to the adjacent Sigambur and Karai Rivers, strengthening the output of the Karai 13

power generation facility as well as the Karai 7 facility still under construction.

Fig. 3 Conceptual Figure of Candidate Project Layout

Source: Created by Study Team

6

Fig. 4 Concept Figure of Study Cases of Plan2

The existing power plants have will have their power uprating in one of the 2 ways listed below:

Case 1: Only increase what can be output during the dry season, without changing the maximum output of the existing plants.It needs river diversion facility and renovation work of existing plants only for this case.

Case 2: Allow the extra river flow to increase the maximum output of existing plants.It needs river diversion facility, additional power plant, as well as renovation work of existing plant for this case.

Increased generating energy

Same max. output

Percent of time that indicated discharge was equaled or exceeded

Dis

ch

arg

e (

m

3 /s)

Increased max. output

Increased generating energy

Percent of time that indicated discharge was equaled or exceededD

isch

arg

e (

m

3 /s)

Source: Created by Study Team

The results of the study show that the development of the Karai 12 mini-hydro power is feasible from

technical, environmental, and economical standpoints. For these reasons, this study has elected to

recommend the Karai 12 mini-hydro power for this project.

Table 1 Evaluation of Study Plans

Case Under Consideration Plan 1Plan 2

Case 1 Case 2

Technical Concerns

○ △ △

A new construction plan that can

be tailored to the technical

requirements from the ground

up.

Existing structural problems will

be reconstructed, however use

of existing equipment means

unease over construction quality

remains.

Same as Left

Socio-Environmental Concerns ○ ○ ○

[Environment] Manufacturing forest or

plantation region; located

outside nature reserves.Same as Left Same as Left

[Social Impact] Will not displace residents. Will

also not draw water from a

recession area. Social impact

will be limited.

Same as Left Same as Left

Economics

○ △ △

Lowest Unit Cost of

Construction

Highest Unit Cost of

Construction

Second Lowest Unit Cost of

Construction

Overall Evaluation

○ △ △

Selected as Development PlanOverall Evaluation: Inferior to

Plan 1

Overall Evaluation: Inferior to

Plan 1

Source: Created by Study Team

7

Fug. 5 Layout Drawing of Selected Project

Source: Created by Study Team

8

Table 2 Selected Project Outline

Power Generation Plan Outline

River Name - Karai River

Catchment Area km2 116.65

Power Generation Type - Run-of-River Type

Headwater Level EL. m 550.00

Tailwater Level EL. m 400.00

Gross Head m 150.00

Effective Head m 145.03

Maximum Discharge m3/s 7.00

Maximum Output kW 9,000

Annual Generating Energy ×103kWh 64.030

Construction Costs

(Civil Engineering)

(Electrical & Mechanical)

(Transmission Line)

×106IDR

×103USD

×106IDR

62,293

5,940

15,400

Facility Overview

Intake weir Type: Gravity

Crest Length: 50.4

Height: 5.0

Width: 13.2

Intake structure m Width: 7.5

Height: 6.1

Connecting channel m Type: Open Channel

Width: 3.0

Length: 55.0

Sand trap m Type: Open Single Tank Bypass Channel

Width: 7.5

Length: 60.7

Depth: 3.2

Headrace m Type: Pressureless Covered Open Channel

Width: 3.0

Length: 1,440

Head pond m Type: Open

Width: 3.6

Length: 25.0

Depth: 3.2

Penstock m Type: Above Ground Iron Piping

Pipe Diameter: φ1.8

Length: 330.0

Powerhouse m Type: Above Ground

Width: 17.8

Length: 36.8

Height: Above Ground 11.7, Below Ground 6.15

Tailrace m Type: Open Channel

Width: 3.0

Length: 46.0

9

Table 3 Selected Project Costs

Construction Expense (Civil

Engineering, Building) ×106IDR 77,693

Construction Expense (Generator) ×103USD 5,940

Construction Expense* ×106JPY 1,562.85

Construction Expense per kWh JPY/kWh 24.4

*: Converted using November 30, 2014 exchange rate (US$1=¥119.23、IDR1=¥0.0110)

Source: Created by Study Team

2) Preliminary finances & overview of economic analysis results

Plan 1 is a new proposal, while Plan 2 renovates or expands upon existing equipment to increase

operating ratios. Regarding the financial analysis of Plan 2, although this plan is a renovation or

expansion, it consists of extant machines, and has thus the preexisting assets and debts have been

included in the analysis of the project’s overall benefits.

The FIRR for all plans exceed Indonesia’s long-term interest rates, the NPV is positive, and the B/C>1;

it can be said that there is investment verification, however the FIRR of Plan 1 is quite high, thus

making Plan 1 the more efficient investment.

As for the economic assessment, the EIRR was calculated in order to evaluate the economic results of

the project from the perspective of the efficiency of resource allocation in regards to the national

economy. Because mini-hydro power generation can substitute for ordinary diesel power generation in

Indonesia, either plan would greatly exceed the general social discount rate of 12%, and it can be

concluded that the plans have a great value to the national economy. Just as in the financial analysis, the

EIRR of Plan 1 was greater, and the most efficient investment of the two.

10

Table 4 Financial and Economic Analysis Results

Plan 1 Plan 2

Case 1 Case 2

Total Investment millions

IDR

186,615 579,301 727,765

FIRR % 28.9% 17.6% 21.0%

NPV millions

IDR

232,964 371,093 563,640

B/C - 1.5 1.1 1.1

EIRR % 71% 48% 56%

Source: Created by the Study Team

3) Evaluation of environmental and social considerations

In regards to the impact that executing this project will have on the environment, we examined both the

natural and social environment of the target region, in addition to reviewing the environmental

protection laws in Indonesia.

The target location for this project is in a mountainous region, and the forest classification and land is

being used as perpetual forest production, dry farming, and plantations, but there are many plants and

animals living in the not-yet-utilized mountain and valley areas as habitats. Though there is no

information regarding important or endangered species, there have been reports from the Indonesian

government of protected Malayan Sun Bears in the area.

However, this project is not a large-scale power plant, and it plans to use the run-of-the-river water

intake method, making it an environmentally friendly form of power generation. In addition, the river is

not used by nearby indigenous peoples in their daily lives (Local Resident Hearing results), so it is likely

that the execution of this project will not have a large environmental or cultural impact.

Additionally, while this project is not subject to the environmental impact assessment (AMDAL),

operations and activities that are to be excluded from AMDAL requirements must create an

environmental management and monitoring program (UKL-UPL). A suitable investigation, estimation

and evaluation of the potential environmental and social impact to the area surrounding the target region

will need to be performed, looking for ways to avoid and/or reduce such impact as much as possible.

11

(4) Project Schedule

The schedule leading up to the realization of the project is currently set as follows:

Table 5 Project Enactment Schedule

Item Year 1 Year 2 Year 3 Year 4 Year 5

3 6 9 12 3 6 9 12 3 6 9 12 3 6 9 12 3 6

1. Business rights

application/approval

2. Environmental

application/approval

3. FS investigation

4. Detailed planning

and provisions

5. Construction/trial run

Source: Created by Study Team

(5) Project Feasibility

1) Feasibility according to technical, financial and economic analyses

This study determined the business feasibility of the establishment of a new facility (Karai 12) as

compared to the improvement of two other facilities (Karai 13, Karai 7) through the application of

technical, financial, and economical analyses. The results of these analyses indicated that the Karai 12 plan

is preferable. As laid out in Chapter 3, in order to proceed with the Karai 12 plan, enactment detailed

technical plans and facility designs is necessary. However, at present the project is not outfitted with

enough of these various documents and materials. Therefore, in order to continue advancing this project, it

will be necessary to pursue various detailed investigations. Also, this report has used substitute information

from business contacts and generalized data from related reports for the various prerequisites that are not

yet solidified in the financial and economic analyses. During detailed financing negotiations with various

financial institutions, it will become necessary to provide definitive project costs and provide a detailed

basis for such, as well as reliable contributions from business partners.

2) History of Formation of the Project and Future Intentions

IDI, a former industrial bank now working in the operation of funds and advisory business in

the environmental and renewable energy fields, approached us in December 2012 concerning

participation in mini-hydro power in Indonesia. As a result, we joined with Bumi Investco

Energi (BIE, headquarters: Jakarta), a company that invests in renewable energy, and Bumi

Hydro Engineering and Construction (BHE, headquarters: Jakarta), the construction

company that BIE established specifically for mini-hydro power projects, in concluding a

three party basic contract in October 2013 for the purposes of implementing all forms of

consulting, and including investment in the project.

12

In regard to the Karai 13 malfunction that occurred after the creation of this survey report, it

is the intent of the owner, BIE, to cover the damages using insurance. If Karai 12 will be

newly established, future funds will be focused into the construction of Karai 12, and in

regard to Karai 13 that suffered the damage, the intent is to continue to generate power

under O&M of the current facilities with the support of our company.

In regard to the new establishment of Karai 12, and taking funds into account, we intend to

make internal adjustments that will allow work to begin as quickly as possible, as well as

continuing discussions with those involved in the project to proactively contribute to new

development proposals in the future. Furthermore, we are also intending to make use of the

Ministry of Economy, Trade and Industry’s Joint Crediting Mechanism (JCM) in order to help

those involved in the project begin work on implementing a FS and commercialization

proposal.

13

(6) Technological Advantages of Japanese Firms

Considering the criteria listed below, there is a strong possibility that Japanese corporations will be

involved with the implementation of this project, so with that as a basis, we plan to work actively towards

securing their participation as investors to the project as well.

Table 6 Technical Advantageous of Japanese Enterprises

Management

Ability

Ability to consider a problem from many angles, look at the big picture, and consider

issues with the project goal in mind

Japanese project management which can control manufacturing process, product

quality, and cost until project completion

Problem-solving

Ability

Ability to solve problem areas using new ideas and ingenuity

Ability to predict and avoid long term issues, not just problems at hand

Engineering

ability

Ability to design hydroelectric plans to increase output and yearly power generation

Use of cutting edge fluid dynamics for water turbine performance analysis to increase

turbine performance and power output

Technical

competitiveness

Designs, production, repair, and maintenance technological strength, wide scope for

choosing materials

O&M technological ability for increased reliability and lifespan

High Performance assessed by life cycle cost

Ability to create superior hydraulic plans to increase output and yearly power

generation with the same drainage systems

Superior schedule management of Japanese businesses for strict observance of

construction timeline and process

Know-how and for taking into account and prevention of sedimentation and water

damage based on area terrain and environmental factors (Ensuring long term safety)

Know-how for the removal of sand and grit in rivers with high quicksand content

Overseas order

history

Experience with investment and engineering for overseas mini-hydro power projects

Experience with supplying Japanese-made turbines for overseas mini-hydro power

projects

Funding ability Experience financing overseas mini-hydro power projects (Investment, Mezzanine

Financing)

Alliance building and consultation with JICA overseas investment program’s Jakarta

office concerning future financing prospects with this project

Source: Created by Study Team

14

(7) Maps of Project Target Location

Source: Created by the Study Team

Chapter 1 Overview of Host Country and Sector

1-1

(1) Economic and Financial Situation of Host Country

1) Economic Overview

After the Asian financial crisis in July of 1997, Indonesia agreed to the IMF, and carried out a reform of the

banking and business sectors. With the stabilization of the political, social, and financial situation, as well

as an increase in consumer spending, the 2001 economic growth rate of 3.6% increased to over 5.5% and

even into 6% after 2005. Though it was affected somewhat by the 2009 world financial and economic

crisis, it still maintained a relatively high rate of 4.6%, and 2011 and 2012 saw healthy growth rates of

6.5% and 6.3% respectively. In addition, in 2010, the Gross Domestic Product (hereafter referred to as

GDP) per capita broke 3000 dollars.

Though consumer spending stays strong, the 2013 Indonesian economy has seen a slowing in investment,

and the real GDP growth rate has dropped below 6% for the first time in four years. The initial growth rate

of 6.0% in 2014 was adjusted downwards to 5.5% in May, but domestic demand is projected to hold up

economic growth, and the growth rate will be maintained (Table 1-1-1).

Table 1-1-1 Basic Economic Indicators

Units 2009 2010 2011 2012 2013

Total GDP Million

dollars

538,613 709,342 845,573 877,801 870,275

GDP Growth Rate ％ 4.629 6.224 6.486 6.264 5.781

GDP Per Capita dollars 2,298.82 2,984.93 3,508.16 3,590.66 3,509.82

Inflation Rate ％ 5.047 5.14 5.344 3.981 6.413

Unemployment Rate

(Urban) ％ 7.87 7.14 6.56 6.14 6.25

Exchange Rate

（Period end、

Rupiah/Dollar）

3,184.69 3,406.04 3,606.57 3,698.24 3,802.49

Balance of External Debt Million

dollars

172,871 202,413 225,375 252,364 264,060

% of GDP Applied to

External Debt ％

32.10 28.54 26.65 28.75 30.34

Source: IMF World Economic Outlook Database October 2014

Balance of External Debt provided by the Central Bank of Indonesia

On October 20th, 2014, Joko Widodo (hereafter referred to as Joko) assumed office as the 7th president,

establishing a new political administration. The administrations main economic policies revolve around

reduction of fuel subsidies, increasing infrastructure, administrative reform, elimination of corruption,

simplifying the investment process, continued export control of mineral resources, increasing regulation of

foreign investment in natural resources and finance, and the increasing of minimum wage. By decreasing

1-2

the large burden of fuel subsidies, the government will be able to redirect those funds to necessary social

welfare expenditures, such as infrastructure, education, and health care. Additionally, the resulting

increased cost of fuel will result in decreased oil consumption and imports, help reduce the current account

deficit, and help stabilize the economy

Additionally, the Indonesian government is working towards strengthening the response to issues such as

delays in policy enactment, and operating environment for businesses, as well as showing an aggressive

stance towards simplifying and shortening investment procedures (Especially the Energy and Mineral

Minister Sudirman’s declaration regarding the simplification of approval for energy investment), and

infrastructure development of roads, rail, and ports.

2) Trade

Indonesia’s amount of trade increased up to 380,000,000,000 dollars in 2011, where it has since stabilized.

The amount of exports had been greater than imports until 2011, but in 2012 an excess of imports caused

the trade balance to enter a deficit (Table 1-1-2). Indonesia’s major exports (2012) are comprised of 34%

natural resources, including oil and gas (19.5%), mineral fuels (13.9%), and animal and plant oil (11.2%).

On the other hand, major imports include oil and gas (22.2%), general machinery/equipment (14.8%), and

machines and electrical parts (9.9%). Oil and gas are both the primary import and export. In 2013, the

main partner countries by export were Japan (14.8%), China (12.4%), and Singapore (9.1%), and imports

were mainly from China (16.0%), Singapore (13.7%), and Japan (10.3%), but there has recently been

striking growth in China, so current numbers may differ.

Table 1-1-2 Trade Balance (unit: million dollars)

2009 2010 2011 2012 2013

Total Exports 116,510 157,779 203,617 190,032 182,552

Total Imports 96,829 135,663 177,299 191,691 186,629

Trade Balance 30,932 30,627 34,783 ▲8,619 ▲5,834

Foreign

Currency

Reserve 63,563 92,908 106,539 108,837 96,364

Source: Central Bank of Indonesia (Trade Balance)

3) Investment from Overseas

According to the Indonesia Investment Coordinating Board (BKPM), in 2013 the inward direct investment

(execution based) saw a 16.5% increase from the previous year to 28.6175 billion USD, and continued the

previous year’s trend of breaking record highs. Going by industry, mining was the greatest at 16.8%

overall, followed by transportation, metals, machines, electrical machinery, chemistry and medical supplies,

electric/gas/water, foodstuffs, and agriculture (Table 1-1-3). By country, Japan’s 4.7129 billion USD just

outpace Singapore’s 4.6708 billion USD, taking the lead position.

1-3

Table 1-1-3 Foreign Direct Investment (Execution Based)

(Unit: Million Dollars)

Sector 2012

2013

Component

Ratio Growth Rate

Farming and Fisheries 1,678 1,655 5.7 ▲1.3

Mining 4,255 4,816 16.8 13.2

Manufacturing 11,770 15,859 55.4 34.7

Electricity, Gas, Water 1,515 2,222 7.8 46.7

Construction 240 527 1.8 119.9

Trade, Repair 484 607 2.1 25.4

Other Service Related 4,624 2,933 10.3 ▲36.6

Total 24,565 28,618 100.0 16.5

Source: Indonesia Investment Coordinating Board（BKPM）

4) Industrial Composition

Looking at the 2013 industrial composition of Indonesia, manufacturing is the greatest, comprising a 24%

share of GPD. This is followed by farming and fisheries (14.4%), commerce, hotel, food and drink (14.3%),

mining (11.2%), with other service related industries at 11%. The amount in 2013 has increased somewhat

from 2012, but overall the ratios remain almost the same.

Table 1-1-4 GDP by Sector

(Unit: Billion Indonesian Rupiahs)

Sector 2012 2013

Amount Component Ratio Amount Component Ratio

Farming and Fisheries 1,193,452.9 14.5% 1,311,037 14.4%

Mining 970,824 11.8% 1,020,773 11.2%

Manufacturing 1,972,524 24.0% 2,152,593 23.7%

Electricity, Gas, Water 62,235 0.8% 70,075 0.8%

Construction 844,091 10.3% 907,267 10.0%

Commerce, Hotel, Food/Drink 1,148,691 14.0% 1,301,506 14.3%

Transportation, Communication 549,105 6.7% 636,888 7.0%

Finance, Real Estate, Services 598,523 7.3% 683,010 7.5%

Other Service Related 889,994 10.8% 1,000,823 11.0%

Total 8,229,439 100.0% 9,083,972 100.0%

Source: Created by the Study Team with data from Statistics Indonesia

5) Fiscal Balance

Indonesia’s fiscal balance is in a chronic state of deficit. Total annual income is transitioning to around

1-4

16% of GDP, while total annual expenditures are around 18%. A deficit like this one of 1-2% is beginning

to approach the upper limit (3.0%) proscribed by national law (Table 1-1-5).

Table 1-1-5 Fiscal Balance

(Unit: Billion Indonesian Rupiahs)

2009 2010 2011 2012 2013

Annual Income 1,211,000 1,338,000 1,502,000 1,635,000 Annual Income

GDP% 16.3 16.2 15.9 16.3 GDP%

Annual Expenditures 1,295,000 1,491,000 1,726,000 1,877,000 Annual Expenditures

GDP%） 17.4 18.1 18.3 18.7 GDP%

Fiscal Balance ▲84,000 ▲153,000 ▲224,000 ▲242,000 Fiscal Balance

GDP% ▲1.1 ▲1.9 ▲2.4 ▲2.4 GDP%

Source: Indonesia Ministry of Finance, End of August, 2014

6) Population

Indonesia’s population is approximately two times that of Japan’s, at over 247,000,000 people. After China,

India, and the United States of America, it is the world’s fourth largest country. The average age is 28.9

years old, with those under 30 making up half of the population; a large business market. The main ethnic

group is Malay (A classification of about 300 ethnicities, including Javanese and Sundanese). About 60%

of the total population of Indonesia lives on Java, which only makes up 7% of the total land area. There is

a continuing trend of steady population increase, and in the ten years from 2010-2020 there is a projected

growth of 30,000,000 people. The population is estimated to increase to 300,000,000 people by 2050. It is

one of the countries with the highest long-term market potential in all of East Asia (Fig. 1-1-1).

Fig. 1-1-1 Indonesia Population Pyramid (2014)

Source: Central Intelligence Agency

Population

(million)

Population

(million)

Age

1-5

Approximately half of this population (50.7% in 2011) is found in urban areas. Indonesia’s middle and

wealthy class are projected to double to 141,000,000 people by 2020, and the number of cities with

500,000 or more middle or wealthy class residents is also expected to double to 541.

According to the Asian Development Bank’s “Asian Development Outlook 2013,” in the three years

leading up to 2012, 8,600,000 people were able to escape from poverty due to the continued high growth

rate of over 6%. However, 29,000,000 people still fall below the poverty line, and 30,000,000 people live

very close to it. 60% of employed persons fall within the informal sector (work with no official

employment contract or insurance), and are resigned to a low income. There has been a trend in recent

years of an increasing income divide, and the Gini coefficient, a metric for measuring income gap, has

risen from 0.35 in 2008 to 0.41 in 2011.

1 Boston Consulting Group, Household Expenditures Database (2012), Indonesia Central Bureau of Statistics (BPS)

1-6

(2) Outline of Project’s Target Sector

1) Electrical Power Situation in Indonesia

With Indonesia’s recent rapid economic growth, it has become the focus of attention as a promising

overseas investment. The lack of energy is becoming more and more serious, as the peak energy demand in

2011 reached 26,644 megawatts, as opposed to the current max capacity of 32,898 megawatts. This puts

the reserve rate at a mere 23%; much lower than the state-owned power company’s (hereafter PT. PLN)

goal of 35%. Moreover, the electrification of Indonesia was only 73% in 2011, meaning that 27% of the

countries households are still unable to use electricity. From 2010 to 2035, power capacity is projected to

increase by 9.1% yearly, and the government of Indonesia is expressing desire to continue large-scale

power development. (Fig. 1-2-1)

Fig. 1-2-1 Change in energy capacity by type

Source: Badan Pengkajian dan Penerapan Teknologi(BPPT), “Outlook Energy Indonesia 2014”

Indonesia possesses an abundance of oil, natural gas, and coal; it has depended mainly on thermal power

generation until now. However, as oil consumption has increased along with recent economic growth, it

has seen a change to a net importer of oil in 2004. At the same time, oil prices have increased, and the

Indonesian government has stated that it wishes to decrease reliance on oil2. Therefore, in order to

compensate for the high annual growth rate of power demand, the “Fast Track Program” plan to increase

large-scale power development of mainly coal and renewable energies was announced, and is currently in

progress. Specifically, Indonesia initially searched for a solution with the first Fast Track Program

(2006-2015), which was set to make all new power development with coal only. However, recent years

have seen an increase in environmental consciousness, and a change to the coal-only approach was called

for. Also, in contrast to the initial Fast Track Program in which PLN was the sole developer, the second

Fast Track Program (2010-2020) plans to proactively encourage the participation of Independent Power

2 Ministry of Energy and Mineral Resources “UPDATES ON POLICY TO PROMOTE NEW

RENEWABLE ENERGY DEVELOPMENT AND ENERGY CONSERVATIONIN INDONESIA November

2011”

1-7

Producers (hereafter IPP). The second Fast Track Program also plans to increase the use of renewable

energy sources to 18,100MW, about four times the current level3 (Table 1-2-1).

Table 1-2-1 Fast Track Program

First Fast Track Program Second Fast Track Program

Period 2006-2015 2010-2020

Development Scale 10,000MW 10,051MW

Source Breakdown Coal 10,000MW (100%) Coal 3,025MW (30%)

Gas 280MW (3%)

Geothermal 4,925MW (49%)

Hydro 1,753MW (18%)

Source: Created by the Study Team based on PLN data

Among the types of renewable energy, geothermal possesses the greatest development potential in the

world. Because of this, many enterprises, including Japanese, are engaging in excavation and various

projects to make use of Indonesia’s geothermal potential. In general however, because of the great effort

required beginning with ground surveys and stretching to the start of power generation, it is said that

geothermal development is only possible for firms with great capital strength.

Although the cost of developing hydroelectric power on a large scale with many resources is also very

costly, mini-hydro power projects of capacities under 10MW have the merits of low initial investment

costs, as well as short development timeframes. Just as explained in the following section, these two merits

make mini-hydro power a perfect renewable energy solution for a country like Indonesia that is aiming for

an increase in electrification rate (Table 1-2-2).

Table: 1-2-2 Renewable Energy Development Potential

Type Development Potential (A) Current Capacity (B) Rate (B/A)

Hydro 75,769 MW 7,571 MW 9.99%

Geothermal 29,164 MW 1,341 MW 4.6%

Biomass 49,810 MW 1,644 MW 3.3%

Solar 4.80 kWh/m2/day 42.78 MW -

Wind 3–6 m/s 1.87 MW -

Ocean 49 GW 0.01 MW 0%

Source: MEMR. “Country Report: Renewable Energy in Indonesia (2012)”

2) Energy Demand in the Sumatra Islands

The Sumatra islands, which rest in the western portion of Indonesia, have a total area of approximately 1.3

times the size of Japan, and a population of 50,000,000 people. The meager power supply and current

electrification rate of 70% serve as a hindrance to economic growth, and as power demand increases by

3 Badan Pengkajian dan Penerapan Teknologi(BPPT), “Outlook Energy Indonesia 2011”

1-8

10.5% each year, the power system is falling into a situation where even normal usage exceeds capacity

(Maximum demand of 4,662MW, PLN maximum supply capacity of 4,777MW). Reliably power supply is

becoming an urgent issue in the area.

At the time of 2012, the electrification rate of the Sumatra islands was approximately 71.7%, a

comparatively higher rate than other areas, with the exceptions of Java and Bali (Table 1-2-3). The

Sumatra power system is already somewhat developed, with a 150kV power line to join the northern and

southern areas linked on August 14th, 20074. Additionally, PLN is advancing a plan to outfit 275kV and

500kV lines as well. With this comparatively advanced power line network as evidence, it is obvious that

the islands of Sumatra are showing concrete steps to improve the electrification of the region. North

Sumatra, the target location of this project, has a comparatively high electrification rate of 84.6%, but the

prolonged shortage of power in North Sumatra has reached 200MW, and is even being taken up as a

national issue. Because of instability in the power supply, it is difficult for other Japanese firms to advance

into the area; there is truly a great need for more power there.

Table: 1-2-3 Electrification rates in the islands of Sumatra (2012)

Province Name Population

(Thousands)

Residences

(Thousands)

Electrification (%)

Aceh 4,693.9 1,105.1 88.55

North Sumatra 13,215.4 3,112.5 84.61

West Sumatra 4,957.7 1,182.5 72.98

South Sumatra 7,701.5 1,870.2 63.09

Bengkulu 1,766.8 445.5 71.02

Riau Islands 811.5 192.1 72.13

Lampung 7,767.3 1,985.0 65.29

Bangka-Belitung

Islands 1,298.2 324.6 73.94

Riau 5,929.2 1,394.7 56.52

Jambi 3,242.8 800.4 58.05

Total 51,384.3 12,412.6 71.69

Source: “PLN Statistics 2012” March, 2013

According to PLN’s “2012-2021 Energy Development Plan,” the Sumatra islands are projected to see an

average economic growth rate of 7.1% and an average annual energy demand growth rate of 8.2%

spanning the years of 2012 to 2021, reaching an energy demand of 65.4TWh in 2021. With the above

economic growth rate as evidence for projected growth in energy demand, this plan has set the target

electrification rate in 2021 at 97.6%. Additionally, the power system for the Sumatra islands is planned to

have a 59% reserve power supply at that time, primarily covering the gap with new fossil fuel-based power

4 Ministry of Energy and Mineral Resources “Minister’s Order Regarding the National Electricity

General Plan 2008-2027” November 13, 2008

1-9

sources. In particular, development is planned to center around coal as a power source, but the proposal

also includes plans to increase hydro power 1.6GW by 2021, for a total of 2.6GW, making up 15.7% of

overall power generation (Fig. 1-2-2).

This power is being distributed by a 150KV2 line that stretches from Sumatra’s north-westernmost Aceh to

its south-easternmost Kalimantan. One part of this line is designed at 275KV, and is currently being used at

150KV.

Fig. 1-2-2 North Sumatra Islands Power Demand Assessment

Source: Created by the Study Team based on the data from the local cooperation company

1-10

(3) State of Target Regions

1) Geography and Climate

Simalungun, the target region for this investigation, is located in along the eastern side of Lake Toba in the

northern part of Sumatra. It is made up of 31 districts and 367 villages (Fig. 1-3-1). Because Simalungun is

located inland, the primary transportation method is by land, and two thirds of roads are paved.

Additionally, the Simalungun Airport, which supports the region’s economic activities, is located 83km

from North Sumatra’s capital city of Medan.

The area covers 43,660 Hectares, or 6.1% of the total area of North Sumatra. It is covered mainly by

tropical rainforest, and sees an annual average rainfall of over 3,000mm, the most intense month being

September, at 465mm. On average, 15 days out of a month experience precipitation. Simalungun’s central

city of Siantar has an average high temperature of 30℃, an average low of 21℃, and an average humidity

of 85%.

Fig. 1-3-1 Investigation Target Region Map (Outline)

Source: Created by the Study Team

1-11

Fig. 1-3-2 Map of Precipitation in Sumatra

Source: Badan Meteorologi, Klimatologi dan Geofisika

2) Land Usage

Simalungun possesses 438,660 hectares of land, one third of which is forested, with 22.4% for

afforestation, and 6.3% being forest reserve. As for the other areas, 18.3% is used for agriculture, and

14.5% for plantations, the main produce of which is corn, palm oil, and rubber.

Table 1-3-1 Land Usage Situation

Land Usage Usage Area（ha） Usage

Rate％ Target District/Primary Agricultural Produce

Afforestation 98,200 22.39% Kingdom Kahean, Silou Kahean, Raya, Panei,

Panombeian Panei, Dolok Panribuan, and so on

Afforestation

Restriction 10,842 2.47% Bosar Maligas, Hutabayu King,Hatonduhan

Forest Reserve 27,668 6.31%

Bund Silimahuta, silimakuta, Dolok Silou, Parba,

Dolk Pardamean, Haranggaol Horizon, Purba, Silaou

Khaeda

Conservation 2,031 0.46% Purba, Silaou Kahean, Dolok Silou

Agriculture 80,220 18.29% Cassava, Corn, Beans, Sweet Potatoes

Plantation 63,671 14.51%

Palm Oil, Rubber, Cocoa, Coffee, Coconuts, Areca

Palm, Cinnamon, Clove, Hazelnuts, Pepper, Palm

Sugar, Vanilla

Source: Simalungun Central Bureau of Statistics (2012)

1-12

3) Population

Simalungun’s population is approximately 830,000 people (2012), with 210,000 households, and an annual

average population growth rate of 1%, a leisurely continued increase. This mirrors the 1% growth rate of

the Sumatra province in which it resides. The city of Siantar, which is located close to this project’s target

location, has a population of 64,000 people (2012), comprising 7.7% of Simalungun’s total population

(Table 1-3-2). The employment rate has increased by 1.4% from 2010 to 2012, and the unemployment rate

has also decreased by 1%.

Table 1-3-2 Simalungun Population by Area

Area Male Female Total Percent of

Population

Bandar 32,354 33,200 65,554 7.89%

Siantar 31,886 32,267 64,153 7.72%

Soil Java 22,969 23,976 46,945 5.65%

Ujung Padang 20,449 20,335 40,784 4.91%

Dolok Stone Nanggar 20,125 19,705 39,830 4.79%

Bosar Maligas 19,795 19,762 39,557 4.76%

Buts Dolok 19,836 19,342 39,178 4.71%

Mount Malela 16,579 16,862 33,441 4.02%

Pamatang Airport 15,456 15,979 31,435 3.78%

Raya (Gov’t Office) 15,789 15,589 31,378 3.78%

Other 198,633 200,098 398,731 47.98%

Simalungun（Total） 413,871 417,115 830,986

Source: Simalungun Central Bureau of Statistics (2012)

With the slight decrease in unemployment, the five years from 2008-2012 saw a 4.8 decrease in poverty as

well (Table 1-3-3).

Table 1-3-3 Simalungun Poverty Rate

2008 2009 2010 2011 2012

Poverty Rate

(%) 14.75 12.67 10.73 10.21 9.96

Source: Simalungun Central Bureau of Statistics (2012)

4) Simalungun Power Demand

In Simalungun’s main city of Siantar has fallen into a serious energy shortage, with the downtown area

experiencing at least one power outage per day.

In Simalungun is the Sei Mangkei special economic zone, which is slated for completion in February of

2015. It rests 120km from the capital Medan, and 145km from Sumatra’s northeastern port town of

1-13

Belawan, and has an area of 2,002 hectares (Fig. 1-3-3). Sei Mangkei is part of the “Masterplan for

Acceleration and Expansion of Indonesia’s Economic Development” (MP3EI), an economic stimulation

project which plans to invest 3.8 trillion JPY (400 trillion IDR) in infrastructure projects and natural

resource processing facilities. At present, the government-affiliated organization PTPN (natural palm oil),

and the foreign firm Unilever have been drawn to the area, the plots of which will comprise 1,600 hectares.

Further development from foreign firms is expected, and a power demand of 40MW is projected from the

economic zone.

Fig. 1-3-3 Map of Sei Mangkei Special Economic Zone (Outline)

Source: Created by the Study Team

5) Industry

The primary industries of Simalungun are agriculture, cultivation, and service, the main products of which

are palm oil, cocoa, and coffee, as well as rice, corn, and cassava (Table 1-3-4).

Table 1-3-4 Agricultural Produce Yield of Simalungun

Agricultural

Produce

Harvest Area

(Hectare) Volume (Tons)

Yield

(Kilo/Hectare)

Rice 79,113 440,992 57.57

Rice Crops 13,198 40,189 30.45

Corn 64,643 383,813 59.37

Beans 415 334 8.04

Peanuts 1,974 2,079 10.53

French Beans 298 329 11.04

Cassava 11,693 336,555 287.83

Sweet Potatoes 3,469 42,053 121.23

Other Vegetables 16,647 167,164 10.04

Pineapples － 50,791 －

1-14

Bananas － 48,697 －

Oranges － 15,698 －

Other Fruits － 19,480 －

Source: Simalungun Central Bureau of Statistics (2012)

6) Resources

Most of the forest resources are planted forests. In terms of minerals, oil production is vigorous.

Chapter 2 Study Methodology

2-1

(1) Details of Study

1) Existing Studies on this Project

North Sumatra is rich in mountainous regions, and rainfall is plentiful. It is suited area for mini-hydro

power from a geographical and climate perspective, so several mini-hydro power project plans have

already been proposed. Several studies have also been done in the target area for this project, the Karai

river basin in Simalungun.

Among these, the ones that this investigation currently possesses are laid out in tables 2-1-1 through 2-1-4.

Table 2-1-1 Summary of Existing Study Reports of Karai 12 Project

“Studi Kelayakan dan Disain Rinci PLTM.Karai12”

Created by: PT. Karai Hidro Energi

Ordered by: PT.Bumi Investco Energi

Preliminary Design Report of New Karai 12 Facility (Report heading is Feasibility, but contents are

preliminary design level). Contents are as follows:

- Target Location Power Situation - Basic Design

- Geography/Terrain Outline - Financial Analysis

- Hydrologic Characteristics Analysis

Salient points indicated in report as follows:

Headwater Level: EL.504.90m Discharge: 5.0m3/s

Tailwater Level: EL.380.20m Maximum Output: 5,000kW

Effective Head: 118.97m Yearly Output Capacity: 26,280×103kWh

PLTM Karai12 Dokumen Tender

Created by: PT.Wahana Adya Engineering Consultant

Ordered by: PT. Karai Hidro Energi

Karai 12 principal facilities detailed design blueprints. Various elements differ from the design report

above. Generator is not included.

Basic summary of the project read from design drawings is as follows:

Headwater Level: EL.559.00m *Discharge: 7.0 m3/s

Tailwater Level: EL.420.75m *Maximum Output: 7,800kW

*Effective Head: 134.55m

*: Calculated based on the design drawing by the Study Team

Source: Created by the Study Team

2-2

Table 2-1-2 Summary of Existing Study Reports of Karai 7 Project

“Studi Kelayakan dan Disain Rinci PLTM.Karai7”

Created by: PT.Wahana Adya Engineering Consultant

Ordered by: PT. Global Karai Energi

Preliminary Design Report of New Karai 7 Facility (Report heading is Feasibility, but contents are

preliminary design level). Contents are as follows:

- Target Location Power Situation - Basic Design

- Geography/Terrain Outline - Financial Analysis

- Hydrologic Characteristics Analysis

Salient points indicated in report as follows:

Headwater Level: EL.381.00m Discharge: 11.0m3/s

Tailwater Level: EL.303.20m Maximum Output: 6,760W

Effective Head: 72.45m Yearly Output Capacity: 35,530×103kWh

「Karai-7 Hydro Power Project Drawing for Construction」

Created by: Concept International

Ordered by: PT. Global Karai Energi

Karai 7 principal facilities detailed design blueprints. Various elements differ from the design report

above.

Basic summary of the project read from design drawings is as follows:

Headwater Level: EL.388.30m *Discharge: 11.0 m3/s

Tailwater Level: EL.300.45m *Maximum Output: 7,400kW

*Effective Head: 76.63m

*: Calculated based on the design drawing by the Study Team

Source: Created by the Study Team

2-3

Table 2-1-3 Summary of Existing Study Reports of Karai 13 Project

“Studi Kelayakan dan Disain Rinci PLTM.Karai13”

Created by: PT.Wahana Adya Engineering Consultant

Ordered by: PT. Global Hidro Energi

Preliminary Design Report of New Karai 13 Facility (Report heading is Feasibility, but contents are

preliminary design level). Contents are as follows:

- Target Location Power Situation - Basic Design

- Geography/Terrain Outline - Financial Analysis

- Hydrologic Characteristics Analysis

Salient points indicated in report as follows:

Headwater Level: EL.700.00m Discharge: 6.5m3/s

Tailwater Level: EL.546.50m Maximum Output: 7,620W

Effective Head: 150.70m Yearly Output Capacity: 40,000×103kWh

“Karai-13 Hydro Power Project Drawing for Construction”

Created by: PT.Bumi Hidro Engineering Construction

Ordered by: PT. Global Hidro Energi

Karai 13 principal facilities detailed design blueprints. Various elements differ from the design report

above.

Basic summary of the project read from design drawings is as follows:

Headwater Level: EL.707.80m *Discharge: 6.3 m3/s

Tailwater Level: EL.541.01m *Maximum Output: 8,600kW

*Effective Head: 155.52

*: Calculated based on the design drawing by the Study Team

Source: Created by the Study Team

2-4

Table 2-1-4 Summary of Existing Study Reports of River Diversion Plan

“Pre-Studi Kelayakan Potensi Suplesi PLTM Karai-13”

Created in 2013 by: PT.Global Hydro Energy

Ordered by: PT.Bumi Investco Energi

By diverting the two rivers in the upstream area of the Karai river (Sigambur and Pulung rivers) into the

Karai river itself, a plan to increase power output of the existing Karai 13 facility was considered. The

basic contents are as follows:

【Scheme 1】

Convey water from the adjoining river (Sigambur) to the Karai river (transbasin diversion), increasing

usable water supply.

・Sigambur river hydrologic analysis

・Investigate headrace from Sigambur to Karai river

・Investigate increasing Karai 13 power output

【Scheme 2】

In addition to Scheme 1, convey water from adjoining river (Pulung) to the Karai river (transbasin

diversion), increasing usable water supply.

・Pulung river hydrologic analysis

・Investigate routes for water conveyance from Pulung to Karai river

・Investigate increasing Karai 13 power output

【Scheme 1 and 2 Comparison】

Source: Created by the Study Team

2) Investigation Points

The above studies were mainly performed based in desk work, using maps etc. In order to determine the

feasibility of a mini-hydro power project, the following investigations were done.

① Host Country/Sector Outline

a）Laws, Regulations, Systems & Policies Study

・Study Indonesian laws, regulations, systems and policies that relate to the project. Particular

attention will be paid to those policies, laws, regulations and systems that relate to hydro power

as a source of renewable energy, either restricting or promoting it.

b）Residents, Resident’s Requirements & Industry Study

・Study the industrial, financial and social areas upon which the project may have an effect.

② Project Contents and Technological Aspect Studies

a）Project Background and Necessity Study

・Study the power situation in the target and surrounding areas, as well as project necessity.

2-5

b）Terrain and Geological Study

・Collect geological and ground condition data as well as on-site survey. Taking into account

ground conditions, investigate placement of project facilities.

c）Hydrological/Climate Study

・Collect hydrological and climate data and conduct a hydrological analysis of the rivers.

d）Power Generation Study

・Settle on a general plan for the new Karai 12 construction project.

・Investigate intake/conveyance of water from Pulung and Sigambur rivers and settle on a general

plan for the project to strengthen the power output of Karai 13 and Karai 7 facilities.

・Conduct a comparative analysis of the Karai 12 new construction plan as opposed to the Karai

13 and Karai 7 strengthen power output plan.

e）Power Facilities Planning Study

・Conduct a general civil engineering study.

・Generator general study and conduct a study concerning the participation of Japanese firms.

・Conduct a study and general analysis of existing systems.

・Conduct a construction planning study.

・Settle on a plan for general maintenance management.

f）Alternative Energy Study

・Study natural energies that have the potential to be a substitute for hydro power, such as wind,

solar and geothermal energy.

The results of these studies will be complied based on the “Report Generation Criteria.”

2-6

(2) Study Methodology and System

The portion of this project conducted in Japan followed the pattern of materials gathering and organizing,

calculation and computation, analysis, and report creation. In Indonesia, an on-site survey as well as visitation of

related agencies will be conducted.

When conducting the study, the following points were especially kept in mind.

・ Hydraulic studies will be enacted to calculate FIRR and EIRR to ensure power generation capacity, the

key to this project.

・ To ensure stable continued operation of facilities, ground strength, as well as river water flow will be

assessed. Counter measures for natural disasters such as floods and earthquakes will be considered.

・ Consider environmental and social impact on the local area and residents who live along the river.

・ Create a plan for the construction of the power production facilities and assess the economic and

business value of the project based upon financial analysis.

・ In order to perform a comparative analysis of the effectiveness of the power generation, make a thorough

investigation of the site conditions (head/flow).

The Study’s system is laid out in Fig. 2-2-1. It is made up of three companies, CHODAI, IDI infrastructures Inc.,

and KISO-JIBAN CONSULTANTS CO., LTD.

2-7

Fig. 2‐2‐1 Study System

Source: Created by the Study Team

2-8

(3) Investigation Schedule

Information gathering, consolidation, computation, breakdown, and analysis in Japan were completed from

September 26th through December 12th, 2013. The report was created from December 15th 2013 through February

27th, 2014. The onsite study was performed following the schedule below.

Table 2-3-1 Investigation Schedule

Item

2014

Sep Oct Nov Dec

2015

Jan Feb

【Site Survey】

1. First Site Survey

(Basic materials gathering, site

survey)

2. Second Site Survey

(Basic materials gathering, site

survey)

3. Third Site Survey

（Field Report Meeting ①）

4. Forth Site Survey

（Field Report Meeting ②）

【Work in Japan】

Execution Planning, Preparation

1. Host Country/Sector Outline

2. Project Contents and

Technological Aspect Studies

1. Environmental and Social

Analysis

2. Economical and Financial

Analysis

3. Risk Analysis

4. Report Draft Creation

5. Final Report Creation

Source: Created by the Study Team

2-9

Table 2-3-2 First Site Survey Results Outline (Site Inspection)

Date/Time Site Name Goal, Contents Results, etc.

10/7 (Tues)

PM

BIE Siantar

Office

Confirm survey

method with BIE,

information gathering

・Obtained local information, existing

materials

・Learned about geological/geographical

characteristics, state of construction,

photos

10/8 (Wed)

Karai 13, Karai 7 Survey existing Karai

13 and Karai 7 plants

・Sight investigation of existing facilities,

ground condition survey, surrounding

plant life survey

・Learned about geological/geographical

characteristics, state of construction,

photos

10/9 (Thurs)

Pulung River Site survey of location

for diverting river to

strengthen output of

existing facilities

・Investigated geological and plant life

situation at planned site of Pulung River

intake weir

・ Learned about terrain and ground

conditions, photos

10/10 (Fri)

Buntu Siantar

Village

Site survey of site for

new Karai 12 plant

・ Survey surrounding plant life,

geological features, and rivers

neighboring Karai 12 plant

・ Learned about terrain and ground

conditions, photos

10/11 (Sat)

AM

BIE Siantar

Office

Collected existing

reports/other materials

・Collected Karai 12 existing reports

・ Learned about terrain and ground

conditions, photos

Source: Created by the Study Team

2-10

Table 2-3-3 First Site Survey Results Outline (Visits to Related Agencies)

Date/Time Location Goal, Contents Results, etc.

10/7 (Tues)

PM

PLN Medan

・Greeting

・Request Survey Cooperation

10/8 (Wed)

AM

Simalungun ・Greeting

・Confirm Survey Objective

・Received list of potential

locations for mini-hydro

power projects

10/8 (Wed)

PM

BIE Siantar ・Greeting

・Confirm Survey Objective

・Received agreement of

cooperation

10/9 (Thurs)

PM

Japanese

Consulate General

Hamada, Suzuki

・Greeting

・Confirm Survey Objective

10/10 (Fri)

JICA

Hattori, Juraku

・Greeting

・Confirm Survey Objective

10/10 (Fri) Japanese Embassy

Kitamura

・Greeting

・Confirm Survey Objective

10/10 (Fri) JETRO

Aizawa

・Greeting

・Confirm Survey Objective

10/10 (Fri) Ministry of Energy

and Mineral

Resources

Goto

・Greeting

・Confirm Survey Objective

10/10 (Fri) BIE Jakarta 1. Greeting

2. Survey Basic Explanation

3. Member introductions, execution

system

4. Specification document

explanation, request for site survey

assistance (various supervisors)

5. Confirm communication method

・Received agreement of

cooperation

Source: Created by the Study Team

2-11

Table 2-3-4 Second Site Survey Results Outline

Date/Time Location Goal, Contents Results, etc.

11/10 (Mon) Wiratman ・Confirm material

collection procedure

・Confirm materials in

possession

・Confirm Survey

Schedule

11/11 (Tues) In-transit all day

11/12 (Wed) Simalungun

National Ministry for

Spatial Planning

Ministry of Water

Resources

Ministry of the

Environment

Central Bureau of

Statistics

・Collect materials on

environment/society

・Obtained documents on the area,

population, main industries, climate,

etc. of the Silou Kahean area of

Simalungun

11/13 (Thurs) Neighboring

Communities (Bunta

Siantar、Dolok Marawa)

Nature Conservation

(Dolok Tinggi Raja)

・Local Resident

Hearing

・Confirm local

community state of

affairs

・Confirm state of

infrastructure

・Understood Pulung river usage

situation

・Understood state of private water

supply, servicing time period, cost,

usage system, etc.

・Understood nature conservation

location, situation

・Photos of state in communities

・ Village’s middle-period

development plan

11/14 (Fri) Simalungun

National Ministry for

Spatial Planning

Ministry of the

Environment

North Sumatra

Ministry of Water

Resources

・Collect materials on

environment/society

・Land use plan figures

・Forest division figures

・Existing reports

Source: Created by the Study Team

2-12

Table 2-3-5 Third Site Survey Results Outline

Date/Time Location Goal, Contents Results, etc.

12/19 (Fri) BIE Jakarta ・Survey progress report

and explanation of result

trends

・Explained to BIE the results of the

survey, and were understood.

Source: Created by the Study Team

Table 2-3-6 Forth Site Survey Results Outline

Date/Time Location Goal, Contents Results, etc.

1/15

09:30-11:30

Japanese Consulate

General

Mr. Hamada, Mr.Suzuki

Survey progress report

and explanation of

result trends

Report Performed

1/19

13:00-15:00

BIE Siantar Office Survey progress report

and explanation of

result trends

Report Performed

1/21

10:00-11:00

Japanese Embassy

Mr. Kitamura

Survey progress report

and explanation of

result trends

Report Performed

1/21

13:00-14:00

JETRO

Mr. Aizawa

Survey progress report

and explanation of

result trends

Report Performed

1/21

15:00-16:00

JICA

Mr. Hattori, Mr. Juraku/

Survey progress report

and explanation of

result trends

Report Performed

1/21

17:00-18:00

Ministry of Energy and

Mineral Resources

Mr. Goto

Survey progress report

and explanation of

result trends

Report Performed

Source: Created by the Study Team

Chapter 3 Justification, Objectives and Technical

Feasibility of the Project

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(1) Project Background and Necessity

1) Project Scope

This study reviewed the existing plans for Karai 12 mini-hydro power development at the Pulung River in

Simalungun, North Sumatra, and compared alternative plans to divert the upper-stream portion of the Pulung

River to the adjacent Sigambur and Karai Rivers, strengthening the output of the Karai 13 power generation

facility as well as the Karai 7 facility still under construction. The location of the project is shown in Figure

3-1-1.

As figures 3-1-2 and 3-1-3 show, the plan for Karai 12 situates it downstream from the diverted rivers,

meaning that both solutions cannot coexist. As such, this survey will evaluate the techniques necessary, the

environmental impact, and the economics of each plan and determine which plan is most feasible for this

project.

In this report, the plans under consideration shall be classified as Project Plan 1 and Project Plan 2, as below.

- Project Plan 1: Development of new Karai 12 power plant.

- Project Plan 2: Power uprating of Karai 7 as well as Karai 13 via river diversion.

Fig. 3-1-1 Project Location

Sumatra Island

Medan

North Sumatra Province

Source: Created by the Study Team

3-2

Fig. 3-1-2 Project Plan 1 Summary

Source: Created by the Study Team

Fig. 3-1-3 Project Plan 2 Summary

Source: Created by the Study Team

Karai13 Powerplant

（Existing）

Karai7 Powerplant （Existing）

Puling River

Sigambur River

Karai River

Plan 1 Construction of new

Karai 12 Powerplant

Karai12 Powerplant （New construction）

Ⓖ

Plan 2

Power uprating of existing

Karai13 and Karai7 Powerplant

Pulung River Sigambur River

Karai13 Powerplant （Power uprating）

Karai7 Powerplant （Power uprating）

Pulung River Waterway

Sigambur River Waterway

Ⓖ

Ⓖ

Karai River

Ⓖ

Ⓖ

3-3

2) Supply and Demand for Project’s Core Products and Services

The power generated by this project will be sold primarily to PLN. At first the Indonesian government

planned to enact the “Fast Track Program,” which involved only the establishment of new coal-fired power

plants. However, in recent years, with the increase of environmental awareness, as well as large delays in

development and construction have caused them to reconsider their coal-centered stance. The new, second

Fast-Track Program (FTP-2) has been established, which considers the aggressive use of not just PLN, but

also Independent Power Producers (IPP) as well. This second Fast-Track Program incorporates renewable

energies such as mini-hydro power, and aims to quadruple the current power generation capacity to

18,100MW by 2030. The same program, while beginning the development of 1,204MW of hydroelectric

power generation, has introduced the FIT system, a long term fixed-price contract for selling power to PLN,

to which mini-hydro power projects are also subject.

The Ministry of Energy and Mineral Resources announced the new FIT (Feed-in Tariff) system for

mini-hydro power projects in May 2014. According to this plan, the selling price to PLN will be

IDR1,182.5/kWh from the commencement of power generation on the island of Sumatra for a period of 8

years, with the price dropping to IDR750/kWh from year 9 onward. The initial selling price is significantly

higher than the current selling price of IDR787/kWh. It can be said that this is another factor driving the

government to eagerly promote mini-hydro power, which can be used as a base supply.

The 2,002ha special economic area of Sei Mangkei, scheduled to be completed in February 2015, lies in

Simalungun, the target of this survey. Currently, Indonesia’s state-run business PTPN (palm oil) as well as

foreign capital group Unilever have been attracted to the area, but more foreign capital groups are expected

to be drawn to the area, creating demand for an estimated 40MW.

3) Current Situation Analysis, Future Predictions (Including Demand Predictions), and Potential Problems if

Project is not Executed

a) Current Situation Analysis

Indonesia’s population is estimated at over 247 million people, or roughly double that of Japan. It is the

fourth largest population, behind only China, India, and the United States, with an average of 28.9; those

under 30 make up half of the population—a large business market. There is a continuing trend of steady

population increase, and in the ten years from 2010-2020 there is a projected growth of 30 million people.

The population is estimated to increase to 300 million people by 2050.

Furthermore, the economic growth rate of 3.6% in 2001 has ballooned to 5.5~6% in the years since

2005, and even after the effects of the financial and economic crisis of 2009, retains a comparatively

high 4.6% growth rate. In 2011 it was 6.5%; in 2012 it was 6.3% with bullish market growth. 2013 saw

3-4

growth of 5.8%, and 2014 growth is estimated to hit 5.5%, with domestic demand continuing to lead and

maintain robust market growth.

b) Future Predictions

In addition to Indonesia’s economic performance mentioned above, the nation’s peak energy demand of

26,246MW in 2010 is expected to reach 59,863MW by 2019—a rise of 33,617MW that is comparable

to the total peak demand of 2011. In order to meet the extra 3,000MW/year demand, it is estimated that

an increase in power plant output to 5,500 MW/year will be required. Coal, geothermal, and gas, as well

as hydroelectricity, are expected to meet this voracious demand for energy; both geothermal and

hydroelectricity are expecting to triple their 1business.

North Sumatra’s power demand is estimated to increase about 10% every year. There is a gap between

current power output capabilities (2012: 1,549MW) and the projected peak demand in 2022 (3,504MW)

of almost 2,000MW. While the estimated peak demand in 2022 is 1.88 times that of the demand in

2013; a very serious shortage of power.

Table 3-1-1 Peak Electricity Demand Forecast in North Sumatra Province

Year 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022Peak ElectricityDemand

MW 1,455 1,607 1,785 1,981 2,194 2,431 2,691 2,966 3,250 3,504

Demand Growth fromprevious year

MW 10.4 11.1 11.0 10.8 10.8 10.7 10.2 9.6 7.8

-ditto- % 152 178 196 213 237 260 275 284 254

Source: Created by the Study Team based on the data from the local cooperation company

c) Potential Problems if Project is not Executed

As desire increases for coal, geothermal, gas, and hydro power to cover the energy demand, if this or

some other energy project is not implemented, it is clear that there will be a very severe electricity

shortage. The prolonged shortage of power in North Sumatra has reached 200MW, and is being taken up

as a national issue. Due to instability in the power supply, it is difficult for other Japanese firms

exploring the area to make inroads, and the demand for power continues to grow in this region.

4) Results and Effects if Project is Executed

a) Direct Results/Effects the Area Will Enjoy

The power supply increase this project will provide cannot resolve the current electricity shortage on the

entire island, however it will be of great benefit to the target area (Karai). The Karai area this project

will supply has a peak demand of 25-28MW, with an expected additional 40MW of industrial electrical

demand by the time this project is completed, essentially making local production for local consumption

feasible.

1 "2010 Indonesia State of Electrical Power Survey, June 10, 2011 Japan Electric Power Information Center, Inc.

Electric Power International Cooperation Center"

3-5

In an area with such stringent supply and demand issues, the construction and management of power

equipment is one of the most important issues, and a project that builds the foundation for any and all

economic activity. Creating a reliable supply of electricity helps attract foreign businesses, and

construction and O&M involved in this project will not only create jobs, but contribute to the area’s

economic development.

b) Environmental Improvements

Contribution to the fight against Climate Change: As a green renewable energy source,

hydroelectricity’s generation process emits no CO2, making it an effective countermeasure against

climate change and other global problems.

Hydroelectricity is infinitely renewable and entirely domestically produced. It contributes to energy risk

management by guaranteeing the nation a minimum supply in emergency situations. It is also one part

of a comprehensive, long-term energy policy that can promote the introduction and development of

fossil-fuel alternatives.

c) Benefits for Japanese Companies

North Sumatra is blessed with woodland resources, and the palm oil, natural gum, coffee, and other

products at the center of the plantation business are also the focus of exports as well. At the heart of the

manufacturing industry lie cooking oils, feed, and several gum products, all of which make this area

vital to the progress of Japanese businesses.

With the stable supply of power this project plans to provide, the North Sumatra region can contribute to

the advancement of Japanese businesses in a big way. The achievements and successful operation of

Asahan Aluminum are a prime example of this.

5) Comparison of Proposed Project with Other Options (Alternative Energy Study)

In North Sumatra we have investigated the feasibility of solar, wind, and geothermal as alternative energies,

and weighed the benefits of each against those of this project. The result was that either of the plans

presented here would be more beneficial compared to another source of alternative energy.

The results of each energy comparison are listed below.

a) Solar Power

According to ETC Energy, North Sumatra receives approximately 4.5-5.0 kWh/m2 worth of sunlight per

day (Figure 3-1-4).

3-6

Fig. 3-1-4 Average Amount of Insolation in Indonesia

Source: ETC Energy

Since the output of solar cells (kW) is calculated by multiplying together the conversion efficiency of

the cells, the area of the cells (m2), and the amount of sunlight on a typical day (kW/ m2), if we set the

conversion efficiency arbitrarily at 10% the amount Q of electricity generated in a day is

Q(kWh/m2)=0.1×1×5.0≒0.5(kWh/m2)

The estimated yearly output increase for Plan 1 of this project is 66,030×103kWh/y, while that of Plan 2

Case 1 is 13,033×103kWh/y and Case 2 is 50,374×103kWh/y. The Case 1 of Plan 2 of this project means

increasing generating annual energy without additional power plant construction, thus this case does not

include comparative study with solar power.

By comparison, if the same amount were to be generated using solar power, you would need an area of

350,000 m2 for Plan 1, and 276,000 m2 for Case 2 (Table 3-1-2). As Sumatra is quite vast, finding a site

would not be a problem. However, solar power requires about 1.21 billion JPY worth of construction for

every 2,000 kW (Table 3-1-3); the construction cost of each plan’s output increase as generated by solar

power is shown in Table 3-1-2.

As the result of the cost comparative study, the cost of solar panels for Case 2 of Plan 2 far exceeds the

construction cost of mini hydro power project even the cost of this case is lower than another case,

whereas the construction cost for solar power jumps up to roughly 3.4 billion JPY from the cost for

small hydro power of 2.2 billion JPY.

According to the above, each plan in this project is more beneficial than solar power.

3-7

Table 3-1-2 Current Project and Solar Power Comparison

Study Plan Plan 1 Plan 2

Study Case Case 2

Output Increased kW 9,000 5,700

Generating Energy Increased peryear ×103kWh/y 64,030 50,374

Generating Energy Increased perday

kWh/day 175,000 138,000

Construction Cost JPY 1,562,849,200 2,238,495,100

Necessary Area for Solar Panel m2 350,000 276,000

Construction Cost of Solar Power JPY 5,445,000,000 3,448,500,000*Output increased in Case 1 is created from

the generating energy increased.

Source: Created by the Study Team

Table 3-1-3 Solar Power (2,000kW) Project Estimated Cost Conditions

Projected Items Projected Costs Base Calculations

Init

ial

Inves

tmen

ts Equipment (Solar Panels) 780,000,000 JPY 390×103JPY/kW×2,000kW

Equipment (Other) 280,000,000 JPY 140×103JPY /kW×2,000kW

Facility Construction 154,000,000 JPY 77×103JPY /kW×2,000kW

Total 1,210,000,000

（1.21 billion JPY） ―

Source: Created by the Study Team based on data from the Ministry of the Environment

b) Wind Power

Medan, located in the northern part of Sumatra, has an average wind speed of 2.5 m/s (Table 3-1-4). As

wind power generally requires average wind speeds of more than 6 m/s, this area cannot achieve wind

speeds great enough for the generation of electricity, and is therefore not suitable for wind power.

Table 3-1-4 Average Yearly Wind Speed in Medan

Anuual Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

km/h 9 8 12 9 9 9 9 9 9 9 9 8 8m/s 2.5 2.2 3.3 2.5 2.5 2.5 2.5 2.5 2.5 2.5 2.5 2.2 2.2

Source: Created by the Study Team based on data from Weatherbase

c) Geothermal Power

Indonesia boasts the second largest geothermal resources in the world, with the potential to generate

roughly 27,790MW~28,500MW (Figure 3-1-5). Sumatra itself boasts geothermal resources of roughly

12,778 MW (Table 3-1-5), so there is plenty of geothermal potential in the region.

3-8

Fig. 3-1-5 Indonesia’s Geothermal Potential

Source: “Geothermal Roadmap” (2011, IEA)

Table 3-1-5 Geothermal Potential of Each Island

Speculative Hydrothetical Possible Probable Rroven

1 Sumatera 90 3,089 2,427 6,867 15 380 12,778

2 Java 71 1,710 1,826 3,708 658 1,815 9,717

3Bali-Nusa

Tenggara28 360 417 1,013 0 15 1,805

4 Kalimantan 12 145 0 0 0 0 145

5 Sulawesi 65 1,323 119 1,374 150 78 3,044

6 Maluku 30 545 97 429 0 0 1,071

7 Papua 3 75 0 0 0 0 75

Total 299 7,247 4,886 13,391 823 2,288 28,635

TotalNo IslandNumber of

Location

Potential Energy (Mwe)

Resources Reserve

Source: Created by the Study team based on MEMR data (2012)

According to the NEDO 2nd Edition Renewable Energy Technology White Paper (2014), geothermal

power construction costs for flash-steam plants are generally 2,000~4,000 USD/kW. The construction

cost of each plan’s output increase as generated by geothermal power is shown in Table 3-1-6 below.

3-9

Table 3-1-6 Current Project and Geothermal Power Comparison

Study Plan Plan 1 Plan 2

Study Case Case 2

Output Inceased kW 9,000 5,700

Construction Cost JPY 1,562,849,200 2,238,495,100

Construction Cost of GeothermalPower (Upper Limit)

USD 36,000,000 22,800,000

Construction Cost of GeothermalPower (Lower Limit)

USD 18,000,000 11,400,000

Construction Cost of GeothermalPower (Upper Limit)

JPY 4,248,000,000 2,690,400,000

Construction Cost of GeothermalPower (Lower Limit)

JPY 2,124,000,000 1,345,200,000

*Output increased in Case 1 is created from

the generating energy increased.

Source: Created by the Study Team

These costs exceed the construction costs of Plan 1, but are equal to or lower than the cost of Plan 2

Case 2, and overall lower than Plan 2 Case 1.

However, the lead time on the development of geothermal power is typically 10 years or more, and

requires large sums of money for the drilling of several bore holes during the exploratory phase. This is

creating a lot of discussion about the big risks of geothermal power. As a result, all plans included in the

current project provide more benefits than geothermal power.

3-10

(2) Increased Rate of Energy Consumption and Rationalization

We believe it is possible to promote smarter, faster energy use in Indonesia through the increased use of renewable

energy and the decreased use of fossil fuels.

Indonesia is a major power in energy exports and is more than 100% self-sufficient, with its abundance of oil, coal,

natural gas and other fossil fuels. However, oil production (both crude and refined) is declining, and

transportation-related consumption of petroleum products is up; as of 2004 oil imports exceeded oil exports

(Daiwa Institute’s Daiwa Institute of Research Survey, Summer 2011 Vol. 3).

Indonesia is blessed with renewable energy sources; with 75,670MW of hydroelectric and 27,510MW of

geothermal power. Combined, they can supply about 5 times the entire country’s peak demand, however their

introduction into the market has been slow: just 4,200MW of hydroelectric and 1,050MW of geothermal are being

ineffectively used (Table 3-2-1).

By developing and expanding the use of abundant hydroelectric and geothermal renewable energy we can reduce

the amount of fossil fuels brought into the market, saving it for transportation or manufacturing petroleum

products, which is tied to reducing oil imports, thus easing the nation’s burden. Further, through the continual use

of hydroelectric and geothermal energy, we can reduce the amount of fossil fuels—which we worry will run

dry—on the market, ensuring that fossil fuels can be used effectively around the world in the future.

We believe the development and expansion of renewable energy described above is directly linked to increased, as

well as rationalized, energy consumption.

Considering increased and rationalized consumption from a local perspective, mini-hydro power is a perfect fit,

since it is locally produced and consumed. Converting local kinetic energy into electricity and distributing it over

existing networks for consumption is makes technical and economic sense, and this project fulfills that vision.

Table 3-2-1 Renewable Energy Resources and Amount Introduced to Market (2011)

Resources (MW) Introduced to Market(MW)

Hydroelectric 75,000 6,848

Geothermal 28,635 1,341

Mini-hydro

power 500 86.1

Biomass 49,810 445

Solar 4.80 (kW/m2/day) 12.1

Wind 9,290 1.1

3-11

Source: Created by the Study Team based on data from MEMR and PT PLN

(3) Studies Necessary to Finalize Project Contents

1) Predicted Demand

According to the long-term Energy Development Plan (RUPTL) 2013-2022 that PLN has decided upon, the

predicted demand for North Sumatra as expected by this project is shown in Table 3-3-1, and is predicted to

increase by 10% each year. As the political and economic center, Java and Bali comprise 60% of the

population and consume 80% of the electricity produced. However, as peak demand in 2022 will be about

1.88 times that of 2013, we predict the energy shortage will become more serious.

Further, the electrification rate of villages in North Sumatra is about 84.61%, which is above the national

average of 73% (PLN data as of 2012). Table 3-3-2 displays equipment capacity rather than utility, while

Table 3-3-3 details the current electrical distribution equipment.

Table 3-3-1 North Sumatra Electrical Demand Survey

Year 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

Peak Demand (MW) 1,455 1,607 1,785 1,981 2,194 2,431 2,691 2,966 3,250 3,504

Increase Over Previous

Year(MW) 152 178 196 213 237 260 275 284 254

Rate of Increase (%) 10.4 11.1 11.0 10.8 10.8 10.7 10.2 9.6 7.8

Source: Created by the Study Team based on RUPTL2013-2022 data

Table 3-3-2 North Sumatra Equipment Capacity

Equipment Homes Industrial Businesses Social Gov’t. Street

Lights Total

Capacity（MVA） 2,072 780 626 136 58 82 3,755

# of Locations

Serviced 2,633,590 3,628 99,245 52,117 6,337 13,363

2,808,28

0

Energy Consumed

(GWh) 3,814 2,135 1,156 229 88 387 7,809

Average Per-Hour

Consumption (MW) 891

Source: Created by the Study Team from Statistik Ketenagalistrikan 2013 data

3-12

Table 3-3-3 North Sumatra Electrical Grid Data

15-20KV Line Length km 23,654

Capacity MVA 1,773

<6KV Line Length km 25,377

Capacity MVA ―

Entire Grid Line Length km 49,032

Capacity MVA 1,773

Source: Created by the Study Team with Statistik Ketenagalistrikan 2013 data

2) Problem points and analysis required to finalize project contents

The following problem points were discovered while carrying out base studies to assess the viability of

bringing hydroelectric power and its related facilities to this area.

a) Obtaining Topographic Maps

We received the following 1/50,000 scale digital maps from the Indonesia’s Geospatial Information

Agency (Badan Informasi Geospasial) and used them to make an outline of the target area for this

project while analyzing electrical generation plans.

1:50,000 digital map (25m contour interval)

- 0618-63 Seribu Dolok

- 0619-31 Berastagi

- 0816-64 Sondi

- 0619-32 Negeri Dolok

The target area for this project is on the northern side of Lake Toba in Northern Sumatra, Indonesia. As

an administrative district, it is entrusted to Simalungun (Kabupaten Simalungun) in North Sumatra

Province (Propinci Sumatera Utara), and the city at the center of the target area is Pematangsiantar

(Kota Pematangsiantar), which is a self-supporting administrative district almost at the center of the

province itself.

With the Lake Toba caldera at the center, there is a northwest-southeast mountain range forming a

sloping watershed from the northeastern side to the southwestern side. The project site on the

northeastern slope, compared to the southwestern side which reaches all the way to the Indian Sea, has a

moderate slope that reaches to the Malaka Strait. The rivers flow from the mountain range to the coast in

simple, nearly straight lines, and run alongside each other to the northeast (Figure 3-3-1).

The project site is located on the Karai River, which flows from a source at the base of Mount

Singgalang (Dolok Singgalang), a peak at the northern end of Lake Toba, from an elevation of 1,500m.

3-13

It gathers several tributaries as it flows downstream about 25km to the northeast, where it reaches the

project site. Roughly 15km beyond that, there is a steep average river grade of 1/30 and below; further

downstream there is a gentle, 1/500~1/1,000 grade and above as it reaches the Malaka Strait. The entire

river is approximately 100km long.

Fig. 3-3-1 Project Area Topographical Map

Source: 1:250,000 scale topographic map published by Badan Informasi Geospasial

b) Geological Survey

b-1) Summary of Topography and Geology

The project site is located along Karai River about 60km south of Medan North Sumatra. Shirasu2

plateaus, which are formed due to geological characteristics of this area, occur at the site. There are

steep slopes along the rivers due to deepening erosion. These rivers erode the plateaus resembling a

dendrite and flow generally from south-west to north-east by merging each other.

Figure 3-3-2 Geological Map around the Site shows geological map of the site area referring from the

Geology of the Medan. As shown in the geological map, Shirasu formed in Quaternary period

Pleistocene epoch covers widely the site. The base geology of the site is volcanic rocks3 (andesite,

2 The tuff at the site is called “Shirasu” in this report because it is very similar to Shirasu which is volcanic eruption

projects from Aira Caldera and is distributed widely south Kyushu Japan. 3 The rocks which is made as magna is spewed out on ground surface, rapidly cooled and harden; lava.

3-14

dacite, rhyolite, etc.) and pyroclastic rocks4 (tuff, tuff breccia, etc.) formed in Neogene period

Pliocene epoch. The geology of the area is summarized as follows:

[Geological Classification]

Geological Division for this site reconnaissance is done referring to the existing geological map

shown in Figure 3-2-2 Geological Map around the Site.

■ TUFA TOBA (Qvt)

TUFA TOBA consists of the eruption products (dacitic tuff) from world largest Toba Caldera, and is

dominant in this area. Shirasu is mainly nonwelded pyroclastic flow deposits (partially fall deposits).

Secondary Shirasu Deposit, which is made by erosion and transportation of originally deposited

Shirasu, is composed of fine to medium tuffaceous sand.

■ SATUAN TAKUR-TAKUR (QTvk)

SATUAN TAKUR-TAKUR consists of andesitic to dacitic pyroclastic rocks which is Neogene

Pliocene eruption products of the volcano located west of the site. SATUAN TAKUR-TAKUR is

thickly covered by Shirasu and only observed at the bottom of the some riverbeds.

At the site, andesitic to dacitic Welded tuff with various welding degrees occur along riverbeds and

the bottom of the excavation of the construction sites. Generally weakly welded parts are classified

into D Class Rock and strongly welded parts are classified into CL to CM Class Rock.

■ SATUAN SIMBOLON (QTvs)

SATUAN SIMBOLON consists of mainly andesitic lava with partially pyroclastic rocks both of

which are eruption products of the volcano at east of the site. As similar to SATUAN

TAKUR-TAKUR, SATUAN SIMBOLON is thickly covered by Shirasu and cannot be confirmed

on the ground surface. Within the study area, rhyolite lava is observed partially near Karai 7.

However, distribution of SATUAN SIMBOLON lava is very limited as a part of SATUAN

TAKUR-TAKUR pyroclastic rocks. Furthermore the characteristics of those two types of rocks do

not show large differences. Thus, those rocks are classified into SATUAN TAKUR-TAKUR in this

report.

4 Volcanoclastic materials which includes tuff, pumice, tuff with volcanic bombs, lava that includes surrounding

sediments eroded by lava flow.

3-1

5

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. 3-3

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3-16

[Characteristic of Major Rocks at Site]

General characteristics of Welded tuff and Shirasu which spread mainly at site are as follows:

■ Welded tuff

Welded tuff is made as volcanic erupted materials (mainly pyroclastic deposit) is cooled and harden.

It is partially welded (melted, consolidated and harden) by its own heat and weight after deposited

on ground surface. Columnar joints occur in some Welded tuff depending on degree of welding.

Columnar joints is regular column shape joints which is made during cooling and shrinking process

of high temperature tuff. Main and sub joints develop vertical and parallel to the cooling plain

respectively.

Photo 3-3-1 Welded tuff with Development of Joints (Cracks) Occurring along River

Source: Photo taken by the Study Team

Photo 3-3-2 Columnar Joints of Welded tuff (View from Top)

Source: Photo taken by the Study Team

3-17

■ SHIRASU (Rhyolitic- Dacitic tuff）

Shirasu is Rhyolitic to Dacitic tuff which is non-welded pyroclastic deposits and consists of fine

white pumices and volcanic ash (mainly silicate and aluminum oxide volcanic glass with plagioclase

and quarts). Since it is white sandy materials, it is called “Shirasu” (white sand) in Japan.

Photo 3-3-3 Gully Erosions on Shirasu Slope

Source: Photo taken by the Study Team

Photo 3-3-4 Secondary deposited Shirasu along River

Source: Photo taken by the Study Team

Generally Shirasu shows unit weight of about 13kN/m3, average specific gravity of 2.3～2.5 and

void ratio of 50 ～58％. Since it contains a lot of small air voids, it shows high permeability. Its

tension strength is low but shear strength is relatively high due to interlocking of complicated shapes

of the grains and Shirasu often forms steep cliff. On the other hand, Shirasu loose strength rapidly

when its water content increases, and gully erosions and underground cavities occur in Shirasu

3-18

ground. Furthermore, Secondary Shirasu, which is formed as deposits of eroded Shirasu, is

composed of low strength fine sand.

Due to those characteristics mentioned above, flat plateaus with bluffs due to river erosion are often

formed in Shirasu area. Since Shirasu contains glass and quarts, it is used as abrasive.

b-2) Site Reconnaissance

[Reconnaissance Method]

Site Reconnaissance is carried out around Plan 1 (Karai 12) and Plan 2 (Karai 7, Karai 13, River

diversion 1, River diversion 2) by using topographic map of PETA RUPABUMI INDONESIA

1:50,000 as shown in Figure 3-3-3 Site Reconnaissance Records and Locations of Photographs in

order to understand general geological characteristics of the site.

During geological inspections of the outcrops, geology (lithology); strength; discontinuities such as

cracks and joints; fault; alteration zone and seepage are carried out. For natural slopes, unstable

slopes including landslide, failure topography, and steep slopes; surface deposits; geology

(lithology); geological structures and seepages are inspected. The records includes photographs and

sketches.

Site Reconnaissance route is recoded using Handy GPS (parallel 20 channels, sensitivity: less than

159dBm (accuracy of ±10ｍ in ideal conditions).

[Site Reconnaissance Schedule]

Table 3-3-4 shows Site Reconnaissance Schedule.

Table 3-3-4 Site Reconnaissance Schedule

2014

8-Oct 9-Oct 10-Oct

Karai 7

Karai 12

Karai 13

River diversion 1

River diversion 2

Source: Created by the Study Team

3-19

Fig. 3-3-3 Site Reconnaissance Records and Locations of Photographs

3-20

Source: Created by the Study Team based on PETA RUPABUMI INDONESIA S=１/50,000

[Site Reconnaissance Results]

Results of Site Reconnaissance are summarized as follows;

■ Karai 12

Karai 12 is planned as a new Mini-hydro power plant at lower reach of Pulung River (Plan 1). We

investigate upper and lower streams of the planned site along the road. Schematic profiles of each

location are shown in Figure 3-3-4 Lower Stream 1 Schematic Profile and Figure 3-3-5 Karai 12

Lower Stream 2 Schematic Profile (Topography is surveyed by laser range finder and water depth is

based on information from local people).

・Lower Steam 1

Lower Stream 1 is eroded severely by the river and forms V-shape valley (width of 2 to 5m and

depth of about 9m). Small eroded terrace plains, which develop at geological boundaries, occur as

shown in Photo 3-3-5 and Photo 3-3-6.

The geology at this location consists of thick Shirasu（Qvt）at upper part and Welded tuff （QTvk）

at lower part. Shirasu is classified as D Class Rock mainly composed of white fine pumice and tuff.

Shirasu at this location is solidified and it is difficult to stick the hammer tip into it. Welded tuff is

well welded CL to CM Class Rock with cracks which occur along columnar joints. Theses cracks

occur horizontally and vertically and majority of cracks are closed. Some parts of river walls are

protected by retaining walls, which are considered to be countermeasures for small failures of

Shirasu slopes.

・Lower Stream 2

Lower stream 2, of which elevation is about 50m lower than that of upper stream, forms V-shape

valley continuing from upper stream with gentler gradient (Photo 3-3-7 and Photo 3-3-8). The

geology at this location consists of thick Shirasu（Qvt）at upper part and Welded tuff （QTvk）at

lower part. Shirasu is classified as D Class Rock mainly composed of white fine pumice and tuff

and can be relatively easily broken by the hammer blow. Welded tuff in the lower stream shows

lower welding degree comparing to that of upper stream and is mainly classified into CL Class

Rock. Horizontally and vertically cracks occur in Welded tuff, however they develop less than

those in the upper stream and are mostly closed. Secondary deposited fine to medium Shirasu sand

occur in gentler gradient river bed (Photo 3-3-9 and Photo 3-3-10).

3-21

Figure 3-3-4 Karai 12 Lower Stream 1 Schematic Profile

Source: Created by the Study Team

Figure 3-3-5 Karai 12 Lower Stream 2 Schematic Profile

Source: Created by the Study Team

3-22

Photo 3-3-5 Karai 12 Lower Stream 1, Photographed from Upper to Lower Stream

Source: Photo taken by the Study Team

Photo 3-3-6 Karai 12 Lower Stream 1, Photographed from Lower to Upper Stream

Source: Photo taken by the Study Team

Photo 3-3-7 Karai 12 Lower Stream 1, Photographed from Upper to Lower Stream

Source: Photo taken by the Study Team

3-23

Photo 3-3-8 Karai 12 Lower Stream 2, Taken from Lower to Upper Stream (Low Gradient Parts)

Source: Photo taken by the Study Team

Photo 3-3-9 Karai 12 Lower Stream 2 Secondary deposited Shirasu on River Bed

Source: Photo taken by the Study Team

Photo 3-3-10 Karai 12 Lower Stream 2 Secondary deposited Shirasu (Close-up Photo)

Source: Photo taken by the Study Team

3-24

■ Karai 7

Karai 7 is a mini-hydro power plant under construction located along Karai River. Geological and

construction conditions from the intake weir at upper stream to the power house at lower stream are

summarized as follows:

・Intake Weir, Sand trap, Headrace (Photo 3-3-11, Photo 3-3-12, Photo 3-3-13)

The geology at this location consists of thick Shirasu（Qvt）at surface underlain by Welded tuff

（QTvk）. Shirasu is classified as D Class Rock composed of brown fine pumice and tuff and can be

easily broken by the hammer blow. Welded tuff is well welded CL to CM Class Rock with cracks due

to columnar joints. These cracks occur horizontally and vertically and are mostly closed.

Volcanic products around Karai 7 consist varying between andesitic and ryolitic, and lava also occurs.

A part of those are considered to be volcanic products (QTvs) originated from east of this location.

Cracky rhyolite lava occurs at the lower parts of slopes at the right bank of the sand trap and

weathering along the joints (onion structure weathering) are developed.

CL to CM Class Rocks occur at the excavation base of dam and sand trap. On the other hand

Shirasu occurs at a wide range of the slopes along open headrace at lower stream of sand trap.

・Headtank, Penstock

Headtank is constructed with stone masonry covered by concrete without reinforcement. The

slopes around the structures are protected by shotcrete and rock bolts, and major defects are not

observed. However, slope failures are observed along the headrace from water storage facility to

power house and the pipe line is damaged by the debris.

・Powerhouse (Photo 3-3-14)

Large excavation (cut slope height of about 20m) is carried out at Power House. Shirasu（Qvt）

occur at the upper part of the cut slope and Welded tuff （QTvk）underlies at lower part of the cut

slope. Welded tuff is mainly composed of non-welded rhyolitic to andesitic pyroclastic deposit and

is classified into D Class Rock. Columnar joints are less developed, however many gully erosions

due to rain and small slope failures occur on the slopes.

3-25

Photo 3-3-11 Karai 7 Intake Weir under construction Welded tuff occurs at Excavation

Source: Photo taken by the Study Team

Photo 3-3-12 Karai 7 Cut Slope at Right Bank of Sand trap Facility

Source: Photo taken by the Study Team

Photo 3-3-13 Karai 7 Open Headrace from Sand trap to Surge Tank

Source: Photo taken by the Study Team

3-26

Photo 3-3-14 Karai 7 Cut Slope around Power House

Source: Photo taken by the Study Team

■ Karai 13

Karai 13 is an existing mini-hydro power plant in operation located along Karai River. Geological

conditions and situations of facilities from intake weir at upper stream and power house at lower

stream are summarized as follows:

・Intake Weir, Sand trap, Headrace (Photo 3-3-15, Photo 3-3-16, Photo 3-3-17, Photo 3-3-18)

The geology at this location consists of thick Shirasu（Qvt）at surface and underlying Welded tuff

（QTvk）. Shirasu is classified as D Class Rock mainly composed of white fine pumice and tuff, and

can be easily broken by the hammer blow. Welded tuff is well welded CL Class Rock with cracks

which partially developed along columnar joints. These cracks occur horizontally and vertically and

are mostly closed.

CL Class Rocks occur at the base of the dam and sand trap. On the other hand, Shirasu are

developed widely over the slopes along headrace at lower stream of the sand trap. Many gully

erosions due to rain erosion and slope failures occur on those slopes and eroded Shirasu is

deposited in drainage channels.

・Headtank, Penstock (Photo 3-3-19)

The headtank is made of a steel tank set in concrete frame. The surge tank used be concrete made

and was reinforced by steel tank because lower stream side of the tank was damaged. Shirasu is

used as aggregate for the surge tank concrete.

Shirasu occurs continuously along the penstock and blue sheets are put on the slope as

countermeasure against erosion. However, the blue sheets are not maintained after installation and

rain water seepages through the gaps of the deteriorated blue sheets.

3-27

・Power House (Photo 3-3-20)

Power house is being constructed at flat land along Karai River. Discharged water from the power

house is very muddy, which is probably due to fine grains originated from Shirasu in conveyed

water.

Photo 3-3-15 Karai 13 Intake Weir

Source: Photo taken by the Study Team

Photo 3-3-16 Karai 13 Cut Slope near Intake Weir

Source: Photo taken by the Study Team

3-28

Photo 3-3-17 Karai 13 CL Class Rock at River Bed of Intake Weir

Source: Photo taken by the Study Team

Photo 3-3-18 Karai 13 Headrace with Cover

Source: Photo taken by the Study Team

Photo 3-3-19 Karai 13 Penstock Blue Sheets are deteriorated

Source: Photo taken by the Study Team

3-29

Photo 3-3-20 Karai 13 Discharged Water from Power House (Water is very muddy)

Source: Photo taken by the Study Team

■ No.1 River diversion

No.1 River diversion is planned as a water transfer facility from Sigambur River to Karai River in

the Project Plan 2 (Photo 3-3-21, Photo 3-3-22). Thick Shirasu（Qvt）covers the site and Welded tuff

(QTvk）underlies at river bed. Shirasu is classified as D Class Rock mainly composed of white fine

pumice and tuff and Welded tuff is inferred as less welded D to CL Class Rock.

River water is very muddy as contaminated with Shirasu originated fine soil from upper stream. We

were not able to cross the river to other bank due to high river water level.

Photo 3-3-21 River Conditions at Planned Location of No.1 River diversion

Source: Photo taken by the Study Team

3-30

Photo 3-3-22 Outcrops at Lower Stream of Planned No.1 River diversion

Source: Photo taken by the Study Team

■ No.2 River diversion

No.2 River diversion is planned as a water transfer facility from Pulung River to Sigambur River in

the Project Plan 2 (Photo 3-3-23, Photo 3-3-24, Photo 3-3-25). Thick Shirasu（Qvt）covers the site

and Welded tuff (QTvk）underlies at river bed. Shirasu is classified as D Class Rock mainly

composed of white fine pumice and tuff and Welded tuff is inferred as less welded D to CL Class

Rock.

River water is very muddy as contaminated with Shirasu originated fine soil from upper stream.

Photo 3-3-23 Upper Stream River Conditions of No.2 River diversion

Source: Photo taken by the Study Team

3-31

Photo 3-3-24 Outcrops at Upper Stream of Planned No.2 River diversion

Source: Photo taken by the Study Team

Photo 3-3-25 Outcrops at Upper Stream of Planned No.2 River diversion

Welded tuff (D Class Rock)

Source: Photo taken by the Study Team

3-32

b-3) Comments

[Comments on Design and Construction]

Shirasu and Welded tuff distributed at the site have the following characteristics which often become

problems in design and construction:

① Shirasu is vulnerable to weathering and erosion and the shear strength of secondary deposited

Shirasu is very low.

② Vertical and Horizontal joints (potential cracks) are tend to develop in Welded tuff. These joints

may be potential cause of water leakage at the planned intake weir location.

③ River water is clouded with fine materials (volcanic glasses, pumices and others) originated from

Shirasu. Those fine materials are not settled easily and transferred long distance to lower stream.

Comments on design and construction for Plan 1 and Plan 2 are summarized in the following

sections and Table 3-3-5 shows Summary of Site Reconnaissance Results.

3-33

Tab

le 3

-3-5

Sum

mar

y o

f S

ite

Rec

onnai

ssan

ce R

esu

lts

Pla

n/S

ite

Pla

n 1

P

lan

2

Kar

i 1

2

Pla

n

Kar

ai 7

U

nd

er C

on

stru

ctio

n

Kar

ai 1

3

In O

per

atio

n

Riv

er d

iver

sio

n p

lan

1 &

2

P

lan

Sit

e C

on

dit

ion

s

To

po

gra

ph

y/

Geo

log

y

A

t u

pp

er s

trea

m t

he

river

wid

th i

s n

arro

w (

2

to 5

m)

and

CL

Cla

ss R

ock

is

dis

trib

ute

d.

Lo

wer

str

eam

is

flat

an

d r

iver

wid

th i

s w

ider

(5

to 1

0m

) at

so

me

po

rtio

ns

(lev

el d

iffe

ren

ce

of

up

per

and

lo

wer

str

eam

is

abo

ut

50

m)

S

hir

asu

co

ver

s th

e su

rfac

e. W

eld

ed t

uff

at

river

bed

is

wel

l w

eld

ed a

nd j

oin

ts (

crac

ks)

ar

e d

evel

op

ed.

S

hir

asu

co

ver

s th

e su

rfac

e. C

L t

o

D C

lass

Wel

ded

tu

ff a

s b

ase

rock

o

ccu

rs a

t ri

ver

bed

.

S

hir

asu

occ

urs

on

th

e cu

t sl

op

es

alo

ng h

ead

race

W

eld

ed t

uff

is

wea

kly

wel

ded

and

jo

ints

(cr

acks)

are

les

s d

evel

op

ed.

S

hir

asu

co

ver

s th

e su

rfac

e. C

L t

o

D C

lass

Wel

ded

tu

ff a

s b

ase

rock

o

ccu

rs a

t ri

ver

bed

.

S

hir

asu

occ

urs

on

th

e cu

t sl

op

es

alo

ng h

ead

race

an

d P

enst

ock

. W

eld

ed t

uff

is

wel

l w

eld

ed a

nd

jo

ints

(cr

acks)

are

dev

elo

ped

.

S

hir

asu

co

ver

s th

e su

rfac

e. C

L t

o D

Cla

ss

Wel

ded

tu

ff o

ccu

rs a

t lo

wer

par

ts.

S

hir

asu

is

vuln

erab

le t

o e

rosi

on a

nd

d

enud

atio

n.

J

oin

ts (

crac

ks)

are

dev

elo

ped

at

the

stro

ngly

w

eld

ed p

arts

of

Wel

ded

tu

ff

Riv

er W

ater

R

iver

wat

er i

s co

nst

antl

y c

lou

ded

wit

h f

ine

mat

eria

ls (

vo

lcan

ic g

lass

es a

nd

qu

arts

).

Co

nst

ruct

ion

-

C

L C

lass

or

bet

ter

Wel

ded

tu

ff

occ

urs

at

the

bas

e o

f in

take

wei

r.

C

on

cret

e w

ith

Sh

iras

u a

ggre

gat

e is

u

sed

. N

o c

oun

term

easu

re i

s d

on

e on

S

hir

asu

slo

pes

alo

ng o

pen

h

ead

race

an

d m

any g

ull

y e

rosi

on

s o

ccu

r.

S

urg

e T

ank i

s co

nst

ruct

ed w

ith

st

on

e m

aso

nry

co

ver

ed b

y

con

cret

e.

S

lop

e fa

ilu

res

dam

age

Pen

sto

ck.

C

L C

lass

or

bet

ter

Wel

ded

tu

ff

occ

urs

at

the

bas

e o

f in

take

wei

r.

C

on

cret

e w

ith

Sh

iras

u a

ggre

gat

e is

use

d.

S

urg

e T

ank h

as r

epai

r re

cord

s (c

on

cret

e is

dam

aged

).

B

lue

shee

ts a

lon

g P

enst

ock

are

m

uch

det

erio

rate

d.

-

Ass

essm

ent/

co

nsi

der

atio

ns

To

po

gra

ph

y/

Geo

log

y

T

his

sit

e is

co

nsi

der

ed t

o b

e su

itab

le f

or

min

i-h

yd

ro p

ow

er p

lan

t.

C

ou

nte

rmea

sure

s ag

ain

st w

eath

erin

g,

ero

sion

, fa

ilu

res

on

Shir

asu

slo

pes

are

req

uir

ed.

C

ou

nte

rmea

sure

s is

req

uir

ed a

gai

nst

slo

pe

fail

ure

s o

f la

rge

slo

pes

. J

oin

ts (

crac

ks)

are

dev

elo

ped

bu

t m

ost

of

them

are

clo

sed

.

P

reli

min

ary t

o d

etai

led

so

il i

nves

tigat

ion

in

clud

ing s

ite

reco

nn

aiss

ance

, bo

rin

g,

in-s

itu

an

d l

abo

rato

ry t

ests

are

req

uir

ed f

or

faci

lity

la

yo

ut

pla

nn

ing.

C

ou

nte

rmea

sure

s ag

ain

st

wea

ther

ing,

ero

sio

n,

fail

ure

s o

n

Sh

iras

u s

lop

es a

re r

equir

ed.

C

ou

nte

rmea

sure

s is

req

uir

ed

agai

nst

slo

pe

fail

ure

s o

f la

rge

slo

pes

C

ou

nte

rmea

sure

s ag

ain

st

wea

ther

ing,

ero

sio

n,

fail

ure

s o

n

Sh

iras

u s

lop

es a

re r

equir

ed.

C

ou

nte

rmea

sure

s is

req

uir

ed

agai

nst

slo

pe

fail

ure

s o

f la

rge

slo

pes

C

ou

nte

rmea

sure

s ag

ain

st w

eath

erin

g,

ero

sio

n, fa

ilu

res

on

Sh

iras

u s

lop

es a

re

req

uir

ed.

C

ou

nte

rmea

sure

s is

req

uir

ed a

gai

nst

slo

pe

fail

ure

s o

f la

rge

slo

pes

P

reli

min

ary t

o d

etai

led

so

il i

nves

tigat

ion

in

clud

ing s

ite

reco

nn

aiss

ance

, bo

rin

g,

in-s

itu

an

d l

abo

rato

ry t

ests

are

req

uir

ed f

or

faci

lity

la

yo

ut

pla

nn

ing.

Riv

er W

ater

P

ipel

ine

or

slo

pe

pro

tect

ion

are

req

uir

ed t

o p

reven

t co

nta

min

atio

n o

f S

hir

asu

fro

m c

ut

slo

pes

alo

ng h

ead

race

. S

tudie

s fo

r m

eth

od

s to

rem

ove

fin

e gra

ins

such

as

san

d t

rap

des

ign

, se

dim

enta

tio

n

agen

ts,

and

pu

rifi

cati

on

sh

eets

are

req

uir

ed.

-

3-34

Co

nst

ruct

ion

Q

ual

ity c

on

tro

l m

anu

al s

uch

as

“Des

ign

an

d

Co

nst

ruct

ion M

anu

al f

or

Con

cret

e w

ith

S

hir

asu

Aggre

gat

e (D

raft

)” b

y K

ago

shim

a C

on

stru

ctio

n T

ech

nic

al C

ente

r, 2

00

6

(Jap

anes

e),

is r

equ

ired

.

B

ed r

ock

is

suit

able

fo

r fo

un

dat

ion

b

ase

of

stru

ctu

res.

T

her

e ar

e co

nce

rns

abo

ut

con

cret

e q

ual

ity.

T

her

e ar

e co

nce

rns

abo

ut

surg

e ta

nk s

tru

ctu

re.

S

tudie

s o

n P

enst

ock

co

ndu

it r

epai

r is

req

uir

ed.

B

ed r

ock

is

suit

able

fo

r fo

un

dat

ion

bas

e o

f st

ruct

ure

s.

T

her

e ar

e co

nce

rns

abo

ut

con

cret

e q

ual

ity.

M

ain

ten

ance

of

slop

es a

lon

g

Pen

sto

ck c

ond

uit

is

requ

ired

.

R

ock

s p

lan

ned

to

be

exca

vat

ed a

re m

ain

ly s

oft

ro

ck a

nd

exca

vat

ion

sh

all

be

rela

tivel

y e

asy.

C

ou

nte

rmea

sure

s fo

r sl

op

e p

rote

ctio

n a

nd s

oil

co

nta

min

atio

n a

re r

equ

ired

if

op

en h

ead

race

is

pla

nn

ed.

C

ou

nte

rmea

sure

s ag

ain

st s

lop

e ar

e re

qu

ired

fo

r p

ipel

ine

cond

uit

. M

ain

ten

ance

is

nec

essa

ry

du

rin

g o

per

atio

n

Sourc

e: C

reat

ed b

y t

he

Stu

dy T

eam

3-35

[Plan 1]

■ Karai 12 Construction

・Site Conditions

Upper stream of the planned site is narrow (about 2 to 5m) and CL Class Rocks occur. Lower

stream (relative level difference is about 50m) is flat and river width becomes wider (5 to 10m). In

terms of topographic and geological point of view, this site can be a candidate.

・Countermeasures for Slope Protection

Stability of slopes shall be considered for the excavation design for structure construction.

Countermeasures against weathering, erosion, and small failures of Shirasu at the upper parts of the

slope, and long term slope stability countermeasures for the large slope of Welded tuff shall be

required. Countermeasures against slope failures to control soil inflow is necessary for intake weir

construction design.

・Seepage from Joints

Seepage is concern because joints are developed in base rock Welded tuff. However, it is

considered to be low possibility that joints are opened by water pressure because most of joints at

the site are closed and the height of intake weir is less than 15m (water pressure of less than

10kN/m2).

・Future Investigation

The candidacy sites shall be narrowed-down by site reconnaissance, then detailed geological

reconnaissance, boring, in-situ tests (such as water pressure test) and laboratory tests shall be

carried out to understand geological characteristics of the site.

・River Water

River water at the planned area is permanently clouded, and Secondary Shirasu is deposited at

lower stream of which river gradient becomes gentler. Since the clouded water contains a lot of

fine materials (such as volcanic glass and quarts), damage and deterioration of the power plant

facilities may be accelerated due to the clouded water. Therefore, countermeasures against

contamination of Shirasu into the headrace (such as subterranean drain and slope protection) and

studies to eliminate the fine grains by sand trap (such as sand trap structure, comparison studies

including sedimentation agent and purification sheet) are required in terms of long term facilities

protections.

・Concrete

Appropriate quality control for concrete is required, if in-situ soil including Shirasu is used for

aggregate (refer to [Concrete with Sirasu Aggregate]).

3-36

[Plan 2]

■ Karai 7 Suppletion

・Slope Protection

No slope protection is done for most of the existing cut slopes. Slope protections against

weathering and erosion are required in terms of long term stability of slopes because the slopes

composed of Shirasu and Welded tuff are easily destabilized.

・River Water

River water at the planned area is permanently clouded. Since the clouded water contains a lot of

fine materials (such as volcanic glass and quarts), damage and deterioration of the power plant

facilities may be accelerated due to the clouded water. Therefore, countermeasures against

contamination of Shirasu into the headrace (such as subterranean drain and slope protection) and

studies to eliminate the fine grains by sand trap (such as sand trap structure, comparison studies

including sedimentation agent and purification sheet) are required in terms of long term facilities

protections.

・Base Rock

The intake weir is founded on stable CL Class or better Welded tuff. Since excavation for the

foundation was carried out about 4 to 5m further into the stable rocks, excavation volume and dam

height were increased and it was not economical. Rock inspection by the geological engineer shall

be required for the safe and economical foundation excavation.

・Concrete

Soil generated at the site, Shirasu, is used as aggregates of the concrete for the structures. There are

concerns about local concrete strength as damages of existing structures are observed.

・Head Pond Structure

Head pond being constructed is made of stone masonry covered by unreinforced concrete, and

there is concern about long term structural stability. Analysis considering planned water level and

detailed structures are considered to be required.

・Restoration of Penstock

Penstock is severely damaged by failed soil from Shirasu slopes. Countermeasures for slopes are

required before soil removal for restoration. In addition to cutting slope with stable gradient,

spraying slope frame or rock bolts shall be considered based on the slope stability analysis in order

to prevent instability due to future erosion and weathering.

3-37

■ Kari 13 Suppletion

・Slope Protection

No slope protection is done for most of the existing cut slopes. Slope protections against

weathering and erosion are required in terms of long term stability of slopes because the slopes

composed of Shirasu and Welded tuff are easily destabilized.

・River Water

River water at the planned area is permanently clouded. Since the clouded water contains a lot of

fine materials (such as volcanic glass and quarts), damage and deterioration of the power plant

facilities may be accelerated due to the clouded water. Therefore, countermeasures against

contamination of Shirasu into the headrace (such as subterranean drain and slope protection) and

studies to eliminate the fine grains by sand trap (such as sand trap structure, comparison studies

including sedimentation agent and purification sheet) are required in terms of long term facilities

protections.

・Base Rock

The intake weir is founded on stable CL Class Welded tuff and no particular problem is observed.

・Concrete

Soil generated at the site, Shirasu, is used as aggregates of the concrete for the structures. There are

concerns about local concrete strength as damages of existing structures are observed.

・Slope Protection along Penstock Route

Periodic exchange of blue sheet or permanent countermeasures are required to prevent weathering

and erosion in terms of the facility protection.

■ No.1 and No.2 River diversion

・Rippability

Rock to be excavated are mostly soft rock and excavation is relatively easy to be carried out.

・Slope Protection

No slope protection is done for most of the existing cut slopes. Slope protections against

weathering and erosion are required in terms of long term stability of slopes because the slopes

composed of Shirasu and Welded tuff are easily destabilized.

・Future Investigation

The candidacy sites shall be narrowed-down by site reconnaissance, then cut slope design (such as

stability gradient and slope protection) are required based on the detailed geological reconnaissance,

boring, in-situ tests and laboratory tests.

3-38

・Headrace Design and Countermeasures

Countermeasure against slope failure and soil contamination for open headrace, and

countermeasures against slope failure for pipeline are required in Plan 2. Periodic maintenances of

slopes and channel are required during operation.

[Concrete with Shirasu Aggregate]

Shirasu is generally not suitable for concrete aggregate as it is porous, light, water-absorbable, and

its grains are fine and uneven. However, application of Shirasu for concrete aggregate is studied in

Kagoshima, Japan where Shirasu are vastly developed. It is reported that concrete with Shirasu

aggregate shows enough strength with appropriate quality control (for example, eliminating pumices

(separation of grains less than 5mm), using high performance AE water reducing agent, installment

of storage facility with roof as Shirasu has high water holding property).

Shirasu is already used as aggregate at the site, however appropriate quality control is not carried out,

and concrete strength may not be enough. Thus, if Shirasu is used for aggregate, quality control

referring Shirasu concrete in Kagoshima is required.

It is considered to be required to sample Shirasu at the site for laboratory tests to study applicability

for Shirasu concrete next fiscal year (test method shall be followed to Concrete Design Manual

using Shirasu as Fine Aggregate (Draft)). Laboratory test items and standard are shown as followed:

① Sampling

Standard-1: Sampling Method of Shirasu for Fine Aggregate.

② Grain Size Analysis

JIS A 1103 Method of test for amount of material passing test sieve 75 µm in aggregates

Standard-2: Sieve Analysis of Shirasu Fine Aggregate.

③ Density and Water Absorption Measurement

Standard-3: Test Methods for Density and Water Absorption Measurement of Shirasu for Fine

Aggregate.

④ Unit Weight and solid content in aggregates

JIS A 1104: Methods of test for bulk density of aggregates and solid content in aggregates.

⑤ Mixture Appropriateness Test (Strength Test)

JIS A 1108: Method of test for compressive strength of concrete.

JIS A 1113: Method of test for splitting tensile strength of concrete.

JIS A 1106: Method of test for flexural strength of concrete etc.

3-39

(References)

Design and Construction manual for Concrete using Shirasu as Fine Aggregate (Draft): Kagoshima

Construction Technology Center, June 2006

c) Hydrological/Meteorological Analysis

c-1) Weather Characteristics of the Project Area

North Sumatra, the target region for this project, is a tropical rainforest according to the Köppen

Climate Classification System, with a high year-round temperature and no clear dry season and high

yearly rainfall totals. Medan, North Sumatra’s capital city, for example, has an average monthly

temperature of 31℃-33℃ and lows of 22℃-24℃ throughout the year. Yearly rainfall is

2.500-3,000ml a year, with relatively heavy rainfall from September to December, and about

100mm a month otherwise. Figure 3-3-6 shows the average temperature and rainfall from

1961-1990.

Fig. 3-3-6 Rainfall and Air Temperature in Medan

Source: Created by the Study Team using WMO data.

c-2) Existing Hydrological Data

There is no on-site record of a river flow survey having been run on the river this project aims to

collect water from; all feasibility studies and other survey reports have estimated the flow based on

rainfall data. Past surveys used two locations for rainfall observations (Sinderaya as well as

Seribudolok), both of which are near the project site. The data used for these two locations was

collected over 31 years from 1978-2008. Figure 3-3-7 shows the actual locations where rainfall was

observed, while Table 3-3-6 shows the average monthly rainfall for these two locations.

3-40

Fig. 3-3-7 Map of Rainfall Observation Locations Near Project Site

Source: Feasibility Study and Detail Design of Karai07 Micro Hydro Power Plant,

Hydrology Report

Table 3-3-6 Average Monthly Rainfall at Observation Locations Near Project Site

Source: Feasibility Study and Detail Design of Karai07 Micro Hydro Power Plant, Hydrology Report

In addition to the rainfall data used in past surveys, this survey obtained existing river flow data on

the Karai River drainage system. The flow data was observed at Pulau Tagor (catchment area of

1,012.5 km2), approximately 45km downstream from the project site. The study team received 41

years’ worth of data, from 1972-2012. Figure 3-3-8 shows the location of Pulau Tagor, where the

flow was observed, while Table 3-3-7 shows the flow data.

Month Jan Feb Marc Apr May Jun Jul Augt Sept Oct Nov Des Average

Rainfall

(mm) 197.9 199.5 228.2 230.9 207.6 134.4 185.0 202.3 339.9 338.3 289.6 236.1 232.5

Lake Toba

Sideraya rainfall station

Seribudolok rainfall

station

Karai12 Catchment Area

Karai 7 Catchment Area

Karai 13 Catchment Area

3-41

Fig. 3-3-8 Location of Pulau Tagor River Flow Observation Site

Source: Created by the Study Team using GIS data from the Geospatial Information Agency

Pulau Tagor

3-42

Table 3-3-7 Pulau Tagor Observed River Flow

Tahun Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total

1972 53.42 52.17 48.65 56.93 56.84 50.48 37.41 33.30 43.67 53.91 64.89 62.26 613.92

1973 58.88 41.45 51.46 58.22 52.96 56.36 48.41 47.31 51.51 60.48 58.69 88.52 674.25

1974 55.83 60.16 47.82 48.16 48.54 45.11 45.96 46.56 66.13 61.03 63.02 49.10 637.43

1975 45.22 46.43 - 47.14 40.33 36.34 - - - - 54.83 55.30 325.58

1976 44.43 55.42 44.09 47.06 43.20 43.72 41.30 45.31 45.50 48.02 74.62 76.02 608.69

1977 60.85 59.58 44.68 43.45 44.00 43.65 36.63 38.31 40.89 64.59 68.95 56.91 602.48

1978 55.95 51.72 54.80 55.36 54.57 48.50 39.68 36.40 37.22 41.27 54.47 47.57 577.52

1979 39.02 40.49 36.04 40.41 35.59 38.40 40.14 36.35 56.48 48.11 73.04 51.17 535.23

1980 41.84 42.62 47.56 41.89 46.08 40.13 37.34 49.52 50.79 54.26 - 55.93 507.97

1981 34.36 - 51.37 52.28 71.21 45.51 31.18 29.68 41.08 53.34 55.29 50.89 516.19

1982 34.36 39.65 42.06 55.83 62.54 45.88 32.73 33.46 35.56 47.09 - - 429.15

1983 - - - - - - 36.18 35.64 42.27 55.48 49.30 55.76 274.64

1984 68.61 64.24 62.94 55.52 64.54 50.03 49.53 - 44.44 45.43 - 49.79 555.07

1985 - 61.51 58.47 57.46 58.10 41.78 43.28 43.27 58.15 65.61 68.25 71.45 627.34

1986 52.63 49.64 50.93 52.86 52.43 50.95 41.00 38.37 42.70 49.45 48.52 50.14 579.62

1987 49.48 41.51 49.83 50.05 58.87 48.99 - - - - - - 298.73

1988 53.02 42.22 51.93 53.19 51.69 40.36 36.25 31.08 63.09 61.80 68.42 72.65 625.70

1989 69.11 54.74 67.72 69.35 67.41 52.10 48.16 40.49 59.57 83.60 86.09 94.78 793.11

1990 67.52 52.05 50.50 51.84 - - 51.47 37.66 40.44 74.05 81.60 78.45 585.58

1991 56.53 56.69 62.75 58.38 66.41 59.29 46.01 47.97 61.98 91.19 91.64 90.22 789.05

1992 64.53 50.92 52.53 58.72 59.54 52.59 37.78 31.99 33.94 31.34 32.09 30.55 536.51

1993 31.13 36.24 37.84 50.66 62.99 47.79 48.47 41.01 53.24 69.57 78.24 57.65 614.82

1994 53.95 61.73 55.52 56.09 54.20 48.40 39.31 45.08 49.44 49.97 68.60 5.54 587.83

1995 46.89 42.48 43.23 45.69 46.19 43.16 36.94 49.95 43.60 49.17 51.33 41.97 540.59

1996 40.12 56.67 42.19 48.67 43.66 41.90 38.47 41.23 41.53 43.81 38.92 48.31 525.49

1997 39.97 38.30 40.56 39.66 33.76 31.46 31.85 28.35 30.66 38.39 60.61 42.62 456.19

1998 43.08 39.23 38.49 37.32 35.92 37.54 - - - - - - 231.58

2000 44.54 39.74 59.01 40.04 37.95 39.41 36.45 38.00 57.78 42.22 44.63 43.04 522.79

2001 42.70 35.72 30.21 34.66 29.63 27.73 26.13 26.03 32.65 32.88 44.41 44.23 406.97

2002 40.25 38.97 37.88 38.72 35.20 - - - - - - - 191.03

2005 45.38 30.94 32.87 34.94 32.80 28.59 29.29 29.12 26.91 31.40 36.23 - 358.47

2007 75.21 64.56 64.80 72.32 70.57 70.92 62.63 61.66 75.10 72.93 72.83 - 763.52

2008 119.60 104.74 155.98 124.83 99.81 105.54 108.96 104.07 132.09 149.60 90.51 - 1,295.71

2009 53.10 28.58 38.36 37.03 31.44 22.64 20.79 21.55 26.57 33.61 47.25 37.55 398.45

2010 63.53 37.19 47.90 46.69 40.32 30.56 28.47 29.51 34.76 42.83 59.11 47.01 507.88

2011 43.85 39.97 42.12 41.44 31.46 28.29 23.26 33.01 25.39 50.76 359.53

2012 103.57 131.18 324.88 122.88 86.74 98.26 54.14 107.27 95.28 111.02 165.23 240.98 1,641.44

S.Ular - Pulao Tagor (Luas DAS 1012.5 km2)

Source: Badan Meteorologi, Klimatologi dan Geofisika

c-3) River Flow at Karai 12 Intake Location (use for Project Plan 1)

[River Flow Condition]

We have made a model for the river flow at the construction site for Karai 12 (Catchment area of

116.64km2) based on the river flow and observed rainfall data approximately 45km downstream in

Pulau Tagor (Catchment area of 1,012.5km2). Using the flow data from Pulau Tagor as a base and

comparing it with the Karai 12 site, we found that even though the Pulau Tagor basin is 8.7 times as

3-43

large, the 3 rivers that feed into it all share almost the exact same source, and Karai 12 is in the same

basin. We believe the flow at the Karai 12 site and the flow at Pulau Tagor are related.

Therefore, since the Karai 12 flow produced using the model is based on an actual flow, we believe it is

more reliable than a purely theoretical flow.

However, as the data used in the calculations is monthly, it is possible that the maximum is rather low,

while the minimum is rather high when compared to river flow data that is typically compiled daily. As

such, it would be preferable to install an observation point near the project site in order to verify the

actual river conditions and produce calculable data for future detailed surveys.

Figure 3-3-9 shows the estimated flow data for the Karai 12 site.

Fig. 3-3-9 Karai 12 Site Flow Capacity

Rainfall-Runoff Model

Catchment Area: 116.64km2

Percent of Time Discharge

(%) (m3/s)5 10.0310 9.3715 8.8320 8.4025 8.0730 7.7435 7.3940 7.1645 6.9450 6.7255 6.4660 6.2665 6.0070 5.8075 5.4780 5.2385 5.0690 4.7295 4.43

0.00

2.00

4.00

6.00

8.00

10.00

12.00

0 20 40 60 80 100

Flow DurationCurve of Karai12

Source: Created by the Study Team

[Design Flood]

For the design flood, the peak flood volume was set at the probable 100-year peak of 200 m3/s, as

shown in the hydrograph in Figure 3-3-10.

This hydrograph was created using SMADA (http://smadaonline.com), a hydrological calculation

software, which uses existing yearly maximum rainfall trends to predict flood totals and uses unit

drawing and other methods to form a hydrograph.

3-44

Fig. 3-3-10 Karai 12 Design Flood

0

50

100

150

200

250

0 10 20 30 40 50 60

De

bit

Ba

nji

r (m

3/s

)

Waktu (jam)

Flood Hydrograph Karai River at Weir(A = 116.64 Km2 )

Q 2th

Q 5th

Q 10th

Q 25th

Q 50th

Q 100th

Q 200th

#REF!

Source: Created by the Study Team

c-4) River Flow at Karai 7 and Karai 13 Intake Location (use for Project Plan2)

Hydrologic analyses for the existing Karai 7 and Karai 13 power plants appear in previous reports,

and so the current plans were created based on that data. As a result, the expansion plans for these

power plants uses the results of previous hydrological analyses. The hydrological analysis techniques

used in previous surveys have been verified as valid.

[River Flow Conditions]

The flow conditions at the Karai 7 and Karai 13 locations were created based on an F.J. Mock model

of the river’s flow. The general idea of an F.J. Mock model is that rainfall creates an influx that is

added to the river’s flow, and it also includes general ideas of underground and stored water as well,

so it is in the same system of flow models as the Tank Model.

■ Data used in the flow model

The rainfall and meteorological data used in the flow model is exactly as follows.

- Sinderaya Rainfall Data (1978-2008)

- Seribudolok Rainfall Data (1978-2008)

- Marihat Meteorological Data (2003-2007)

As rainfall data is an incredibly important parameter for creating flow models, the Thiessen method

(a method where bisectors are drawn across the straight lines connecting two locations of measured

Flo

od

Disch

arge (m

3/s)

0 10 20 30 40 50 60

Time (hr)

3-45

rainfall totals, then those bisectors are used to create polygons that divide the area into sectors

around each location) was used to calculate rainfall data for the basin based on rainfall totals

observed nearby. In other words, the observed rainfall value is the amount of rainfall at one location

(the site rainfall), and in order to know the rainfall in the basin (the area rainfall), we must find the

geometrical area these arbitrary rainfall observation points control. Once we find those areas, we

recalculate the rainfall totals and use that data.

Further, meteorological data was taken from a nearby observation post in Marihat, which will be

sufficient assuming that all the necessary parameters for the creation of a F.J. Mock flow model are

present.

■ Comparison and Evaluation of Flow Condition Graph Created From Flow Model Data

The flow condition graph for Karai 7 made using the above methods is shown in Figure 3-3-11,

while that of Karai 13 is shown in Figure 3-3-12. When the flow condition graphs are compared, we

can see that the Karai 13 basin is 145.254km2, and the Karai 7 basin is 248.306km2, making for a

differential of 0.585. The comparisons of both locations at 25%, 50%, 75%, and 90% of river flow

are shown in Table 3-3-8. Based on these results, we can say that the river flow data from Karai 7

and Karai 13 differs only in the amount of river flow, as seen in the basin comparison; flow

conditions are essentially the same.

3-46

Fig. 3-3-11 Karai 7 Flow Duration Curve

Source: ”Studi Kelayakan dan Disain Rinci PLTM. Karai7”

Fig. 3-3-12 Karai 13 Flow Duration Curve

Source: ”Studi Kelayakan dan Disain Rinci PLTM. Karai13”

Flo

od

Disch

arge (m

3/s) R

iver D

ischarg

e (m3/s)

3-47

Table 3-3-8 Comparison of Karai 7 and Karai 13 Flow Conditions

Source: Created by the Study Team

Other models such as the tank model use rainfall and meteorological data to create simple models of

flow conditions that are easily reproduced, however it is desirable to keep data consistent when

comparing flow conditions.

Therefore, the Karai 7 and Karai 13 flow condition graphs were created using a trusted Indonesian

model, drawing on sufficient rainfall and meteorological data. Unfortunately, some of the data may

contain minor errors due to the fact that the flow percentage, etc. could not always be kept

consistent.

[Design Flood Amount]

The design flood capacity was made into a hydrograph by taking trends in existing design flood

rainfall data and connecting them using a Nakayasu unit hydrograph.

The design flood amount looks at the trend of the largest rainfall total from each year and predicts

the design flood amount. Several statistical methods of finding the design flood amount exist, but

previous reports used the Ishii method and the logarithmic type III Pearson distribution, and appear

to use a suitable type III Pearson distribution prediction value for their predictions. The details of the

suitability of the Ishii method versus the type III Pearson distribution are not mentioned in the report,

and are thus unclear.

The design flood amount draws on the above-mentioned planned flood rainfall amounts, and

generates flow conditions based on the Nakayasu unit hydrograph. The unit hydrograph method is

used when there is no river flow data available; when rainfall from a certain period of time is

discharged, the amount discharged is considered proportional to how much rain fell. The Nakayasu

method can predict the maximum discharge, an ascending and descending curve, but in the previous

reports’ design flood rainfall amounts, how the rain had fallen (for example, did 100mm fall all at

once, or over a period of time, which changes the peak discharge) was not recorded, so this is

unknown.

The design flood hydrographs for Karai 7 and Karai 13 are as shown in Figures 3-3-13 and 3-3-14.

Probabilities of

Flow Karai13 Karai7 Ratio

Karai13/Karai7

25％ 8.50 15.51 0.548

50％ 6.81 12.23 0.557

75％ 6.15 11.00 0.559

90％ 5.69 10.28 0.554

3-48

Fig. 3-3-13 Karai 7 Design Flood Hydrograph

Source: ”Studi Kelayakan dan Disain Rinci PLTM. Karai7”

Fig. 3-3-14 Karai 13 Design Flood Hydrograph

Source: ”Studi Kelayakan dan Disain Rinci PLTM. Karai13”

d) Existing Power Plant and New Power Plant Candidate Site Field Survey

A field survey of the sites for Plan 1 and Plan 2 was conducted, and in addition to investigating the area

around the new development sites, the existing facilities and those under construction were given a sight

survey for soundness in a summary evaluation.

Flo

od

Disch

arge (m

3/s) F

lood

Disch

arge (m

3/s)

Time (hr)

Time (hr)

3-49

d-1) Project Site of Karai 12 (Project Plan 1)

The planned site for Karai 12 is right along the Pulung River, and about 5km south (upstream) of the

closest village, Desa Butusiantar, is the planned intake area. The village is on the right bank of the

Pulung, and is accessible by car via an unpaved road, however the road becomes incredibly rough;

passenger vehicles and large trucks cannot pass without difficulty.

The generator will be installed at EL.550m (intake site)-EL.400m (power plant site), in an area where

the river runs down a steep slope with an average 1/11 grade. Up- and downstream of this area, the

grade is a comparatively gentle 1/30-1/50.

[Intake Weir Site]

As described in the detailed geological survey in item b), the sites for Plan 1 and Plan 2 are

generally covered in volcanic product from Lake Toba. The surface of Karai 12 is shirasu, with

welded tuff underneath. About 5m-15m from the riverbed lies CL-grade bedrock, and the grade of

both river banks approaches vertical in places, with some areas of the river being as narrow as 2m

(Photo 3-3-5). From EL.550m upward, the river gradually widens and the incline of the river banks

lessens, making EL.550m ideal for placement of the intake weir.

[Headrace Passage Location]

The headrace passage is planned to let water pass through an open channel at near EL.550m. The

contour line of the right river bank at EL.550m has a relatively gentle slope, while about 800m

downstream from the intake site on the left bank the drop becomes quite steep. It is possible to

establish a channel in either location, however installing the channel on the right bank tends to

increase the amount of excavation necessary.

[Head Pond and Penstock Location]

From a stability and post-construction maintenance perspective, it would be ideal for the head pond

and penstock to be located on a ridge. Around 1,500m downstream from the intake site, both river

banks form ridges, and the foothills extend down to roughly river level, making it possible to

establish the head pond and penstock on either side.

[Power Plant Site]

Downstream from EL.400m, the slopes on both banks of the river become relatively gentle, and

either bank is a suitable location for the power plant. It is necessary for the primary power

generation equipment to be placed at a sufficient height away from rising waters should the river

flood. According to the height of the draft tube given in the water wheel design and the position of

the drainage, the power plant will have to be elevated above the design flood level.

If the power plant is established on the steep banks along the narrow section of river on this site,

3-50

however, the swells will be large should the river flood, and the drainage must be positioned above

the surface of the river on a calm day. This means we can put the height difference on these banks to

good use, which should be taken into consideration.

d-2) Karai 13 Power Plant (Project Plan 2)

Just as on the Karai 12 site, the area around Karai 13 is thickly covered in shirasu sediment (white

sand). For the main power facility, the layer of shirasu must be cleared, and the welded tuff beneath

should serve as the foundation. The intake equipment and headrace area have been deeply excavated,

and a tall mound of shirasu sits out in the open.

As there are no complete design documents, the details of each structure are unclear, so the survey

was conducted by comparing detailed design drawings with the current state of the structures. The

survey found that the structures had several shortcomings from a long-term use standpoint, both as

power equipment and as a foundation for the area.

The problems of each individual structure are listed below.

[Intake Weir]

According to the blueprint, the intake weir itself is a masonry concrete structure reinforced on the

outside with concrete 50-100cm thick. There is a 1.5m wide flushing gate inside the weir, however

the gate is too small and set too low for the large amount of pebbles, pumice and shirasu that flow

down the river, and cannot effectively drain the sediment even when the gate is open (See photos

3-3-26 and 3-3-27).

The upstream river dike will be established on a mound of earth on the right bank in the design

documents, but in reality has not been established at all, leaving the flowing sediment (shirasu) to

pile up into an earth weir. The tip of the earth weir is about 2m lower than the top of the dike, and as

a result of this upstream mound of earth, the flood level has risen higher than is called for in the

design. As it is also constructed from shirasu, which cannot withstand the current, we fear it will

break if the river floods (See photos 3-3-28 and 3-3-29).

The intake structure sits at a 45° angle to the heart of the river’s current, facing upstream; since

water freely flows in when the current slows, this structure is not suited to a river with such a large

amount of sediment.

3-51

Photo 3-3-26 Sand Scour Gate Installed on Right Bank of Intake Weir (Taken Downstream from

Intake Weir)

[Comment]

Taking geography, catchment area, and rainfall

into account, this gate is too small for the

predicted amount of sediment in the river

water.

A mound of fine-grained sediment has piled up

downstream from the weir. Normally, a flood

would carry this sediment downstream,

however the residual sediment downstream

from the weir shows that even if floodwaters

pull less-than-expected amounts of sediment

downstream, the river water itself still contains

a large amount of fine-grained sediment. Put

simply, even under normal conditions a fair

amount of fine-grained sediment (including

quartz) will flow into the intake structure.

Source: Photo taken by the Study Team

Photo 3-3-27 Condition of the Intake Weir on the Upstream Side

[Comment]

The sediment on the upstream side of the intake

weir is amassing on the right bank. This

effectively reduces the catchment area and invites

a raising of the riverbed, pushing flood levels

above those in the plans; an increased risk.

50cm or more of rolling stones and driftwood are

mixed into the sediment, which could

immediately block the aforementioned flushing

gate, even if it is opened.

Source: Photo taken by the Study Team

3-52

Photo 3-3-28 Dike on Right Bank Not Constructed

[Comment]

The dike on the right bank has not been

constructed, and shirasu is collecting. Even now,

the top of the earth weir is at the same level, or

perhaps slightly lower, than the flood level, and it

is highly possible that it will break or be washed

away.

Should it break, the chances are great that large

amounts of sediment will enter the sand trap and

headrace, and dirty water could conceivably flow

along the headrace as well.

Source: Photo taken by the Study Team

Photo 3-3-29 Dike on Right Bank Not Constructed

[Comment]

There are clearly visible tracks in the earth weir

from rainfall, meaning the weir could loosen

even if exposed to small amounts of water.

Source: Photo taken by the Study Team

[Sand Trap]

The sand trap was constructed almost exactly to spec, however there are only 2 drainage pipes of

300mm installed, which will be weak drainage for a power plant that is expected to see a large

amount of sediment. Further, drainage is operated via a manual valve, and the control pit for said

valve may become submerged during rainfall, making the valve impossible to open during an

emergency (Photo 3-3-30).

3-53

Photo 3-3-30 Sand Trap Drainage Valve Pit

[Comment]

The sand drainage valve is roughly 5m

underground and has no water drainage of its

own, meaning water collects at the bottom.

There is evidence on the walls that the water

once rose high enough to submerge the valve.

Source: Photo taken by the Study Team

The excavation of the sand trap area is not being protected, and has no drainage ditch for sand and

water. The walls of the sand trap are not very high off the ground, meaning that even a small amount

of rain or water could cause dirt or sediment to enter the sand trap (Photo 3-3-31).

Photo 3-3-31 Sand Trap Excavation

[Comment]

Shirasu has piled up, almost to the level of the

sand trap wall. Even a small amount of rain

could cause shirasu to flow into the sand trap.

Source: Photo taken by the Study Team

[Headrace]

Since the headrace is completely subterranean, it is inconceivable that dirt would pass through the

pipe walls, however the slope being excavated is unprotected and shows signs of significant erosion

from rainfall, making a landslide possible in the near future. The landslide could potentially reach

the head pond area, affecting its stability (Photo 3-3-32).

Additionally, there is a swamp on the left bank that the headrace crosses partway down, where

erosion has been swift. If it continues at this pace, there is a concern that it may affect the headrace

(Photo 3-3-33).

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Photo 3-3-32 Headrace Channel Site

[Comment]

Erosion of the slopes near the excavation site

continues.

Source: Photo taken by the Study Team

Photo 3-3-33 Headrace Swamp Crossing

[Comment]

This swamp is presumed to absorb the rainfall

from the upper half of the headrace. Erosion

continues here, and if left unchecked may

affect the headrace itself.

Source: Photo taken by the Study Team

[Head Pond]

The main material for structures in this power plant—not just the head pond—is masonry concrete

as per the design, however in practice the concrete being used to fill the gaps may as well not be

present at all, and is therefore insufficient. Shirasu is being used as a fine aggregate, but we believe

the execution is not being properly managed; the boulders can be easily removed by hand (Photo

3-3-34).

The effect of this is most profound in the head pond, which has cracked from the water pressure

upon filling, and is being replaced with a steel construction due to leaks (Photo 3-3-35).

The head pond maintains an optimum water level using both an excess water drainage system and a

drainage system for grit and a sand scour. There is currently a problem with the grit drainage, and

there is no sand scour mechanism.

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Photo 3-3-34 Status of the “Masonry Concrete”

[Comment]

This is, essentially, masonry concrete not fit

for use as a building material, being used for

the dike and other relatively low-priority

structures. Given the fact that the entire power

plant is designed to be built with masonry

concrete, the quality of the concrete is poor,

and cannot withstand the load called for in the

design.

Source: Photo taken by the Study Team

Photo 3-3-35 Head Pond Rebuilt Using Steel

[Comment]

The wall that connects the head pond to the

penstock cracked, so the connector was

removed, and the head pond is being rebuilt

using steel. No sand scour equipment has been

installed.

Source: Photo taken by the Study Team

[Penstock]

The penstock has no paving beneath it; it is simply covered by a blue tarpaulin. Roughly 9 months

have passed since completion, and the erosion of the top layer of shirasu covering the hill continues.

If erosion continues, particularly on the downstream half of the slope, there is concern that a

landslide might damage the penstock and the power plant itself (Photo 3-3-36).

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Photo 3-3-36 Penstock

[Penstock]

The penstock has not been paved.

The effects of a landslide on the penstock and

power plant are a concern.

Source: Photo taken by the Study Team

d-3) Karai 7 Power Plant (Project Plan 2)

Karai 7 is under construction, however the basic structure is the same as Karai 13, meaning that the

deficiencies indicated on Karai 13 may show up on Karai 7 in the future. The problems inherent to

Karai 7 are listed structure-by-structure below.

[Intake Equipment]

The intake structure of Karai 13 is the same, however the distance between the weir and the intake

structure is long. As a result, even if the sand scour gate functions perfectly, the front section of the

intake structure will be difficult to clear of sand and sediment. Also, the terrace still exists, which is

at the same height as the cover on the front of the intake structure. This means the pile of dirt and

sediment on the terrace will mix with the water in the intake (See photo 3-3-37).

Photo 3-3-37 Intake Equipment

[Comment]

The distance between the sand scour gate and

the intake structure is too large.

The dirt and sediment on the terrace will get

into the intake structure.

Source: Photo taken by the Study Team

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[Headrace]

Part of the headrace is uncovered and the nearby excavated hill has not been treated. Any eroded dirt

or sediment will enter the headrace (Photo 3-3-38).

Photo 3-3-38 Headrace

[Comment]

The excavated hill near the uncovered section

of headrace has not been treated, and erosion

has already begun. As this could become a

large landslide concern in the future, shotcrete

or other reinforcing material must be installed

soon.

Source: Photo taken by the Study Team

[Head Pond]

The basic structure and materials are the same as for Karai 13; there are concerns regarding their

strength (Photo 3-3-39).

Photo 3-3-39 Head Pond Under Construction

[Comment]

Just as with the Karai 13 head pond, masonry

concrete is being used for the construction,

however there are visible gaps between the

boulders that have not been appropriately filled

with mortar. The strength of the structure is in

question.

Source: Photo taken by the Study Team

[Penstock and Spillway]

The penstock is built atop marshlands (it is typically built on a ridge), in an area where rainfall

collects. Upon completion, a landslide sheared the pipe off at a weld and shifted it. The spillway lies

side-by-side with the penstock, but is uncovered; the blockage created by the landslide could cause it

to overflow (Photo 3-3-40).

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Photo 3-3-40 Penstock

[Comment]

It is constructed on a marsh, but there is no

equipment that can deal with the excess water.

A landslide on the hill to the left has moved the

previously installed pipe, breaking a weld and

damaging the pipe itself.

The adjacent spillway has several turns in it; any

water that overflows from the spillway could

affect the penstock or the power plant itself.

Source: Photo taken by the Study Team

d-4) River Diversion Plan Area (Project Plan 2)

[No.1 River Diversion: Sigambur River to Karai River]

The area where water from the Sigambur River will be taken is roughly 3km downstream from the

drainage for No.2 River Diversion. The width of the river is roughly 5m.

The headrace will pass along a hill toward the valley. As it will follow the contour of the hill, an open

channel is a possibility.

The end of the headrace from the Sigambur River will be about 200m upstream from the existing

Karai 12 intake site, where the area around the river is a steep cliff of about 30-40m.

[No.2 River Diversion: Pulung River-Sigambur River]

The Pulung River intake site is about 7.5m upstream from the planned intake weir site for Karai 12.

The width of the river is the same as the Sigambur at about 5m, and both banks are steep cliffs over

30m in height with inclines of 45° or more. The geology of the catchment area is the same as the

Karai 12 power plant, and the river is expected to carry a proportional amount of sediment (Photo

3-3-41).

As the headrace will pass through a mountain with a maximum elevation of 100m, tunneling will be

necessary.

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Photo 3-3-41 Pulung River Intake Site

Source: Photo taken by the Study Team

e) Electrical Supply and Demand/Electrical System Survey

e-1) North Sumatra Electrical Supply and Demand, and Electrical System

According to the results of a survey conducted by the Medan office of PLN, the base electrical

consumption of the North Sumatra region is 1,000 MW, with a maximum of 1,300MW. Although this

is less than the estimates drawn out in 2012’s RUPTL 2013-2022 created by PLN (the Maximum

Demand in Table 3-3-9), the demand outstrips the supply by 200MW. The chronic shortage of energy

continues.

Looking at the items planned to increase the energy supply in order to reduce the energy deficiency,

the main source of energy in 2022 will be coal and gas, with hydro power and geothermal after that.

As for the mini-hydro power this project is concerned with, the current amount being generated is

10MW (as of 2013), with plans to increase that to 134MW by 2016. Plan 1 of this project adds a new

9.0MW facility, while Plan 2 adds an anticipated 5.7MW expansion, making the contributions of this

project, should it be enacted, quite large.

The North Sumatra power lines are a 240mmx2 conductor circuit rated for a voltage of 150KV, and

encircle Lake Toba. The electric supply forms three tightly-formed loops, with Lake Toba at the

center. Mini-hydro power is typically distributed via a 20KV electrical supply. Figure 3-3-9 is a map

of North Sumatra’s electrical supply system. Figure 3-3-10 is a diagram of the electrical system itself.

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Table 3-3-9 North Sumatra’s Electrical Demand and Supply Capability

Year 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

Peak Demand

（MW） 1,455 1,607 1,785 1,981 2,194 2,431 2,691 2,966 3,250 3,504

Power Sources

（MW）

Coal 234 674 695 715 1115 1115 1115 1715 1715 1715

Gas 977 977 977 1227 1227 1727 1727 1727 1727 1727

Biomass 50 50 50 50 50 50 50 50 50 50

Hydro Power 359 359 404 404 404 618 618 618 782 1292

Mini-Hydro Power 38 70 102 134 134 134 134 134 134 134

Geothermal 10 10 10 10 340 340 580 580 580 855

Wind - - - - - - - - - -

Solar - - - - - - - - - -

Other 698 698 698 698 698 698 698 698 698 698

Total 2367 2839 2937 3239 3969 4683 4923 5523 5687 6472

Source: Created by the Study Team based on data from the RUPTL 2013-2022

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Fig. 3-3-15 Transmission Network in Sumatra Island

Source: PLN Medan Office Documents

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Fig. 3-3-16 Electrical System Diagram in North Sumatra

Source: PLN Medan Office Documents

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e-2) Electrical Demand in the Karai Region

The demand for electricity in the Karai region this project plans to supply is shown in Table 3-3-10;

the current peak demand is 25-28MW. According to a survey conducted by the PLN office in Medan,

in the North Sumatra region where a chronic electricity shortage persists, the low demand of the

Karai region means that the supply currently outstrips demand. According to a survey conducted by

Chodai’s resident long-term dispatch engineers, Karai 13’s output is being restricted. This fact was

confirmed by the survey conducted by the PLN office in Medan.

The power distribution lines are not structured to allow power to flow freely through them like a

power line. The power lines and power distribution lines serve different purposes: where the power

lines are designed to let power flow without restriction to the transformers they connect to, power

distribution lines are designed to distribute electricity to areas where it is needed. Therefore, even if

there is a gap between the amount of electricity produced and the amount consumed in a given area,

there are still limits to how much can be sent, based on the size of the conductor and the amount

needed. These limitations occur even in the Karai region, impeding the flow of electricity. This is not

a problem unique to the area; even in Japan with the introduction of solar power, the same situation

arises. Restrictions and limits are being placed on the amount of power that can be received.

In order to resolve the cause of these restrictions, the power distribution system will have to be

re-evaluated and the main power lines upgraded, however PLN has no intention of doing so.

Within Table 3-3-10, which shows the demand for the Karai region, the applications to purchase

40MW worth of industrial power is listed as potential demand, but due to the high level of uncertainty

regarding this figure, it has not been included in the calculations. Therefore, factoring in Karai 7,

which is due to begin operating next year, as well as the output increase of roughly 6-9MW, we

estimate that the supply will overcome demand.

Due to the reasons listed above, the plan to augment existing equipment or install new equipment

requires a plan to upgrade the current 20KV electrical system distribution lines currently being used

to receive mini-hydro power to a superior 150KV system. Compared to the current system,

connecting to stable 150KV lines would prevent power plants from tripping due to events such as

lightning strikes and ground faults, and make a large contribution to the stability of the power supply.

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Table 3-3-10 Electrical Supply and Demand of the Karai Area

Demanding Facilities 588,000

Home Use 90%

Industrial Use 10%

Peak Load 25-28MW

Base Load 20-23MW

Applications for Industrial Use Power 40MW

Electrification 87%

Karai 13 Operating Output 6MW

Source: Created by the Study Team

f) Power Plant Survey

f-1) Karai 13 Power Plant

Karai 13 was completed in February 2014, and is currently operating. The total output of 8,670kW

comes from 2 sources: a 4,335 kW horizontal Francis turbine and a dynamo. From the power plant’s

exit to the grid connection runs a 240 mm2 size power distribution line.

The connection is a T-type direct connection to a 20KV, 150mm2 main, which is a standard

connection for the current system. The 150mm2 main is used as the main distribution line with

10-15MVA passing through it.

According to a survey conducted by Chodai’s resident long-term dispatch engineers, the power

plant’s peak operating output is 6MW, and it is currently running below that maximum output. They

report an imbalance of supply and demand as the cause for the limitation.

Trips, due either to the power plant or power lines, reportedly happen an average of 2.76 times per

day. According to the PLN office in Medan, lightning strikes as well as ground faults due to

vegetation are the main causes, however at present have no intention of maintaining overhead power

lines or removing the offending vegetation in response to these occurrences.

Trips caused inside the power plant reportedly occur an average of 0.92 times per day. Combining

trips that occur due to breakdowns of the power supply lines and other outside equipment with those

that occur inside the plant, trips happen just shy of 4 times per day, on average.

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Table 3-3-11 Karai 13 Monthly Sales Volume and Utilization Rate (Oct. 2014 Survey Data)

Meter Value Amount

Sold

Utilization

Rate

Outages (Internal

Incidents)

Outages (External

Incidents)

Month kwh-meter kwh ％ Occurrences Occurrences

3 1796.8 2019.4 33.9

4 3816.2 2902.1 50.4

5 6718.3 3532.7 59.4

6 10251.0 3181.5 55.2

7 13432.5 4170.3 70.1 41 85

8 17602.8 4415.7 74.2 28 93

9 22018.5 4397.8 76.4 16 76

Total Number of Trips 85 254

Source: Created by the Study team, Drawing from Operation Records

f-2) Karai 7 Power Plant

Karai 7 is under construction, and scheduled to begin operating in April 2015. The total output for the

plant is 7,400 KW, from 2 sources: a 3,700KW horizontal Francis turbine and a dynamo.

This power plant connects to the main via a 150mm2 size power distribution line. The supply to the

main is guaranteed through this line, however the demand of the Karai region is low, so output

restrictions on the existing power plants will be applied to Karai 7 once it is completed and begins

generating power.

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3) Examination of Technical Methods

The issues to be solved as a result of site survey and points to consider in the design are listed below.

a) Common to Project Plans 1 and 2

As explained in detail in the geological survey, the entire area of this project is covered in an

unhardened volcanic ash called shirasu. Shirasu characteristically includes the sharp points of fine

particles like plagioclase feldspar and quartz (Photo 3-3-42), while the insides of the particles are porous

and, with a specific gravity of 1.3, rather light.

The geological makeup of shirasu generally has a low tensile strength, and its strength in general

decreases considerably when wet. Also, as the specific gravity is quite light, the dispersion rate is high,

meaning it can enter water quite easily. It has a tendency to rapidly erode exposed soil or tree roots

exposed during excavation, but it is easily eroded into gullies by rain. These gullies can be seen in

various places around the Karai 7 and Karai 13 construction sites.

Photo 3-3-42 Shirasu Particles (Left: Magnified Photo, Right: Electron Microscope Photo)

Source: Geological Survey of Japan, AIST Web Site

The river that is the target of this project has uniformly cloudy water with a low degree of transparency.

This indicates that a fair amount of shirasu that does not easily precipitate has been swept up in the flow

and is being carried downstream.

The particles that make up shirasu are sharp as well as hard, accelerating abrasion inside pipes should

they make it into the water taken in by the penstock or the turbine’s runner.

Based on the geological characteristics above, it was necessary for the hydroelectric generation

equipment designs to pay special attention to the question of how we might reduce the amount of

shirasu in the water used for electric generation.

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b) Project Plan 1 (New Karai 12 Development Plan)

The plan for the new Karai 12 power plant paid attention to thoroughly cleaning the river water of

shirasu and removing the shirasu that enters the intake equipment. The following designs for each

structure were settled upon.

[Intake Structure]

In the design standards, and in the hydraulic equipment instruction manual,5 it is written that the water

flowing into the intake structure flows at a rate of 0.3m/s-1.0m/s. Further, as the speed exceeds 0.4m/s,

particles 0.3mm in diameter begin to move as well. Therefore, to ensure the water flows at the

minimum 0.3m/s mentioned in the manual or lower, the width of the intake structure was determined

using the following equation:

B > Q/0.3h

Here, B: Intake structure Width

Q: Intake Amount

h: Depth of Intake Structure

In addition, the location of the intake structure was placed as closely as possible directly upstream

from the intake weir sand scour gate, facing the river flow at a right angle.

[Intake Weir Sand Scour Gate]

In order to effectively make the sand (shirasu) that has piled up in front of the intake structure flow

downstream, the sand scour gate has been placed more than 1.0m below the cover of the intake

structure, and will be designed to quickly remove all sand and thoroughly prevent the entry of any sand

into the intake equipment. Concrete designs will follow once it has been established that the project

will move forward, and it will be built according to spec.

[Sand Trap]

The particles that flow into the intake structure along with the river water precipitate out even more

quickly with the use of a sand trap; the goal is a drastic reduction in the amount that mixes into the

water entering the headrace. The speed inside the sand trap is set at a standard 0.3m/s, however based

on the geological makeup of the area, and to increase the sand trap’s abilities, the size of the sand trap

will be decided based on which design drops the speed to 0.2m/s.

Further, elongation of the sand trap is calculated by doubling the value produced by this equation.

5 According to “Weir Design” (The Japanese Society of Irrigation, Drainage, and Rural Engineering), “the standard

speed of water entering the intake structure is 0.6m/s-1.0m/s.” In addition, in “Hydroelectric Practice” Shinichi

Senshu writes that “An intake speed between 0.3m/s-0.5m/s is desirable.”

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L > h/vg×u

Here, L: Maximum Length of Sand Trap(m)

h: Depth of Water in Sand Trap(m)

u: Average Speed Inside Sand Trap(m/s)

vg: Speed of Precipitating 0.3mm Sand Particle, 0.04m/s

In order to completely remove any sand, a sand scour gate is typically used in Japan, to great effect.

Since it is assumed there will be a need for regular sand removal once the plant is operational, a bypass

will be installed, running from the front of the sand trap gate to the headrace, so that sand removal can

take place without interrupting operation of the plant itself.

[Headrace]

In order to reduce construction costs, the headrace is usually an open channel installed along the local

geography. The hill being excavated is typically reinforced as soon as excavation finishes, however to

prevent eroded dirt and sand from entering the headrace, the entire headrace will be sealed with

concrete.

[Head Pond]

The head pond, established as the connecting point for the headrace and penstock, regulates changes to

the power plant’s load, in addition to precipitating the last of the sand and dirt from the water to

prevent damage to the pipes and turbines.

As sand removal is particularly important to this project, a sand trap and sand scouring equipment will

be installed.

c) Project Plan 2 (Existing Power Plant Suppletion with River Diversion Plan)

As the results of the site survey have shown, the existing Karai 13 facility and the Karai 7 facility under

construction are to be used safely in the long term with an increased generation capacity and output, the

existing equipment urgently needs restructuring.

Therefore, the repairs necessary to keep both existing facilities running as pieces of infrastructure for the

area have been added to the river diversion proposal of Plan 2. As in Plan 1, the main objective of

repairs to current equipment will be to strengthen the following functions:

- Construct facilities such that absolutely no sediment enters the intake structure.

- Construct facilities such that any sediment that does enter can quickly be removed.

c-1) Existing Karai 13 Power Plant

[Intake Structure]

The sand scour gate currently installed in the intake weir cannot adequately fulfill its duty, and the

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intake structure location and orientation are incorrect. As a result, the current structure will be

exchanged for a new sand scour gate, intake structure and intake channel as per Figure 3-3-11.

Fig. 3-3-17 General Map of Intake Equipment Renovation

Source: Created by the Study Team based on “Karai 13 Hydro Power Project Drawing for

Construction”

[Sand Trap]

The sand trap is the most important structure of this power plant, and a complete restructuring will

be necessary. In this case, a multi-trap system like the one in Figure 3-3-12 would be effective.

Fig. 3-3-18 Example of Sand Trap Remodeling Method

Source: Civil Engineering Handbook

[Head Pond]

The existing steel head pond has a number of support beams installed, which throw off the flow of

Sand Flushing Gate

Headrace

Submerged

Weir Gate

Gate

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water, and as such it has almost no system for handling grit, in addition to lacking a sand scour. As a

result, it will be necessary to reconstruct the reinforced concrete head pond and ensure a sand scour

system is installed.

c-2) Existing Karai 7 Power Plant

[Intake Structure]

The intake structure for existing Karai 7 power plant is currently under construction, however there

are already problems, as noted, with the location of the intake structure as well as the intake’s sand

scour gate; the water must be cleaned thoroughly, as drift and will be taken in. As there is no

equipment installed to quickly clean the sand out of the front of the intake structure, the entire

structure must be reconstructed, as with the Karai 13 power plant.

The current temporary drainage channel for use during construction is installed at the riverbed level

(Photo 3-3-43), so this may be used to install an intake structure, intake canal, and sand scour gate,

as in Figure 3-3-13.

Photo 3-3-43 Temporary Drainage Channel for Construction of Intake Weir

Source: Photo taken by the Study Team

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Fig. 3-3-19 Suggested Intake Remodeling for Karai 7 Power Plant

Source: Created by the Study Team based on “Karai-7 Hydro Power Project Drawing for Construction”

[Sand Trap]

Since it is sufficiently large, it appears that a gate capable of draining sand can be installed at the end

of the sand trap, just as in Karai 13.

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(4) Project Plan Summary

1) Basic Policy for Deciding Project Details

In order for this project to make full use of the natural water resources present in the Karai river basin in

Simalungun, North Sumatra, Indonesia, the best development plan must be chosen from a comprehensive

drainage system development point of view, making maximum power supply the basic policy therein. In

addition, by making applicable hydro power facilities into run-of-river type, this project will prevent

wide-area submersion caused by construction, and bring harmony to natural and social considerations.

At the time of drafting the development plan, technical assessments of geographical terrain, meteorology, and

upstream/downstream development plans will be performed, as well as economical assessments of future

operation and maintenance management. Ultimately, the most appropriate plan will be decided based on the

intentions of local business enterprises. Lastly, the possibility of participation of Japanese investigators in

operations to bring Japanese technical expertise to the project will also be considered.

Given these findings, this project’s basic policy has been defined as follows:

- Draft a plan that ensures facilities last long and become social capital for the public good

- Have consideration for environmental and social impact through natural and social environment

assessments

- Select hydro-mechanical and hydro-electrical equipment with the intent of reducing maintenance

management cost

- Select the most economical development plan making the most use of natural water power resources

that have drainage systems

2) Design Summary and Specifications of Applicable Equipment

a) Study of Generation Plan

This survey, in addition to reviewing the plans for the new Karai 12 power plant, compared an

alternative plan to divert rivers with the aim of maximizing the use of existing facilities along the same

river system, thereby increasing the output of the currently operational Karai 13 and the Karai 7 facility

under construction. The most suitable development plan will be chosen. An examination of each plan

follows.

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a-1) Project Plan 1: Construction of New Karai 12 Power Plant

① Review of Existing Reports

Regarding the plan for the new Karai 12 power plant, according to information from the main

developer of this project, BIE, several surveys have been conducted in the past, and each produced a

different development plan. No staff members know the details of these existing surveys, and only

parts of the reports and diagrams have been saved, so we could not gain a systematic understanding of

the existing surveys. In response to this, the documents received were organized into an existing

survey plan, and its validity and chances of being appropriated into this survey were assessed. Two

types of documents from which we could glean the previous plans were received and their contents

closely examined; there were uncertainties about using either one to form a plan. It was determined

that there is enough room near each candidate site for an equipment layout that would produce more

efficient head. Therefore, this survey will use a 1/50,000 scale topographic map as a base for

reconsidering the equipment layout, and creating a new plan.

Table 3-4-1 shows the contents and evaluation of the documents obtained.

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Table 3-4-1 Existing Survey Report on the Karai 12 Plan

Name of Report Studi Kelayakan dan Disain Rinci

PLTM.Karai12

PLTM KARAI12

Dokumen Tender

Cliant Karai Hydro Energi Karai Hydro Energi

(PT. Wahana Adya)

Report Type Report only Drawing only

Summary

River Name Pulung River Pulung River and

Parlogingan River

Intake WL. EL.504.90m EL.559.00m

Tail WL. EL.380.20m EL.420.75m

Gross Head 124.70m 138.25m

Effective Head 118.97m *134.55m

Max. Discharge 5.00m3/s *7.00m3/s

Max. Output 5,000kW *7,800kW

Intake Weir 1 2

Our Comment The maximum discharge of 5.0m3/s

corresponds to 50% of river flow in

this report’s flow graph. The validity

of this maximum discharge is not

written in the report.

The details of the site selection are

also not written.

From the topographic map of the

area, it is thought that raising the

headwater level can efficiently earn

more head.

* The study team calculated the

effective head, discharge, and

maximum output from design

documents due to a lack of data.

The plan calls for 2 intake weir

locations, however the river that flows

in from the right bank (Sungai

Parlogingan) is a small river with a

catchment area of roughly 29 km2,

putting the merits of constructing a

second weir in question.

② Selection of Facility Layout

[Headwater and Tailwater Levels]

The cross-section diagram of the Pulung River was created based on the topographic map obtained for

this survey. Minding head efficiency, a location with a steep slope was chosen and the headwater and

tailwater levels were selected. As a result, a height of EL.550m-EL.400m will be used for generation,

as well as headwater and tailwater levels, respectively.

Figure 3-4-1 shows the topographical map of the candidate site area, while Figure 3-4-2 shows the

cross-section diagram of the Pulung River.

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Fig. 3-4-1 Topographical Map of Candidate Site Area for Karai 12 Project

Source: Created by the Study Team Based on a 1:50,000 Indonesian Topographic Map

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Fig. 3-4-2 Cross-Section Diagram of the Pulung River

Source: Created by the Study Team

[Headrace Territory]

The area the headrace will pass through has a relatively gentle slope; once the open channel is

established, it has been determined that the amount of earthwork will be minimal, thus the left bank

has been chosen.

[Head Pond and Penstock]

The head pond will be positioned on a flat section of ridge on the left bank around EL. 550m. The

penstock will be placed along the ridge of a northeast-facing hill, more toward the river from the head

pond. The pipe will be about 350m in length.

③ Determination of Maximum Discharge

Based on the Pulung River intake site flow graph organized by the study team, the three cases had

maximum discharge estimates of 6.0m3/s, 7.0m3/s, and 8.0m3/s; these estimates were used to calculate

construction cost and electrical output, and the maximum discharge with the lowest cost of energy

production was chosen. The estimated construction costs dealt with here were chosen for the absolute

highest maximum discharge for the sake of comparison, and do not reflect actual construction costs.

For convenience, we have followed the “Standard for the Estimation of Construction Costs to

Determine the Survey Scope for the Optimization of Undeveloped Land” from the New Energy

Foundation’s “Small- and Medium-Scale Hydroelectric Generation Handbook” when making these

calculations. When calculating the electrical production, calculations were performed with the river

flow following deduction of a 0.5m3/s maintenance flow corresponding to a 100km2 catchment area,

since discharge from the river’s flow back into the environment is required.

Since the case with a maximum discharge of 7.0m3/s is the cheapest, this value was used for the

Intake WL.

Tail WL.

3-77

survey.

The results of the optimum scale examination are shown in Tables 3-4-2 and 3-4-3.

Table 3-4-2 Results of Optimum Scale Determination

69 68 117◎

Unit Cost (\/kWh)

Optimum Case

52,362 57,746 36,308

3,597 3,937 4,251

Annual Energy(MWh)

Construction Cost

(×106\)

2,190 2,555 2,9201 1 1

S(abcd)

β

212 120 63

1,904 2,145 1,394

Number of Date

flowing Qmax

ΣS(abcef)

Case 1 Case 2 Case 3

6.00 7.00 8.00Qmax (m3/s)

Source: Created by the Study Team

Fig. 3-4-3 Discharge－Construction Unit Cost Curve

Source: Created by the Study Team

④ Basic Power Generating Plan

Based on the chosen facility layout and maximum discharge, we have drafted a basic plan for the Karai

12 mini-hydro power plant. In addition, in the examination of each piece of equipment, the problems

mentioned above were revealed; through the offering of several solutions, we have taken care to ensure

that the equipment will run for a long time.

Table 3-4-3 shows the elements of the plan, while Figure 3-4-4 shows the general ground plan for the

Unit Cost (¥/kWh)

Max. Discharge (m3/s)

3-78

Karai 12 mini-hydro power plant.

Regarding the Annual Energy Production calculations: as discharge from the river’s flow back into the

environment is required, calculations were performed with the river flow following deduction of a

0.5m3/s maintenance flow corresponding to a 100km2 catchment area. In addition, a reduction in

generator efficiency when the discharge is reduced was taken into consideration.

Table 3-4-3 Elements of the Karai 12 Power Plant Plan

River Name Pulung River

Intake WL. EL. m 550.00

Tail WL. EL. m 400.00

Intake Weir no 1

Catchment Area km2 116.65

Type of Headrace Covered Open Channel

Length of Headrace m 1,440

Length of Penstock m 330.0

Gross Head m 150.00

Effective Head m 145.03

Max. Discharge m3/s 7.00

Max. Output kW 9,000

Annual Generating

Energy

×103kWh 64,030

3-79

Fig. 3-4-4 General Ground Plan of Karai 12 Mini-hydro power Power Plant

Source: Created by the Study Team

3-80

a-2) Project Plan 2: Power Uprating Plan of Existing Power Plant with River Diversion

① Review of Existing Study Reports

[Karai 13 Power Plant]

The Karai 13 power plant was completed in February 2014 and is generating electricity. However,

there are no completed design documents, so the effective head and other basic generation data has not

been organized yet.

As a result, the base situation and elements used to create the output increase for existing equipment

are: the maximum discharge and generator efficiency taken off the generator’s nameplate; and the loss

calculations run based on the detailed design blueprints; these were organized by the study team.

Further, since the river flow observation post at the site of the power plant has not been established, the

study team has calculated the electrical output based on the flow graph from the planning phase.

[Karai 7 Power Plant]

The Karai 7 power plant is currently under construction, however the study team has obtained detailed

design documents. Just as with Karai 13, various data have not been organized, so the study team has,

based on the planned maximum discharge, run a loss calculation based on the blueprints, and organized

the data of the existing equipment to form a base.

Data on the Karai 13 and Karai 7 power plants are shown in Table 3-4-4.

3-81

Table 3-4-4 Elements of Existing Karai 13 and Karai 7 Power Plants

Power Plant Karai 13 Karai 7

River Name Karai River Karai River

Intake WL. EL.m 707.80 388.30

Tail WL. EL.m 541.01 300.45

Intake Weir no 1 1

Catchment Area km2 145.25 248.31

Type of Headrace Covered Open Channel Open Channel and

Covered Open Channel

Length of Headrace m 3,312.20 2,306.70

Length of Penstock m 445.12 684.84

Gross Head m 166.79 87.85

Effective Head m 155.52 76.63

Max. Discharge m3/s 6.30 11.00

Max. Output kW 8,670 7,460

Annual Generating

Energy ×103kWh 67,807 58,084

Source: Created by the Study Team from “Studi Kelayakan dan Disain Rinci PLTM, Karai 7” and

“Studi Kelayakan dan Disain Rinci PLTM, Karai 13”

[River Diversion Plans]

Regarding river diversion plans, with the commitment of BIE, Indonesian consultants are creating the

basic designs. The basic designs have 2 locations for channel plans, called River Diversion Plan 1 and

River Diversion Plan 2. The summary of these plans is shown in Fig. 3-4-5 and Table 3-4-5.

3-82

Fig. 3-4-5 Map of Karai River Diversion Locations

Table 3-4-5 Summary of Karai River Diversion Plan

Diversion Plan River Diversion 1 River Diversion 2

Name of Intake River Sigambur River Pulung River

Name of Discharge River Karai River Sigambur River

Catchment Area km2 22.22 67.74

Max. Discharge m3/s 0.79 2.42

% of Probable Flow % 70 70

Type of Headrace Open Channel Open Channel＋Tunnel

Length of Headrace m 1,310 1,180

Source: Created by the Study Team Based on Data from “Pre-Feasibility Study SUPLESI PLTM

KARAI-13”

In River Diversion Plan 1, the headrace from the Sigambur River will be located approximately 200m

upstream from the existing Karai 13 intake site. The headrace will pass through a valley, and is planned

to be an open channel 1,310m long.

However, the catchment area of the Sigambur is small, and since we do not anticipate a large intake

(See Figures 3-4-6 and 3-4-7), roughly 3km upstream from the intake for River Diversion Plan 1 is

where the planned diversion from the Karai River in River Diversion Plan 2 will begin. The catchment

area of the intake location for River Diversion Plan 2 is larger than that of River Diversion Plan 1 (See

Figures 3-4-8 and 3-4-9), so we anticipate a larger intake. However, roughly 5km downstream from the

River Diversion 1

River Diversion 2

プルン川

カライ川 シガンブール川

Source: “Pre-Feasibility Study SUPLESI PLTM KARAI-13,” Annotated by the Study Team

3-83

planned intake site for the Pulung River is the planned site for the Karai 12 Power Plant, therefore both

plans cannot coexist.

In the results of the field survey, it was determined that there were no technical problems with the

existing channel plans, so they may be used in Plan 2 of this survey.

Fig. 3-4-6 River Diversion Plan 1 (Sigambur River) Catchment Area

Source: ”Pre-feasibility Study Suplesi PLTM Karai-13”

CA. of

Sigambur River

River Diversion

Plan 1 Intake of Karai13

Pulung River

CA of

Karai River

3-84

Fig. 3-4-7 Flow Duration Curve of the Sigambur River

Source: Created by the Study Team Based on Data from “Pre-feasibility Study Suplesi PLTM Karai 13”

Fig. 3-4-8 River Diversion Plan 2 (Pulung River) Catchment Area

Source: “Pre-feasibility Study Suplesi PLTM Karai 13”

River Diversion

Plan 2 Sigambur River

CA. of Pulung River

Intake Weir of

Karai13

CA. of

Karai River

3-85

Fig. 3-4-9 Flow Duration Curve of the Karai River

Source: Created by the Study Team Based on Data from “Pre-feasibility Study Suplesi PLTM Karai 13”

② Study Plan Organization for Power Uprating Plan of Existing Power Plant

Two adjacent rivers (the Sigambur and the Pulung) will be diverted into the Karai River, and in the

event of increased flow in the Karai River, the existing power plants on that river will have their

outputs increased in one of the 2 ways listed below:

- Study Case 1: Only increase what can be output during the dry season, without changing the

maximum output of the existing plant.

- Study Case 2: Allow the extra river flow to increase the maximum output of existing plant.

The contents of the 2 cases above are collected in Table 3-4-6. If the outputs are allowed to increase, as

in case 2, the construction of new powerhouses beside the existing powerhouses in each plant will be

required. Further, in each case, as revealed by the results of the survey, the replacement of the intake

structure, sand trap, and head pond will be planned as a solution to the problems noted with each. The

headrace, as determined in the examination of Case 2, will be able to handle even the increased

maximum flow comfortably, and is thus fit for use as-is in either case.

3-86

Table 3-4-6 Case Examinations of Existing Power Plant Output Increases via River Diversion

Case Case 1 Case 2

Output Increase

Method

Only increase what can be output

during the dry season, without

changing maximum output of the

existing plant.

Allow extra river flow to increase

maximum output of existing plant.

Maximum Discharge No change.

Use existing equipment.

Increase by diverted amount

(3.21m3/s)

Effect Increase in kWh only kW and kWh increase

Construction Scope Existing Equipment Renovation

・Intake Structure

・Intake Weir Sand Scour Gate

・Intake canal

・Sand Trap

・Head Pond (One section)

Existing Equipment Renovation

(Same as Case 1)

Installation of New Equipment

・ New Penstock (Divert from

existing penstock)

・New Powerhouse

・New Tailrace

・New 150kV Power Lines

Source: Created by the Study Team

③ Basic Power Generating Plan

Based on the existing flow surveys and results of hydrological analyses carried out in previous reports

on the existing plants on the Pulung and Sigambur Rivers, the following has been determined

regarding the river diversion that forms the basis of the plan to augment existing facilities:

1. The existing Karai 13 equipment utilization rate shall be calculated from the Karai River flow

diagram (Fig. 3-4-10, blue line).

2. A Load Duration Curve will be created by adding the diverted Sigambur and Pulung River

amounts to the Karai River flow diagram (Fig. 3-4-10, red line), and for Case 1 (increase of

existing power plant output only), a diverted flow was chosen so that the utilization rate would

reach the maximum value.

If 70% of the flow of the duration curves for the Sigambur and Pulung Rivers are diverted to the Karai

River, the utilization rates of plant equipment reach 99.7% and 98.4%, respectively, fulfilling the

conditions above. To achieve this, 70% of the flow in River Diversion Plans 1 and 2, a total of

3.21m3/s, was set as the ordinary intake. Figures 3-4-10 and 3-4-11 show the current condition of the

existing power plants, and the flow conditions following diversion of the rivers.

3-87

Fig. 3-4-10 Karai 13 Power Plant Load Duration Curve

Source: Created by the Study Team

Fig. 3-4-11 Karai 7 Power Plant Load Duration Curve

Source: Created by the Study Team

In the examination of Case 2 (Augmentation of existing plant and increase of maximum output), for

comparison the diverted flow was set at 3.21m3/s as in Case 1, and the plan added a power plant with a

maximum discharge of 3.21m3/s.

Table 3-4-7 shows the summary of elements of existing power plant output increase for Cases 1 and 2,

while Figures 3-4-12 to 3-4-15 show the summary designs for Karai 13 and Karai 7 in Plan 2, Cases 1

and 2.

Karai River Flow

Increased River

Flow

Max. Discharge of Case2

Max. Discharge of Case1

Max. Discharge of Case2

Max. Discharge of Case1

Karai River Flow

Increased River

Flow

Percent of time that indicated discharge was equaled or exceeded

Percent of time that indicated discharge was equaled or exceeded

Dis

cha

rge

(m3/s

) D

ischa

rge

(m3/s

)

3-88

Table 3-4-7 Plan 2 (River Diversion Proposal) Elements of Existing Power Plant Output Increase

Study Case Case 1 Case 2

Power Plant Karai13 Karai7 Karai13 Karai7

Intake WL. EL. m 707.80 388.30 707.80 388.30

Tail EL. EL. m 541.01 300.45 541.01 300.45

Catchment Area km2 145.25 248.31 145.25 248.31

Type of Headrace Open

Channel

Open

Channel

Open Channel Open Channel

Length of Headrace m 3,312.20 2,306.70 3,312.20 2,306.70

Length of Penstock m 445.12 684.84 445.12 +

71.23(additional)

684.84 +

73.83(additional)

Gross Head m 166.79 87.85 166.79 87.85

Effective Head m 155.52 76.63 151.03 73.35

Max. Discharge m3/s 6.30 11.00 9.51 14.21

Max. Output kW 8,600 7,400 12,600 9,100

Annual Generating

Energy ×103kWh 75,144 63,780 101,864 74,401

Source: Created by the Study Team

3-89

Fig. 3-4-12 Plan 2 Case 1 (Output Increase via River Diversion) Karai 13 General Layout

3-90

Source: Created by the Study Team

Fig. 3-4-13 Plan 2 Case 1 (Output Increase via River Diversion) Karai 7 General Layout

Source: Created by the Study Team

3-91

Fig. 3-4-14 Plan 2 Case 2 (Plant Augmentation via River Diversion) Karai 13 General Layout

Source: Created by the Study Team

3-92

Fig. 3-4-15 Plan 2 Case 2 (Plant Augmentation via River Diversion) Karai 7 General Layout

Source: Created by the Study Team

3-93

b) Examination of Planned Generation Equipment

b-1) Project Plan 1: Karai 12 Power Plant

The new facility proposed in Plan 1 will generate an output of 9.0MW. However we cannot

recommend the plan to connect it to the same 20KV distribution line as Karai 13, as this will result in a

large amount of supply line-related trips and issues due to lack of demand, as noted above. Thankfully,

there are plans to construct the nearby Negeri Dolok 150KV transformer; upgrading from a 20KV

distribution line to a 150 KV line, we can plan to reduce the aforementioned number of trips and relax

output limits, and expect an increase in the utilization rate of each plant.

Fig. 3-4-16 Map of Karai 12 Electrical System (New Facility Proposal)

Source: Created by the Study Team

b-2) Project Plan 2: River Diversion Plan, Existing Karai 13 and Karai 7 Facilities

Karai 13 and Karai 7 will receive output increases of 4,000kW and 1,700kW, respectively. These

outputs will be achieved through the installation of 1 new dynamo in each plant. It has been

determined that the installation of new equipment alongside the existing equipment will result in a

greater increase in output than the simple renovation of existing equipment alone.

Therefore, through the expansion of existing equipment, we will achieve output increases of 4.0MW

and 1.7MW, a Power Factor of 0.8, Short-Circuit Ratios of 1.0, and a transformer capacity fit for the

amount of power being generated.

The secondary voltage will be 20KV, in order to connect to the existing distribution lines.

As a result, the total outputs will be 12.6MW for Karai 13, and 9.1MW for Karai 7. The currently

installed distribution wiring has the capacity to carry the power from the power plant to the mains.

3-94

However, judging by the operating conditions of the currently operational Karai 13, it is doubtful as to

whether or not the corresponding demand for so much electricity exists on the current 20KV

distribution system of the Karai region.

If connected to a 150KV electric supply line during construction, output limits arising from a lack of

demand and trips caused by the supply lines can be avoided. Thankfully just 5.5km away lies the

150KV Negeri Dolok transformer; by connecting to this transformer we can plan to reduce the

aforementioned number of trips and relax output limits, and expect an increase in the utilization rates

of each plant.

Fig. 3-4-17 Map of Karai 7 & 13 Electrical Systems (Augmentation Proposal)

Source: Created by the Study Team

c) Development Costs of Plans Under Consideration

A summary of the salient points for each plan are listed in Table 3-4-8 below, with the development and

construction costs (including construction costs per amount of electricity generated) listed in Table 3-4-9.

The approximate construction costs are calculated based on the estimated volume of construction in the

summary design for each structure, and were calculated using the price estimates of Indonesian

construction companies for each type of construction. Chapter End Document 3-1 shows an itemized list

of the approximate construction costs for each plan.

Based on this, building the new Karai 12 facility in Plan 1 emerged as having the cheapest construction

cost.

3-95

Table 3-4-8 Overview of Salient Points for Each Plan Under Consideration

Study Plan

Study Case

Name of Facility Karai12 Construction Karai7 Renovation Karai13 Renovation Karai7 Expansion Karai13 Expansion River Diversion 1 River Diversion 2

Max. Discharge Qmax m3/s 7.00 11.00 6.30 14.21 9.51 - -

Catchment Area CA km2 116.65 248.31 145.25 248.31 145.25 - -

Gross Head H m 150.00 87.85 166.79 87.85 166.79 - -

Effective Head He m 145.24 76.63 155.52 73.35 151.03 - -

Turbine Efficiency ηt 0.93 - -

Generator Efficiency ηg 0.97 - -

Max. Output P kW 9,000 7,400 8,600 9,100 12,600 - -

Annual Generating Energy W ×103kWh/y 64,030 63,780 75,144 74,401 101,864 - -

Construction Cost (Civil Works) ×106IDR 62,293 35,972 28,112 49,891 45,509 14,137 16,021

Construction Cost (E&M Works) ×103USD 5,940 - - 2,700 3,070 - -

Construction Cost

(Transmission Line Works)×10

6IDR 15,400 - - - -

0.925 Existing: 0.925, New: 0.93

Plan 1

0.964 Existing: 0.964, New: 0.97

15,400

Plan 2

Case 1 Case 2 Common to Case 1 and 2

Source: Created by the Study Team

Table 3-4-9 Other Construction Costs for Each Plan

Study Plan Plan 1

Plan 2

Study Case

Case 1 Case 2

Output Increased kW 9,000 - 5,700

Generating Energy Increased ×103kWh/y 64,030 13,033 50,374

Construction Cost in Indonesian

Rupiah ×106IDR 77,693 94,242 140,958

Construction Cost in US Dollar ×103USD 5,940 - 5,770

Total Construction Cost Equivalent

in Japanese Yen* JPY 1,562,849,200 1,036,662,000 2,238,495,100

Unit Construction Cost per Annual

Generating Energy JPY/kWh 24.4 79.5 44.4

Remarks

New

construction of

Karai12

Karai7 and 13

renovation, and

river diversion

facilities

Karai7 and 13

expansion, and

river diversion

facilities

*：Calculated Using December 17, 2014 Exchange Rate (US$1=¥117.15、IDR1=¥0.01)

Source: Created by the Study Team

d) Comparison of Considered Plans

The Technical Concerns, Environmental Concerns (as detailed in Chapter 4), and Economics of each

case under consideration above have been evaluated, and the optimum development plan chosen. As a

result, the Plan 1 construction of the new Karai 12 power plant was superior economically, and

presented no environmental or technical problems, and was selected by this survey as the development

plan.

Table 3-4-10 shows the evaluation of each case under consideration.

3-96

Table 3-4-10 Evaluation of Each Case Under Consideration

Case Under

Consideration Plan 1

Plan 2

Case 1 Case 2

Technical Concerns ○ △ △

A new construction plan

that can be tailored to

installation requirements

from the ground up.

Existing structural

problems will be

reconstructed, however

use of existing equipment

means unease over

construction quality

remains.

Same as Left

Environmental

Concerns

(Detailed in Chapter

4)

○ ○ ○

[Environment]

Manufacturing forest or

plantation region;

located outside nature

reserves.

[Social Impact]

Will not displace

residents. Will also not

draw water from a

recession area. Social

impact will be limited.

Same as Left

Same as Left

Economics ○ △ △

Lowest Unit Cost of

Construction

Highest Unit Cost of

Construction

Second Lowest

Unit Cost of

Construction

Overall Evaluation ○ △ △

Selected as

Development Plan

Overall Evaluation:

Inferior to Plan 1

Overall

Evaluation:

Inferior to Plan 1

○: Optimal, △: Development is Possible, but Inferior to Other Proposals

Source: Created by the Study Team

3) Contents of Proposed Projects (Site and Scale of Project Budget, etc.)

The summary design of Plan 1 (New Karai 12 Facility), which was selected as the optimum proposal, is

shown below. Chapter End Document 3-2 shows basic design drawings of Karai 12 Mini-Hydro Power

Project, and Chapter End Document 3-3 shows calculation result for Karai 12 head loss.

3-97

Fig. 3-4-18 General Layout of Karai 12 Mini-Hydro Power Plant

Source: Created by the Study Team

3-98

Table 3-4-11 Karai 12 Power Plant Outline

Summary of Power Generation Plan

River Name - Karai River

Catchment Area km2 116.65

Power Generation Type - Run-of-river Type

Headwater Level EL. m 550.00

Tailwater Level EL. m 400.00

Gross Head m 150.00

Effective Head m 145.03

Maximum Discharge m3/s 7.00

Maximum Output kW 9,000

Annual Generating Energy ×103kWh 64.030

Construction Costs

(Civil Engineering)

(Electrical & Mechanical)

(Transmission Line)

×106IDR

×103USD

×106IDR

62,293

5,940

15,400

Facility Overview

Intake Weir Type: Gravity

Crest Length: 50.4

Height: 5.0

Width: 13.2

Intake Structure m Width: 7.5

Height: 6.1

Intake canal m Type: Open Channel

Width: 3.0

Length: 55.0

Sand Trap m Type: Open Single Tank Bypass Channel

Width: 7.5

Length: 60.7

Depth: 3.2

Headrace m Type: Pressureless Covered Open Channel

Width: 3.0

Length: 1,440

Head Pond m Type: Open

Width: 3.6

Length: 25.0

Depth: 3.2

Penstock m Type: Above Ground Iron Piping

Pipe Diameter: φ1.8

Length: 330.0

Powerhouse m Type: Above Ground

Width: 17.8

Length: 36.8

Height: Above Ground 11.7、Below Ground 6.15

Tailrace m Type: Open Channel

Width: 3.0

Length: 46.0

Source: Created by the Study Team

3-99

4) Solutions for Issues Regarding Proposed Techniques and System Use

The projects proposed in this survey were examined for superiority by putting the currently available data to

use and carrying out basic designs at the basic study level. Regarding the implementation of the projects

proposed in this survey, the creation of more detailed plans and equipment designs must be carried out,

however the appropriate documents and data have not yet been collected. As a result, upon advancing

according to current plans, more detailed surveys need to be conducted.

The next round of surveys to be conducted and their contents are listed below.

a) River Flow Survey

As there is no documentation of the river flow for the project area, theoretical flows will be created

using local observed rainfall data. As these data are essential for generation plans as well as equipment

design, a rainfall observation outpost (gauging station) will be installed near the planned site of the

Karai 12 intake weir during the initial stage of the next round of surveys, observations will be recorded,

and a minimum of 1 years’ worth of river flow data will be collected.

The details of each survey are as follows:

- Installment of Gauging Station

- Measurement of River Cross-Section

- Measurement of Rainfall (Once a Month)

- Measurement of Water Level (Once a Day)

- Creation of H-Q Curve

b) Topographical Survey

The final layout of each piece of generation equipment must be scrutinized; a 1m, contour line-level

topographic map must be made, from the intake weir site to the power plant site. A detailed 1/200

topographic measurement of the area around each structure will also be conducted. Further, along with

measurements of a cross-section of the river, the width of the river will be measured in 50m intervals for

drainage and flood calculation purposes.

The details of each survey are as follows:

- Establishment of Reference Measurements (3 Locations)

- Topographical Survey (Total Ground Plan: Scale 1/1,000, Detailed Structural Blueprints: Scale

1/200)

- Measurement of River Cross-Section

3-100

- Measurement of River Width (50m pitch)

c) Geological Survey

Table 3-4-12 shows future geological investigation items assuming for Plan 1. Geological

investigation shall be carried out for each stage of preliminary to detail studies.

Table 3-4-12 Future Geological Investigation Items

Item Description

Preliminary/Detailed

Reconnaissance

Preliminary to detailed geological reconnaissance is required to understand

topographical and geological characteristics of the planned sites and

considerations for design and construction. Preliminary reconnaissance of wide

area of the planned site shall be carried out first. After narrowing down the

project site, topographic survey of the site and then the detailed reconnaissance

shall be carried out.

Topographic Survey

Accuracy of site reconnaissance depends on topographic map accuracy to be

used. Plan survey, cross-sectional survey and longitudinal profile leveling shall

be carried out for detail study for structures.

Boring Investigation

Boring investigation shall be carried out at each planned structure location

decided from site reconnaissance and preliminary design to understand the

geological conditions.

Good quality coring is necessary to evaluate ground conditions accurately.

Termination of boring should be generally 3 to 5m below the base foundation

rock, however it shall be studied depending on planned structures and site

conditions.

In-Situ Test

Lugeon tests shall be carried out in boreholes. The purpose of Lugeon test is to

understand the hydrological characteristics of ground and groundwater, and

evaluate seepage at intake weir. Other in-situ tests and sounding shall be studied

depending on planned structures and site conditions.

Laboratory Test

In order to investigate applicability of Shirasu concrete, sampling of Shirasu at

the site, laboratory tests of grain size, density, coefficient of water absorption,

specific gravity, solid content, and confirmation of concrete characteristics by

trial mix shall be carried out.

Source: Created by the Study Team

d) Increasing the Operating Ratio of Turbine Generators

According to a survey conducted by Chodai’s resident long-term dispatch engineers, the operating

maximum of Karai 13 is 6MW—a limit reportedly imposed due to the imbalance between supply and

3-101

demand. This indicates that there is no corresponding demand for the electricity being supplied by the

current distribution system; this also indicates that even a plan to expand the power plants cannot

guarantee that the equipment will reach the planned utilization rates.

Further, as previously stated, the distribution system is the cause of an average of 3 trips per day; adding

in the internal incidents that cause trips that number reaches just under 4 trips per day.

The root causes of these trips are lightning strikes and ground faults. We see no signs of a

solution—such as installing aerial power lines or removing the offending vegetation causing ground

faults—forthcoming from inside PLN.

These trips run the risk of shortening the life of the turbines, and we fear the turbines will not last as

long as planned should this situation continue. In addition, the primary cause of these trips has the

potential to cause other incidents; trips caused by the supply lines will become a major problem at some

stage.

Further, geological problems with the water in the plant caused buildup-related outages, so utilization

rates were not necessary close to their target at first. However thanks to the efforts of the existing Karai

13 facility owner, utilization rates have passed 70%.

Despite this effort, the time consumed by buildup-related outages on top of supply line related-trips, the

primary cause of outages, means that the current measures being taken do not amount to a fundamental

solution.

It will be necessary to conduct hydraulic tests, make alterations that address the cause of these trips to

the equipment and protected electric relay, change the connection to the distribution lines, etc. in order

to resolve these issues.

We would like a more detailed study of these incidents.

e) Condition of Power Lines and Connection to Power Supply Lines

As stated above, the ability to demand or consume electricity from the increased output of Karai 7 and

Karai 13, or the new Karai 12 facility, does not exist within the current 20kV supply lines.

Therefore it is necessary to connect to a superior 150kV system if this project is to be implemented.

If additional facilities are renovated or the new Karai 12 facility is built, a superior 150kV system will

be necessary to achieve smooth transfer of the power generated from an area with 2 or 3 power plants

the 5.5km distance to the 150kV Negeri Dolok transformer.

3-102

According to the Wiratman survey, the cost of building one 150kV circuit is 2.8 billion IDR, making the

total cost 15.4 billion IDR.

The conductor is a 240mm2 ACSR, with a supply capacity of 30-50MVA that is more than capable of

handling the 28.5MVA generated by the plants.

Moreover, the output would be relatively small relative to the capacity, and this would create an

economical, one-circuit system.

Fig. 3-4-19 Overview of Karai Region Power Transmission and Power Distribution System

Sou

rce: Created by the Study Team

f) Summary Examination of Construction Plan

In order to maintain long-lasting power facilities that can be used long-term as social capital for the

good of the public, construction management will ideally be conducted according to the following

policies, with the goal of guaranteeing the quality, process, and safety of construction.

- Construction methods and process will be conducted with consideration for the area’s

hydrological, meteorological, geographical and geological conditions, etc.; the location of the

power plant will be chosen with consideration for the river’s characteristics and other

environmental conditions.

- A general construction plan that does not contain the need for special equipment or techniques

outside the realm of possibility shall be created.

- In addition to setting an appropriate standard for construction methods and management, we will

3-103

enact an on-site supervision and management plan to fulfill that standard.

- To prevent pollution of the downstream area, we will select an area near the project site with

minimal impact on the environment and society for gravel pits, quarries, borrow pits, muck

disposal, and waste treatment facilities, in addition to preventing the maximum release of polluted

water and collected sediment during periods of high water.

Based on the above, the following points will be included in the detailed construction plan, to be drafted

during the detailed investigation phase.

- Examination of Supply Methods (Consent/Refusal of Japanese Equipment Introduction)

- Examination of Construction Schedule

- Examination of Construction Management System

- Proposal of Necessary Safety Measures

g) Outline of Maintenance and Management Plan

As mentioned above, based on the currently operating Karai 13’s many power distribution-related trips,

a plan to reduce the number of trips is needed.

Further, the sediment in the river that is a result of the area’s geological makeup is causing buildup in

the powerhouse and channel, as well as wear on the generator, reducing the electrical utilization rates. It

would be preferable to resolve these issues.

3-104

Chapter End Document 3-1 Table of Approximate Construction Cost Items for Each Case

[Plan 1 (Construction cost of new Karai 12 Mini-Hydro Power Plant)]

No. Work Item Price (*103 IDR)

1. Preparatory Works 985,000

1-1 Mobilization and Demobilization 500,000

1-2 Clearing & Grabbing 60,000

1-3 Community Management 70,000

1-4 Temporary Worker's Residence 100,000

1-5 Survey Work 80,000

1-6 Setting-out Control Point 50,000

1-7 Temporary Electrical Facilities 125,000

2. Weir and Intake 13,322,498

2-1 River Diversion 346,827

2-2 Intake Weir

a) Earth Work 211,905

b) Masonry Work 1,583,694

c) Concrete Work 1,554,843

d) Reinforcement Works 2,879,283

e) Form Works 242,139

f) Plastering Works 51,267

g) Miscellaneous Works 127,073

2-3 Intake Structure and Channel

a) Earth Work 281,806

b) Concrete Work 1,102,793

c) Reinforcement Works 1,905,172

d) Form Works 457,976

2-4 Gate 2,577,720

3. Sand Trap 8,486,694

a) Earth Work 828,700

b) Concrete Work 1,633,281

c) Reinforcement Works 4,232,457

d) Form Works 288,556

g) Gate 1,503,700

4. Headrace 12,843,209

a) Earth Work 4,154,450

b) Masonry Work 4,534,687

c) Concrete Work 802,734

d) Reinforcement Works 2,080,191

e) Form Works 611,293

f) Plastering Works 659,854

5. Headtank 3,555,281

a) Earth Work 122,981

b) Masonry Work 302,148

c) Concrete Work 516,822

d) Reinforcement Works 1,785,713

e) Form Works 154,722

f) Plastering Works 61,003

g) Trashrack Screen 611,892

3-105

No. Work Item Price (*103 IDR)

6. Penstock 8,449,937

a) Penstock Pipe 6,506,789

b) Anchor Block 272,145

c) Miscellaneous Works 1,671,003

7. Powerhouse 14,650,371

a) Earth Work 1,498,346

b) Masonry Work 735,309

c) Sand Filling Works 13,604

d) Concrete Works 1,373,909

e) Reinforcement Works 4,747,100

f) Form Works 307,124

g) Plastering Works 22,977

h) Powerhouse Superstructure 1,952,002

i) Overhead Traveling Crane 4,000,000

Total Cost 62,292,990

3-106

[Plan 2 common to Cases 1 and 2 (Construction cost of river diversion facility)]

River diversion 1: (Sigambur River to Karai River)

No. Work Item Price (*103 IDR)

1. Preparatory Works 2,435,114

1-1 Mobilization and Demobilization 200,000

1-2 Clearing & Grabbing 80,000

1-3 Community Management 35,000

1-4 Temporary Worker's Residence 50,000

1-5 Survey Work 30,000

1-6 Setting-out Control Point 35,000

1-7 Temporary Electrical Facilities 50,000

1-8 Land Acquisition 1,365,000

1-9 Disposal Area 590,114

2. Diversion Weir 3,045,624

2-1 River Diversion 835,947

2-2 Intake Weir

a) Earth Work 837,851

b) Masonry Work 249,836

c) Concrete Work 1,480

d) Reinforcement Works 2,672

e) Form Works 1,428

f) Plastering Works 12,457

g) Miscellaneous Works 70,099

2-3 Intake Structure

a) Earth Work 379,199

b) Masonry Work 98,770

c) Concrete Work 2,537

d) Reinforcement Works 4,580

e) Form Works 1,504

f) Plastering Works 4,752

g) Miscellaneous Works 51,214

2-4 Gate 491,298

3. Waterway 8,655,835

a) Earth Work 5,902,964

b) Masonry Work 2,752,871

Total Cost 14,136,573

3-107

River diversion 2: (Pulung River to Sigambur River)

No. Work Item Price (*103 IDR)

1. Preparatory Works 2,306,334

1-1 Mobilization and Demobilization 200,000

1-2 Clearing & Grabbing 80,000

1-3 Community Management 35,000

1-4 Temporary Worker's Residence 50,000

1-5 Survey Work 30,000

1-6 Setting-out Control Point 35,000

1-7 Temporary Electrical Facilities 50,000

1-8 Land Acquisition 1,680,000

1-9 Disposal Area 146,334

2. Diversion Weir 2,898,662

2-1 River Diversion 792,710

2-2 Intake Weir

a) Earth Work 812,017

b) Masonry Work 234,833

c) Concrete Work 1,480

d) Reinforcement Works 2,672

e) Form Works 1,428

f) Plastering Works 12,457

g) Miscellaneous Works 69,903

2-3 Intake Structure

a) Earth Work 316,623

b) Masonry Work 98,770

c) Concrete Work 2,537

d) Reinforcement Works 4,580

e) Form Works 1,504

f) Plastering Works 4,636

g) Miscellaneous Works 51,214

2-4 Gate 491,298

3. Waterway 10,816,135

a) Earth Work 858,359

b) Masonry Work 1,387,046

c) Concrete Work 2,769,396

d) Tunnel 5,801,334

Total Cost 16,021,131

3-108

[Plan 2, Cases 1 (Renovation cost of existing power plant)]

Renovation cost of existing Karai 13 Mini-Hydro Power Plant

No. Work Item Price (*103 IDR)

1. Preparatory Works 310,000

1-1 Mobilization and Demobilization 100,000

1-2 Clearing & Grabbing 40,000

1-3 Community Management 35,000

1-4 Temporary Worker's Residence 50,000

1-5 Survey Work 20,000

1-6 Setting-out Control Point 15,000

1-7 Temporary Electrical Facirities 50,000

2. Weir and Intake 14,436,558

2-1 River Diversion 271,289

2-2 Intake Weir

a) Earth Work 154,388

b) Masonry Work 4,298,990

c) Concrete Work 1,106,211

d) Reinforcement Works 2,021,234

e) Form Works 201,525

f) Plastering Works 26,160

g) Miscellaneous Works 46,476

2-3 Intake Structure and Channel

a) Earth Work 190,993

b) Concrete Work 1,164,945

c) Reinforcement Works 2,012,546

d) Form Works 339,614

2-4 Gate 2,602,187

3. Sand Trap 7,745,540

a) Concrete Demolition 65,585

b) Earth Work 95,497

c) Concrete Work 1,709,704

d) Reinforcement Works 4,430,498

e) Form Works 252,970

f) Miscellaneous Works 8,786

g) Gate 1,182,500

4. Headtank 5,619,676

a) Steel Demolition 377,505

b) Earth Work 47,748

c) Concrete Work 1,314,260

d) Reinforcement Works 3,405,749

e) Form Works 252,970

f) Miscellaneous Works 8,786

g) Trashrack Screen 212,658

Total Cost 28,111,774

3-109

Renovation cost of existing Karai 7 Mini-Hydro Power Plant

No. Work Item Price (*103 IDR)

1. Preparatory Works 310,000

1-1 Mobilization and Demobilization 100,000

1-2 Clearing & Grabbing 40,000

1-3 Community Management 35,000

1-4 Temporary Worker's Residence 50,000

1-5 Survey Work 20,000

1-6 Setting-out Control Point 15,000

1-7 Temporary Electrical Facirities 50,000

2. Weir and Intake 19,391,785

2-1 River Diversion 436,881

2-2 Intake Weir

a) Earth Work 171,371

b) Masonry Work 4,771,879

c) Concrete Work 1,227,894

d) Reinforcement Works 2,243,570

e) Form Works 223,693

f) Plastering Works 29,038

g) Miscellaneous Works 51,588

2-3 Intake Structure and Channel

a) Earth Work 338,058

b) Concrete Work 2,061,953

c) Reinforcement Works 3,562,206

d) Form Works 601,117

2-4 Gate 3,672,537

3. Sand Trap 9,759,904

a) Concrete Demolition 51,812

b) Earth Work 120,326

c) Concrete Work 2,154,227

d) Reinforcement Works 5,582,427

e) Form Works 318,742

f) Miscellaneous Works 11,070

g) Gate 1,521,300

4. Headtank 6,510,537

a) Concrete Demolition 38,859

b) Earth Work 58,253

c) Concrete Work 1,603,397

d) Reinforcement Works 4,155,014

e) Form Works 308,623

f) Miscellaneous Works 10,719

g) Trashrack Screen 335,672

Total Cost 35,972,226

3-110

[Plan 2, Cases 2 (Expansion cost of existing power plant)]

Expansion cost of existing Karai 13 Mini-Hydro Power Plant

No. Work Item Price (*103 IDR)

1. Preparatory Works 310,000

1-1 Mobilization and Demobilization 100,000

1-2 Clearing & Grabbing 40,000

1-3 Community Management 35,000

1-4 Temporary Worker's Residence 50,000

1-5 Survey Work 20,000

1-6 Setting-out Control Point 15,000

1-7 Temporary Electrical Facirities 50,000

2. Weir and Intake 16,247,473

2-1 River Diversion 271,289

2-2 Intake Weir

a) Earth Work 154,388

b) Masonry Work 4,563,354

c) Concrete Work 1,313,875

d) Reinforcement Works 2,399,148

e) Form Works 201,525

f) Plastering Works 27,729

g) Miscellaneous Works 46,476

2-3 Intake Structure and Channel

a) Earth Work 190,993

b) Concrete Work 1,339,726

c) Reinforcement Works 2,314,496

d) Form Works 451,993

2-4 Gate 2,972,481

3. Sand Trap 11,767,302

a) Concrete Demolition 65,585

b) Earth Work 95,497

c) Concrete Work 2,806,474

d) Reinforcement Works 7,272,647

e) Form Works 332,884

f) Miscellaneous Works 11,715

g) Gate 1,182,500

4. Headtank 5,619,676

a) Steel Demolition 377,505

b) Earth Work 47,748

c) Concrete Work 1,314,260

d) Reinforcement Works 3,405,749

e) Form Works 252,970

f) Miscellaneous Works 8,786

g) Trashrack Screen 212,658

5. Penstock 708,097

a) Penstock Pipe 607,660

b) Anchor Block

100,437

3-111

No. Work Item Price (*103 IDR)

6. Powerhouse 10,856,433

a) Earth Work 1,070,721

b) Masonry Work 699,881

c) Sand Filling Works 7,920

d) Concrete Works 835,297

e) Reinforcement Works 2,886,098

f) Form Works 233,569

g) Plastering Works 26,420

h) Powerhouse Superstructure 1,096,527

i) Oversead Traveling Crane 4,000,000

Total Cost 45,508,981

3-112

Expansion cost of existing Karai 7 Mini-Hydro Power Plant

No. Work Item Price (*103 IDR)

1. Preparatory Works 310,000

1-1 Mobilization and Demobilization 100,000

1-2 Clearing & Grabbing 40,000

1-3 Community Management 35,000

1-4 Temporary Worker's Residence 50,000

1-5 Survey Work 20,000

1-6 Setting-out Control Point 15,000

1-7 Temporary Electrical Facirities 50,000

2. Weir and Intake 20,232,796

2-1 River Diversion 548,931

2-2 Intake Weir

a) Earth Work 171,371

b) Masonry Work 4,771,879

c) Concrete Work 1,227,894

d) Reinforcement Works 2,243,570

e) Form Works 223,693

f) Plastering Works 29,038

g) Miscellaneous Works 51,588

2-3 Intake Structure and Channel

a) Earth Work 327,916

b) Concrete Work 2,000,094

c) Reinforcement Works 3,455,340

d) Form Works 583,083

2-4 Gate 4,598,399

3. Sand Trap 10,906,056

a) Concrete Demolition 51,812

b) Earth Work 137,172

c) Concrete Work 2,455,819

d) Reinforcement Works 6,363,967

e) Form Works 363,366

f) Miscellaneous Works 12,620

g) Gate 1,521,300

4. Headtank 6,510,537

a) Concrete Demolition 38,859

b) Earth Work 58,253

c) Concrete Work 1,603,397

d) Reinforcement Works 4,155,014

e) Form Works 308,623

f) Miscellaneous Works 10,719

g) Trashrack Screen 335,672

5. Penstock 1,075,134

a) Penstock Pipe 721,596

b) Anchor Block

353,538

6. Powerhouse 10,856,433

a) Earth Work 1,070,721

3-113

No. Work Item Price (*103 IDR)

b) Masonry Work 699,881

c) Sand Filling Works 7,920

d) Concrete Works 835,297

e) Reinforcement Works 2,886,098

f) Form Works 233,569

g) Plastering Works 26,420

h) Powerhouse Superstructure 1,096,527

i) Oversead Traveling Crane 4,000,000

Total Cost 49,890,956

3-114

Chapter End Document 3-2 Basic Design Drawing of Karai 12 Mini-Hydro Power Plant

3-115

3-116

3-117

3-118

3-119

3-120

3-121

3-122

3-123

3-124

3-125

3-126

3-127

3-128

3-129

3-130

3-131

3-132

3-133

3-134

Chapter End Document 3-3 Calculation Result for Karai 12 Head Loss

Symbol

1. Intake～Intake Canal

(1) he

(2) hp

(3) hr

(4) hgc

(5) hf

(6)

2. Sand Trap

(1) hgc

(2)

3. Hredrace

(1) hf

4. Head Pond

(1) hsc

(2) hr

(3)

5. Penstock

(1) hc

(2) hf

(3) hb

(4) hB

(5) hv

(6)

6. Tailrace

(1) hc

(2) hgc

(3) hf

(4) hl

(5)

H

He

Items Head Loss (m) Remarks

Inflow 0.014

Pier 0.007

Trash Screen 0.004

Reduction of cross section 0.165

Friction 0.000

Other loss 0.019 Σ(1)～(5)*0.1

Subtotal 0.209

Reduction of cross section 0.162

Other loss 0.016 (1)*0.1

Subtotal 0.178

Slope of headrace 1.440

Subtotal 1.440

Reduction of cross section 0.019

Trash Screen 0.007

Other loss 0.003 Σ(1)～(2)*0.1

Subtotal 0.029

Inflow 0.039

Friction 1.489

Curve 0.192

Junction 0.290

Valve 0.304

Other loss 0.231 Σ(1)～(5)*0.1

Subtotal 2.545

Outlet of draft tube 0.083

Reduction of cross section 0.208

Friction 0.038

Outlet of tailrace 0.190

Intake water level 550.00

Tail water level 400.00

Other loss 0.052 Σ(1)～(4)*0.1

Subtotal 0.571

Gross head 150.00

Effective head 145.03

Total head loss 4.972

Chapter 4 Evaluation of Environment and Social

Impacts

4-1

(1) Analysis of the Current State of the Environment and Society

1) Current Environment and Society Data Analysis

a) The State of Socioeconomic Affairs and Land Use

This target region for this project is located in Simalungun Regency, the mountainous region in North

Sumatra Province. Simalungun has an area of 4,372.50km2 a population of 830,000 people (2012), and is

made up of 31 sub districts. Among those districts is the target area for Karai 7 (under construction) and

Karai 12 (new construction plan), Silou Kahean, which has an area of 228.74km2. There is also the target

region for the river diversion plans 1 and 2, Dolok Silou, which has an area of 302.66km2. Lastly is the

area for Karai 13 (currently operating), Raya, which has an area of 331.83km2. These three areas make up

20% of the total area of Simalungun, and rest at 100m above sea level. Also, Silou Kahean’s “Dolok

Marawa” is a “Nagori” that is made up of six villages, including Buntu Siantar, the closest to Karai 12

(new construction plan), and has an area of 19.78km2, and a population of 988 people (2012).

Simalungun’s is a hot and humid tropical rainforest climate, with an average temperature of 25.2℃, a low

of 21.8℃ and a high of 31.4℃ (2012).

Simalungun possesses 138,741.72ha of forest land, with 98,200.48ha (70.8％) of production forest,

10,841.74ha (7.8％) of restricted production forest, and 27,668.09ha (19.9％) of forest conservation.

Simalungun’s main industry is agriculture, and besides paddy fields (wetland: 79,113ha, dry land:

13,198ha), corn (64,643ha), cassava (11,693ha), petai (3,491ha), cabbage (3,478ha), sweet potatoes

(3,469ha), and chili peppers (3,091) are being produced. Additionally, palm oil (28,950.61ha), rubber

(14,013.51ha), and coffee (10,053.5ha) plantations are serving an important role in the economy of

Simalungun. Of the three sub districts, Silou Kahean’s highest production is in paddy fields (dry land),

corn, cassava, and palm oil. Dolok Silou’s highest production is in paddy fields (dry land), corn, chili

peppers, and rubber. Raya’s highest production is in paddy fields (wet land), corn, petai, rubber, and coffee.

The stretch of road in Silou Kahean for Karai 12 (new construction plan) is 74.13km (2012), and the

proportion of road in good/average condition was 60%, while the proportion of broken/very damaged road

was 40%. Additionally, according to the field survey conducted in Dolok Marawa and Buntu Siantar

villages, each house had electricity and water (refer to d) State of Neighboring Communities).

b) Natural Environment

The target region for this project is the mountainous region in North Sumatra. There are no existing results

from an environmental survey done by a public institution for this area. However, there is an

environmental management program and environmental monitoring (UKL-UPL) report1※ concerning

1 “DOKUMRN Upaya Pengelolaan Lingkungan Hidup dan Upaya Pemantauan Lingkungan

Hidup(UKL-UPL) Kegiatan Usaha Pemanfaatan Hasil Hutan Kayu Pada Hutan Tanaman

4-2

industrial plantation in the sub districts of Dolok Silou and Silou Kahean. According to this report, local

fauna include the wild goat, Asian wild pig (Sus spp), giant flying squirrel, crab-eating macaque (Macaca

fascicularis), Sumatran porcupine (Histrix sumatrae), and Sun bear (Helarctos malayanus) etc.

representing mammals, with the partridge, and various hawks etc. representing birds, snakes and lizards etc.

representing reptiles, with forest living bees etc. for insects are reported to live in the region. Additionally,

according to the report, Sun Bears are designated as a protected species in the 1999 7th edition of the

Indonesian government’s guidelines for the protection of plants and animals.

As for flora, corn (Zea mays), cassava (Manihot esculenta), peanuts (Arachis hypogaea), bananas (Musa

paradisiaca), papaya (Carica papaya), and mangos (Mangifera indica) etc. are grown as crops. Besides

that, the African oil palm (Elaeis gueneensis jacq), and the rubber tree (Hevea braziliensis) etc. are grown

on plantations. Lastly, the growth of over 30 tall tree genera such as Shorea, Diospyros, Dipterocarpus,

Callophyllum, and Castanopsis etc. were also reported.

It can be assumed that the same flora and fauna are to be found around the target areas for this project as

well.

c) State of Regional Regulations

1. State of Land Use

The land being planned for this project is mainly used for perpetual production forest, dry land agriculture

or plantations.

The land usage in the target areas for this project, Silou Kahean Dolok Silou, and Raya, is mainly for

cultivation (Kawasan Budidaya), made up of primarily perpetual production forest (Hutan Produksi Tetap),

plantations (Perkebunan), or dry land agriculture (Pertanian Lahan Kering).

Karai 7 (under construction), Karai 12 (new construction plan), and Karai 13 (currently operating), are

mainly located in perpetual production forestland, whereas river diversion plans 1 and 2 are located in a

dry land agriculture or plantation area (Fig. 4-1-1).

2. State of Forest Reserves

The planned land for this project will not affect any protected forests or natural reserves.

The target area for this project, Silou Kahean, Dolok Silou, and Raya are classified as protected forest

(Hutan Lindung), perpetual production forest (Hutan Produski Tetap), restricted production forest (Hutan

Produksi Terbatas, and natural forest reserve (Hutan Suaka Alam).

Industri(UpHHk-HTI) PT.TANAMAN INDUSTRI LESTARI SIMALUNGUN Lokasi Kegiatan :

Kecamatan Dolok Silou dan Kecamatan Silou Kahean Kabupaten Simalungun Luas Areal : 2,700 Ha Juli

2013”

4-3

Karai 7 (under construction) and Karai 12 (new construction plan) correspond to perpetual production

forest, while Karai 13 (currently operating) is in a perpetual production forest and a “should be considered

for other use” area (Areal Penggunaan Lain). The river diversion plans 1 and 2 are located outside of the

forest classification areas (Fig. 4-1-2).

3. State of Conservation Areas

The projects planned land will not affect any conservation areas.

As for the target areas for this project, the Simaclk mountain (PPA Gunung Simaclk di kec. Dolok Silau)

resides in Dolok Silou, Tinggi Raja Conservation area (Kawasan Konservasi Tinggi Raja) is in Silou

Kahean, but both of these are not located in the area affected by this project (Fig. 4-1-3).

Also, on the western side of Dolok Marawa village is the Dolok Tinggi Raja Conservation area (Cagar

Alam Dolok Tinggi Raja), which possesses a hot spring and is partly being used as a tourism site, but it is

more than 3km away from Karai 12 (new construction plan) (Fig. 4-1-4 and 5, Photo 4-1-1).

4-4

Fig. 4-1-1 State of Land Use

Source: “RENCANA TATA RUANG WILAYAH (RTRW) KABUPATEN SIMALUNGUN TAHUN

2011-2031” (REMERINTAH KABUPATEN SIMALUNGUN BADAN PERENCANAAN

PEMBANGUNAN DAERAH PAMATANG Raya 2012)

LAMPIRANⅢ RENCANA POLA RUANG KABUPATEN SIMALUNGUN used for creation by Study

Team

Karai 12 new

Karai 7 construction

Karai 13 operating

River Div. 1

River Div. 2

Other Uses

Tourist Area

Perpetual Production

Forest

Natural Reserve

Plantation

(Cultivation Land)

(Protected Land)

Restricted Production

Forest

Protected Forest

Dry Land Agriculture

4-5

Fig. 4-1-2 State of Forest Reserves

Source: “RENCANA TATA RUANG WILAYAH (RTRW) KABUPATEN SIMALUNGUN TAHUN

2011-2031” (REMERINTAH KABUPATEN SIMALUNGUN BADAN PERENCANAAN

PEMBANGUNAN DAERAH PAMATANG Raya 2012)

LAMPIRANⅣ USULAN REVISI KAWASAN HUTAN used for creation by Study Team

Protected Forest

Perp. Prod. Forest

Restricted Prod.

Natural Conserve

Other Use

Karai 12

Karai 7

Karai 13

River Div. 1

River Div. 2

4-6

Fig. 4-1-3 State of Conservation Areas

Source: “RENCANA TATA RUANG WILAYAH (RTRW) KABUPATEN SIMALUNGUN TAHUN

2011-2031” (REMERINTAH KABUPATEN SIMALUNGUN BADAN PERENCANAAN

PEMBANGUNAN DAERAH PAMATANG Raya 2012)

LAMPIRANⅤ RENCANA KAWASAN STRATEGIS KABUPATEN SIMALUNGUN used for

creation by Study Team

KAWASAN STRATEGIS

FUNGSI DAYA DUKUNG LINGKUNGAN（Environmental Support Strategy）

9 PPA Gunung Simaclk di kec. Dolok Silau（Dolok Silou, Mount Simaclk）

10 Kawasan Konservasi Tinggi Raja（Tinggi Raja conservation area）

Karai12

Karai7

Karai13

River Div. 1

River Div. 2

4-7

Fig. 4-1-4 Dolok Tinggi Raja Nature Conservation Area (Hot spring Location）

Source: NAGORI DOLOK MARAWA mid-development plan (2011-2015)

“PEMERINTAH KABUPATEN SIMALUNGUN KECAMATAN Silou Kahean NAGORI DOLOK

MARAWA RENCANA PEMBANGUNAN JANGKA MENENGAH DESA (RPJMDes) TAHUN

2011-2015” used for creation by Study Team

Pulung River

Dolok Marawa

Buntu Siantar

TINGGI RAJA

Conservation Area

N

4-8

Fig. 4-1-5 Dolok Tinggi Raja Nature Conservation Area (Hot spring Location) Map

Source: NAGORI DOLOK MARAWA mid-development plan (2011-2015) and local field surveys used for

creation by Study Team

Photo 4-1-1 Dolok Tinggi Raja Nature Conservation Area

*Dolok Tinggi Raja Nature Conservation Area (Date of Designation: April 16, 1924 Size: 167ha)

TINGGI RAJA Cons. Area

TINGGI RAJA

Cons. Area

Dolok Marawa

Buntu Siantar

Karai 12

Pulung River

4-9

d) State of Neighboring Communities (Local Resident Hearing Results)

Below are the results of a local resident hearing held at Buntu Siantar village, the closest village to the

Karai 12 proposed new facility in the target region.

Also, it should be noted that the Pulung river water planned for use with the new Karai 12 facility is not

being used for livelihood by the residents.

■ Buntu Siantar〔Nov. 13, 2014 (Thurs)〕

Photo 4-1-2 Buntu Siantar Photo 4-1-3 Local Resident Hearing

Photo 4-1-4 Investigation of Community Photo 4-1-5 State of Private Water System

Photo 4-1-6 Water Tank

4-10

1. State of Private Water System

・ The water system is run not as a utility, but by a private company

・ The water is boiled and drunk, as well as used for bathing and washing

2. Location of Source for Water System

・ The water source is about 5km from the village, and is conveyed there by a pipe from the

water spring.

・ No pumps are used, and the water is collected at a water tank in the upper region of the

village (inside the plantation).

3. Water Cost, Date of System Outfitting

・ The cost covers system maintenance, and is 16,000IDR/month for private dwellings, and

25,000IDR/month for restaurants etc.

・ The system was outfitted in 2004, before which the river was used for all water needs.

4. State of Pulung River Usage

・ The river is currently only used for bathing and fishing (hobby), and not used for the

plantation.

・ The community’s personal gardens/fields etc. (rice, chili peppers, corn, bananas, etc.) pull

water from the river.

5. Community Situation

・ There are about 80 residences with 300 people (does not apply to minorities).

・ Villagers work at the plantation (palm oil, rubber).

・ Each residence has electricity.

・ The community has one road, unpaved and narrow.

・ The village has one church, and no elementary school (students attend Dolok Marawa’s

elementary school).

Photo 4-1-7 Buntu Siantar villagers Photo 4-1-8 Plantation (Palm Oil)

4-11

Photo 4-1-9 Electricity System Photo 4-1-10 Buntu Siantar Village Road

Photo 4-1-11 Church Photo 4-1-12 Going to School

Additionally, the results of local observations of Dolok Marawa, the neighboring village to Buntu Siantar,

are as follows.

■ Dolok Marawa〔Nov. 13, 2014 (Thurs)〕

1. Community Situation

・ The villagers work at the plantation (palm oil, rubber).

・ Each residence has electricity and water.

・ The village has one road, unpaved and narrow. Eventually it forks off towards Buntu Siantar.

・ The village has one church, and one elementary school which the students attend on foot.

Photo 4-1-13 Dolok Marawa entrance Photo 4-1-14 Plantation (Palm Oil)

4-12

Photo 4-1-15 Electricity System Photo 4-1-16 Water System

Photo 4-1-17 Dolok Marawa road Photo 4-1-18 Fork to Buntu Siantar

Photo 4-1-19 Church Photo 4-1-20 Going to School

Photo 4-1-21 Elementary School

Buntu Siantar

4-13

Fig. 4-1-6 Buntu Siantar and Dolok Marawa Villages Map

Source: NAGORI DOLOK MARAWA mid-development plan (2011-2015)

“PEMERINTAH KABUPATEN SIMALUNGUN KECAMATAN Silou Kahean NAGORI DOLOK

MARAWA RENCANA PEMBANGUNAN JANGKA MENENGAH DESA (RPJMDes) TAHUN

2011-2015” used for creation by Study Team.

2) Future Predictions (If Project is not Carried Out)

The following points are predicted in the case that the project is not carried out.

・The local environment is stable.

・Eventually, with the current power shortage, a power plant will be constructed in the local area.

However, if and when a power plant is built, the effects of the plant on the environment and lives of

the locals is a point of concern.

・This project proposes a run-of-the-river system mini-hydro power, with almost no environmental

impact, and stable power supply. However, if a plant that uses fossil fuels is built, the

environmental impact and the emission of greenhouse gases will increase.

Pulung River

Dolok Marawa

To Karai 12

N

Church

Church

Elementary School

Palm Oil

Cacao

Rubber

Buntu Siantar

Palm Oil

■Water Tank

Bridge

Road Fork

4-14

(2) Environmental Improvements Achieved through this Project

This project is the construction of a hydroelectric plant that does not emit any carbon dioxide (CO2)

through power generation. Compared to coal power stations used for power generation, we estimate that

Plan 1 (Karai 12 New) will result in a yearly reduction of 52,000 tons of CO2 emissions, while Plan 2 Case

1 (Karai 7, 13 Renew) will result in a yearly reduction of 114,000 tons of CO2 emissions, and Plan 2 Case

2 (Karai 7, 13 Increase Output) will result in a yearly reduction of 144,000 tons of CO2 emissions.

Below we have provided concrete calculations for the resulting decrease in greenhouse gas emissions.

1) Setting a Baseline

a) Thinking About the Baseline

The baseline for this project (a new mini-hydro power plant) is the amount of CO2 emitted by a diesel

power station that can generate the same amount of (expected) power.

b) Baseline Calculation Method

The amount of CO2 released by a diesel power station is calculated based on the IPCC Guidelines (IPCC

Guidelines for National Greenhouse Gas Inventories: Reference Manual).

c) Prerequisite Conditions

The planned output and yearly power generation for the power station are as shown in Table.

Table 4-2-1 Calculation Conditions

Cases Under Consideration Planned Power Output

（kW）

Usage

Ratio

Yearly Power

Generation（MWh）

Plan 1 Karai-12 new 9,000 81％ 64,030

Plan 2 Case 1 Karai-7 renew 7,400 98％ 63,780

Karai-13 renew 8,600 100％ 75,144

Case 2 Karai-7 increase

output

9,100 93％ 74,401

Karai-13 increase

output

12,600 92％ 101,864

Yearly power production = Planned output * 24 hours * 365 days * Usage ratio

Source: Created by the Study Team

4-15

d) Baseline Calculation Results

If the reduction of greenhouse gas emissions comes from reduced (or alternative) energy, the conversion to

CO2 emissions can be calculated as follows.

CO2 equivalent = Crude oil equivalent of reduced or alternative energy (ktoe/y) * 42.62 * 20 * 0.99 *

44/12

(1) Reduced (or alternative) energy (crude oil equivalent in ktoe/y)

The energy conversion for crude oil is 10,000 kcal/kg.

The energy conversion for electric power is 2,646 kcal/kg.

(2) Convert to energy units (amount of heat: TJ)

(2) = (1) * 42.62 TJ/kt (conversion factor)

(3) Convert to unit for carbon emissions

(3) = (2) * 20 t-C/TJ (unit for carbon emissions)

(4) Correction for imperfect combustion

(4) = (3) * 0.99 (coefficient of oxidation for carbon)

(5) CO2 conversion

(5) = (4) * 44/12(ratio by molar weight)

(1) Crude oil conversion (toe/y)

2,646 kcal/kWh / 10,000 kcal/kg = 264.6 kg/MWh

(2) Convert to energy units (amount of heat: TJ)

264.6 kg/MWh * 42.62 TJ/kt = 11.235 * 10-3TJ/MWh

(3) Convert to unit for carbon emissions

11.235 * 10-3 TJ/MWh * 20 t-C/TJ = 0.225 t-C/MWh

(4) Correction for imperfect combustion

0.225 t-C/MWh * 0.99 = 0.223 t-C/MWh

(5) CO2 conversion (emission coefficient)

0.223 t-C/MWh * 44/12 = 0.818 t-CO2/MWh

(6) Yearly power generation

Yearly power generation (MWh) = Planned power station output (MW) * 24 (h) * 365 (days) * Yearly

usage ratio

(7) Resulting amount of reduced yearly CO2 emissions

Resulting amount of reduced yearly CO2 emissions = Yearly power generation (MWh) * 0.818

t-CO2/MWh

Thus, the projected amount of CO2 emissions for this project (i.e., the values calculated in steps (6) and (7)

above) are shown in Table 4-2-2.

4-16

Table 4-2-2 Emissions Based on CO2/Crude Oil Conversions

Item

Crude Oil Conversion

Plan１ Plan 2

Karai-12

New

Case 1 Case 2

Karai-7

Renew

Karai-13

Renew Total

Karai-7

Increase

Output

Karai-13

Increase

Output

Total

Yearly Power

Generation (MWh/year) 64,030 63,780 75,144 138,924 74,401 101,864 176,265

Emission Coefficient

(t-CO2/MWh) 0.818 0.818 0.818 0.818 0.818 0.818 0.818

Reduced Yearly

Emissions (t-CO2/year) 52,377 52,172 61,468 113,640 60,860 83,325 144,185

Source: Created by the Study Team

2) Calculating these Results

a) Thinking about the Results

Through the construction and provision of power through the implementation of this project, the amount of

CO2 emissions reduced is determined by the difference in emissions from a diesel power station that could

produce the same amount of power.

b) Method of Calculation

The power station in mind for this project does not emit any CO2 as it is a mini-hydro power, and therefore

has 0 (t-CO2/year) CO2 emissions.

c) Calculation Results

Based on the above calculations, the total reduction in CO2 emissions achieved through the

implementation of this project is the difference between each plan’s baseline amount of 52,377-144,185

(t-CO2/year) and 0 (t-CO2/year).

4-17

Table 4-2-3 CO2 Reduced Emissions

Item

Crude Oil Conversion

Plan 1 Plan 2

Case 1 Case 2

Reduced Yearly Emissions

(t-CO2/year)

52,377 113,640 144,185

Source: Created by the Study Team

Therefore, the implementation of this project would result in a reduction of 52,000-144,000 tons of CO2

emissions per year.

Reduction in CO2 emissions = Baseline emissions - Project CO2 emissions

＝ 52,377-144,185（t-CO2/year）－ 0（t-CO2/year）

＝ 52,377-144,185（t-CO2/year）

4-18

(3) Environmental and Social Improvements Achieved through the

Implementation of this Project

1) Screening of Economic and Social Topics Referred to in the JICA and JBIC Guidelines

As part of the work for this investigation, we conducted on-site investigations and held hearings with and

collected materials from all relevant organizations with reference to the following materials: Appendix 4:

Screening Methods and Table of Checklists included in the JICA Social and Environmental Guidelines and

the Screening Form and Table of Checklists included in the reference materials with the JBIC Bank for

International Cooperation Guidelines for Social and Environmental Issues. After the on-site investigation,

we screened for items that might affect social and environmental issues, keeping in consideration the scale

of the project.

Our results conclude that there would be no major negative effects on either the environmental or social

landscape. The power station planned for this project is not large in scale and uses a river flow

methodology for water intake, which makes it a safe power station for the environment. Due to the fact

that we do not project any major environmental influences after operation of the power station is started

and that no rivers that are used by neighboring indigenous peoples for their daily lives are affected by its

construction (Local Resident Hearing Result), we project that there will be very little environmental or

social effects.

However, according to an environmental management program and environmental monitoring

(UKL-UPL) report concerning industrial plantation in the sub districts of Dolok Silou and Silou Kahean,

Sun Bears are designated as a protected species in the 1999 7th edition of the Indonesian government’s

guidelines for the protection of plants and animals. Also, there is no survey data concerning amphibious,

fish, and insect species that depend on the target rivers, Pulung and Karai, to live. Because of this, it will

be necessary to show intelligence gathering, surveys, and countermeasures from the UKL-UPL creation

stage.

The following table shows the results of our investigation based on the above guidelines and checklists.

4-19

Table 4-3-1 Investigation Results Based on Environmental Checklists

Environmental Item Investigation Results

Permits,

Licenses, and

Explanations

EIA and

environmental

permits

・This project does not meet the scale to be considered.

・Projects that are exempt from AMDAL must create an

environmental management program and environmental

monitoring program (UKL-UPL）.

Explanation to

indigenous peoples

・Because this project is still in the initial consideration phase,

explanation to indigenous peoples has not been conducted.

Pollution

Countermeasures

Air quality Hydro power does not produce any dust or air-polluting

materials.

Water quality Hydro power does not produce any water pollution.

Waste materials Hydro power does not produce any water pollution.

Land pollution Hydro power does not produce any harmful, land-polluting

materials from its power station facilities.

Noise/Vibrations ・The nearest village (Buntu Siantar) Is about 2km away, so

there will be no noise or vibration impact.

Ground settlement ・Because this is a mini facility using a run-of-the-river

system, there is no chance of drawing up groundwater

ground settlement from foundation construction.

Smell ・No waste or polluting materials are produced that could

result in any smells or odors.

Natural

Environment

Protected areas ・Near the proposed construction site is the Dolok Tinggi Raja

Nature Conservation Area, and the surrounding area is

classified as forest reserve, but both are about 3km away.

・The proposed site is mainly perpetual production forest, dry

land agriculture, or plantations.

Ecosystem ・The project target location is in a mountainous region, and

there is no information of important or endangered species

in the area. However, according to (UKL-UPL) report

concerning industrial plantation in the target area, Sun

Bears are designated as a protected species in the 1999

7th edition of the Indonesian government’s guidelines for

the protection of plants and animals. Also, there is no

survey data concerning amphibious, fish, and insect

species that depend on the target rivers, Pulung and

Karai, to live. Because of this, it will be necessary to

show intelligence gathering, surveys, and

countermeasures from the UKL-UPL creation stage.

4-20

Hydrometeor ・There is the possibility of a decrease in the existing water

level caused by water intake.

Geography/Geology

・As an important geological feature, there is a hot spring

emanating from the nearby Dolok Tinggi Raja Nature

Conservation Area, but it is about 3km away.

Social

Environment

Inhabitant relocation

・There are no inhabitants in the proposed construction area, so

there will be no relocation.

Daily life

・The Pulung river is not used for daily living, so no adverse

effects should occur. (According to the Local Resident

Hearing, the river is only used for swimming and hobby

fishing)

Cultural sites There are no historical sites that have been discovered in

the area that can be considered cultural sites.

Scenery

・This project is a small-scale construction and therefore

there is only an extremely small chance that there will be

any disruption to the surrounding landscape. (Also, there

are no laws or local ordinances regarding scenery)

Minority groups and

indigenous peoples

・There are no minority groups or indigenous peoples around

the proposed site.

Other Impact during

Construction

・There will be very little impact due to the small-scale of

construction involved in this project. However, trucks

traveling to and from the construction site may stir up

dust and contribute to noise pollution, which could affect

neighboring residents.

Accident prevention

measures

・A system for accident prevention will be developed

together with the department in charge of the

construction through preventative measures such as

safety training and the provision of proper safety

equipment.

・Roads in the community are not paved and narrow, as well as

used by children going to and from school. It will be

necessary to make safety countermeasures to avoid traffic

accidents.

Monitoring ・Detailed plans will be drafted for the extraction of

monitoring items related to water levels and water

quality (during construction as well as operation), as well

as for a system to handle these tasks.

Source: Created by the Study Team

4-21

2) Other Options and Comparisons for Less Environmental and Social Impact

The mini-hydro power project proposed in this project is a clean, economical, and stable solution for the

provision of power and we are unable to find any other options that may result in less environmental and

social impact.

4-22

(4) Overview of the Laws and Regulations Regarding Environmental

and Social Issues in Indonesia

1) Outline of laws and regulations regarding environmental and social issues related to this project

The two Indonesian bodies in charge of environmental issues were the Ministry of Environment (Policy

making regarding environmental issues, global environment issues, etc.) and the Environmental Impact

Management Agency (Conservation efforts, Inspections, etc.), but by the “2001 101st Presidential

Amendment to the Jurisdiction of each Ministry and Agency” (Presidential Decree No. 2, 2002) the two

combined to form a new Ministry of Environment (hereafter referred to as KLH).

According to this 2002 Presidential Decree No. 2, the duty of the Ministry of Environment (Section 16) is

to “Engage in Environmental Management, as well as create and adjust countermeasures to reduce

environmental impact.”

Additionally, according to the “Environmental Minister’s Regulations for the Ministry of Environment

Organization and Duties” (2010 Environmental Minister’s Regulations No. 16), the structure of the KLH

has been changed.

Fig. 4-4-1 Indonesia Ministry of Environment (KLH) Organizational Map (As of October, 2012)

Source: Indonesia’s Legislative System Structure and Execution

(Japan Ministry of the Environment’s Home Page)

The following constitute Indonesia’s related environmental laws and regulations.

4-23

a) Basic Laws

In Indonesia, the law that deals with general overarching environmental issues is the Environmental

Management Law No. 32, 2009. The basic laws established in 1982 were revised in 1997, strengthening

environmental regulations for enterprises, strengthening penalties, enriching regulations for dealing with

environmental disputes, as well as the introducing of citizen rights for environmental information. These

laws were once again revised in 2009, and were officially proclaimed/enacted as the “Environmental

Protection and Management Law” (2009, Law No. 32).

Table 4-4-1 Laws and Regulations Regarding Environmental Issues (Basic Laws)

Law/Regulation Overview

Environmental Protection

and Management Law

(2009, Law No. 32)

General rules, principles, and objectives, as well as outlook, planning, utilization,

management, environmental management program and environmental monitoring

program (UHL-UPL), damage prevention, harmful and poisonous substance

management, rights and responsibilities, bans, and citizen participation are all

structured according to Chapter 17, Section 127. The Ministry of Environment

has been given greater powers of jurisdiction and penalty, even the ability to

cooperate with the police to make arrests for violations of environmental

protection policies.

Source: Indonesia’s Legislative System Structure and Execution

(Japan Ministry of the Environment’s Home Page)

b) Air Pollution

Indonesia’s air pollution management is laid out in the “Air Pollution Prevention Government Ordinance”

(1999 Government Ordinance No. 41). It aims to keep air pollution to a level that will not affect human

health or environmental health, targeting enterprises and projects, as well as car owners.

4-24

Table 4-4-2 Laws and Regulations Regarding Environmental Issues (Air Pollution)

Law/Regulation Overview

Air Pollution Prevention

Government Ordinance

(1999 Government

Ordinance No. 41)

・Atmospheric environment regulation is basically concerned with sulfur dioxide

(SO2), carbon monoxide (CO), nitrogen dioxide (NO2), particulate matter

(PM10,PM2.5), total suspended particulate (TSP), and dustfall etc., a total of

13 items.

・The Ministry of Environment has a duty to decide and act upon technical

guidelines for air pollution management, and keeping a standard for the nations

atmosphere, regarding fixed and moving source effluent standards.

・The provincial governor, taking into account the national and provincial

environmental state, may by provincial governor’s decree regulate the air

pollution standards of a province. (Considered every five years)

・Local Environmental Management will be executed under the inspection of the

regency, city, or provincial governor.

Source: Indonesia’s Legislative System Structure and Execution

(Japan Ministry of the Environment’s Home Page)

a) Water Pollution

Indonesia’s water pollution management is laid out in the “Water Pollution Prevention and Water Quality

Management Government Ordinance” (2001 Government Ordinance No. 82).

Table 4-4-3 Laws and Regulations Regarding Environmental Issues (Water Pollution)

Law/Regulation Overview

Water Pollution

Prevention and Water

Quality Management

Government Ordinance

(2001 Government

Ordinance No. 82)

・Standards for inland water have types depending on use. 1) Physical Items

(Heat, Turbidity), 2) Inorganic Items (ph, mercury, arsenic, etc.), 3) Organic

Items (BOD, COD, dissolved oxygen, etc.), 4) Microbe Items (E. Coli content)

5) Radioactive Items (total alpha rays, total beta rays). There are approximately

45 items covered in all.

・Regency, city, and provincial governments have management jurisdiction within

their localities to alter or adopt new standards (expansion or creation).

・The central government transfers its power to the localities concerning water

pollution.

・The Ministry of Environment decides on an overall national standard concerning

water pollution.

・The central government will handle issues concerning water that crosses over

provincial or national borders.

Source: Indonesia’s Water Environmental Pollution Situation

(Japan Ministry of the Environment’s Home Page),

Indonesia’s Legislative System Structure and Execution (Japan Ministry of the Environment’s Home Page)

4-25

c) Noises, Vibrations, and Smells

Indonesia’s regulations regarding noise, vibration, and smell pollution are laid out in the 1996 Minister of

the Environment’s Decree Numbers 48, 49, and 50. Noises, vibrations, and smells should be regulated to a

level that does not impact human health or environmental health, targeting enterprises and projects for

regulation.

Table 4-4-4 Laws and Regulations Regarding Environmental Issues (Noise, Vibration, Smells)

Law/Regulation Overview

Minister of the

Environment’s Decree on

Noise Standards (1996

No. 48)

・Standards for noise levels are decided depending on the type of land use

(Residence, Business, Office, Green Land, Manufacturing, Government Office,

Public Facilities, Recreational Facilities, Other including Airports, Stations,

Ports, Cultural Assets), as well as the type of activity (Hospital, School, Place

of Prayer).

Minister of the

Environment’s Decree on

Vibration Standards

(1996 No. 49)

・Standards for vibration are decided based on wave frequency including

standards for vibration from machine damage, vibration from other building

machines, and impact vibrations.

Minister of the

Environment’s Decree on

Smell Standards (1996

No. 50)

・Standards for smells are made up of five points, including Ammonia, Hydrogen

Sulfide, and Methyl Sulfide, etc.

Source: Indonesia’s Legislative System Structure and Execution

(Japan Ministry of the Environment’s Home Page)

d) Waste Related

Information on Indonesia’s waste management policy can be found in the “Rules No. 18 on the

Management of Harmful Waste” (1999). Regulation targets and contents are laid out for the limiting and

prevention environmental pollution through management of harmful wastes. Also, a list of harmful

substances such as 1) Unspecified Origin, 2) Specific Origin, 3) Expired Chemical Substances, etc. is

included.

2) Contents of the EIA (Environmental Impact Assessment) Required for Implementation of the Project

The Indonesian Environmental Impact Assessment (AMDAL) was created based on the 1983

Environmental Management Standards Law No. 16 in 1986, and in 1993 was revised by the “Ordinance

Concerning the Environmental Impact Assessment” (No. 51). The revision mainly simplified the initial

screening process, and strengthened the environmental impact management agency’s jurisdiction

concerning inspection of enterprises that involve several ministries/agencies. It was revised once more in

1999, and again in 2012 (2012 Ordinance No. 27).

Types and scopes of projects that qualify as targets for an environmental impact assessment are laid out in

4-26

the “Minister of the Environment’s Standards for Target Enterprise Activities and Scopes for

Environmental Impact Planning” (2012 Minister of the Environment’s Standards No. 5), and those types

and sizes are reconsidered once each five years.

According to the 2012 Minister of the Environment’s Standards No. 5, in the fields of energy and mineral

resources, “Intake Weir Height≧15m or Water Storage Area≧200ha or Energy Capacity≧50MW” are the

standards for an AMDAL requirement for hydroelectric power generation.

As for this project, Plan 1 (Karai 12 New Construction) is 9MW, Plan 2 Case 1 (Karai 7 and Karai 13

Improvement) is 16 MW, and Plan 2 Case 2 (Karai 7 and Karai 13 Output Increase) totals at 22 MW of

hydroelectric power generation. The intake weir is 5m, and the other requirements are not applicable, so all

of the plans fall outside the requirement for AMDAL.

3) Measures required to Satisfy Related Rules and Regulations

This project does not fall under the AMDAL requirement. However, according to the 34th section of “Laws

Concerning Environmental Conservation and Management” (2009 Law No. 32), “Enterprises and activities

which do not have an AMDAL requirement must create an environmental management program and

environmental monitoring program (UKL-UPL).” UKL-UPL is aimed to manage and monitor enterprises

and activities which do not have a large environmental impact, and is a necessary item for decision-making

concerning operating procedures for those enterprises/activities.

Additionally, according to section 36 in the same document, “Enterprises and activities with a UKL-UPL

requirement must receive an environmental permit.” An environmental permit is necessary to be permitted

to engage in project activities, and is given to all parties undertaking enterprises and activities that fall

under the UKL-UPL requirement. Also, an environmental permit must be received from the Minister, and

various provincial, regency, and city governors for their various jurisdictions.

In order to satisfy all related rules and regulations, the documents required of all of the above laws and

ordinances must be submitted, and agreement must be gained from the local governing body through a

local resident hearing. Lastly, firm countermeasures and steps must be taken in regards to any of the above

environmental impact points that might apply to this project.

4-27

(5) Necessary Actions from Indonesia (Implementing Agencies and

Other Organizations) to Fulfill this Project

The following actions should be taken by the Indonesian government and related agencies in order to make

this project a reality.

-Smooth handling of the permitting process, including the evaluation of environmental impact

assessments (UKL-UPL)

-Have discussions with indigenous peoples in the region and provide support in times of conflict

-Public and fair discourse in relation to information regarding the project

The importance of considering the impact we have on the environment and society will only increase as

time goes on. With this in mind, this project must be organized so that consideration is placed on the

impact the project will have on the regional society during its execution, as well as the benefits it may

bring. Most importantly, an agreement must be reached with the indigenous peoples of the region. When

the implementing private firms work to obtain the agreement of the indigenous peoples of the region, we

must place careful consideration on explaining the project clearly to them and progress smoothly as we can

the support and cooperation of the Philippine government.

Chapter 5 Financial and Economic Evaluation

5-1

(1) Estimated Project Cost

The overall cost of this project, in each case, is estimated as shown in Table 5-1-1. The project cost listed

includes the cost of civil engineering, electrical equipment, power transmission facilities, and other

building costs. The exchange rate was 119.23 JPY/USD, 0.0110 JPY/IDR1.

Table 5-1-1 Case-by-case Project Cost Breakdown

Plan 1 Plan 2

Case 1 Case 2

Karai 12 New

Karai Facility 7, 13

Renovation

+River Diversion Plan

1, 2

Karai Facility 7, 13

Expansion

+River Diversion Plan

1, 2

Output Increases By kW 9,000 - 5,700

Construction Cost (Civil

Engineering) millions IDR 62,293 64,084 95,400

Construction Cost

(Electrical Equipment)

thousands

USD 5,940 0 5,770

Construction Cost

(Transmission Equipment) millions IDR 15,400 0 15,400

Total Construction Cost millions IDR 142,077 64,084 173,342

Value-Added Tax (10%) millions IDR 14,208 6,408 17,334

Grand Total millions IDR 156,285 70,492 190,676

millions JPY 1,719 775 2,097

Source: Created by the Survey Commission

(2) Results Summary of Preliminary Financial/Economic Analyses

1) Fundraising

The current estimated total cost of constructing the new Karai 12 facility (as in Plan 1) is 156,285 million

IDR (about 1.7 billion JPY). Regarding fundraising, Syaria Mandiri, which has an established record as a

senior lender in the BIE, as well as Bank Muamalat and government financial institution SMI (Sarana

Multi Infrastruktur) can be offered as candidates. Further, we are anticipating IDI Infrastructures Inc.

(hereafter referred to as IDI-I) as a mezzanine lender.

1 Mitsubishi USJ Research and Consulting, Nov. 2014 TTS

5-2

It is estimated that senior loans will comprise 60 percent of the necessary funding, mezzanine financing 10

percent, with equity providing the final 30 percent.

If Karai 7 and Karai 13 are renovated, and their performance improved—as in Plan 2 Case 1—or if the

facilities are expanded and their output increased—as in Plan 2 Case 2—senior lenders and BIE funds

covered the existing equipment, and it is estimated that mezzanine financing will supply all additional

construction costs.

2) Detailed Statement

The following is a detailed statement of the basic elements, financial conditions, and operating costs of this

project. However, as there are still unconfirmed items within this statement, general figures from the BIE

hearing and other projects have been used for reference.

5-3

Table 5-2-1 Detailed Statement of the Confirmed Business Plan

Plan 1 Plan 2

Case 1 Case 2

Basic Elements Rated Output kW 9,000 16,000 21,700

Maximum Annual

Generation MWh 64,030 138,924 176,265

Equipment Capacity % 90% 90% 90%

Electricity Sold MWh 57,627 125,032 158,639

Unit Price (Sold) IDR/kWh

1,183

（Years 1-8)

878

（Year 1）

878

（Year 1）

IDR/kWh

825

（Years 9-20）

1,000

（Years 2-20）

1,000

（Years 2-20）

Annual Revenue

millions

IDR

68,173

（Years 1-8）

54,889

（Under

construction for

half of Year 1）

0

（Under

construction for

Year 1）

millions

IDR

47,542

（Years 9-20）

125,032

（Years 2-20）

158,639

（Years 2-20）

Capital Structure Senior Loans % 60% - -

Mezzanine Financing % 10%

100%

Additional

Construction

+ Operating

Costs

100%

Additional

Construction

+Operating

Costs

Equity % 30% - -

Senior Loans Interest Rate % 12% 12% 12%

Principal Deferment

Period years 2

Upon

commencement

of repayment

Upon

commencement

of repayment

Repayment Period years 10 10 10

Binding Deposit - 3 Months’ Interest

Mezzanine Financing Interest % 15% 15% 15%

Repayment Period years 10 10 10

Operating Cost Water Supply Cost IDR/kWh 5 5 5

Operating Cost

millions

IDR 3% of Construction Cost

Additional Costs

millions

IDR 1,200 1,200 1,200

Source: Created by the Survey Commission

5-4

Indonesia is promoting renewable energy as one part of a government plan to reduce crude oil

consumption, and the cost of mini-hydro power is continually under consideration for a price increase

under Feed-in Tariff system. The current unit price for the island of Sumatra is 1,183 IDR/kWh for the first

year through the eighth year following activation, and 825 IDR/kWh for years nine through twenty. This

applies to the construction of a new facility, Karai 12 (Case 1).

In Case 2, a PPA was executed for Karai 7 and 13 prior to the price increase. However, according to Law

22 of 2014 from the Ministry of Energy and Mineral Resources, a previously executed PPA may still be

subject to price revisions based on individual negotiations, so the purchase price has been set at 878

IDR/kWh for the first year, and 1,000 IDR/kWh for years two through twenty.

The duration of construction for the new construction in Plan 1 is two years, while the renovation of

existing equipment only in Plan 2 Case 1 is six months, and the accompanying expansion of Plan 2 Case 2

is one year. Plan 2 assumes that the existing power plants will be shut down during construction, and

therefore will not generate revenue during this period.

3) Project Plan

The following is profit and loss statement, balance sheet, and cash flow statement (for the 10 years

following investment). In any event, assuming proper management, this project can be implemented using

a steady revenue from electricity sales as capital.

5-5

Table 5-3-1 Plan 1 Project Plan

P/L Plan 1 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

Unit：IDR MM Year -2 Year -1 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8

Profit/Loss Total Sales 0 0 68,173 68,173 68,173 68,173 68,173 68,173 68,173 68,173

Total Cost 0 0 24,124 24,419 24,728 25,052 25,393 25,751 26,127 26,521

Total Sales Profit 0 0 44,049 43,754 43,445 43,120 42,780 42,422 42,046 41,651

Total Administrative Expenses 100 100 100 105 110 116 122 128 134 141

Operating Profit -100 -100 43,949 43,649 43,335 43,005 42,658 42,294 41,912 41,511

Total Other Expenses 0 0 16,285 15,174 13,927 12,525 10,949 9,179 7,191 4,956

Current Profits -100 -100 27,664 28,475 29,408 30,480 31,709 33,115 34,721 36,555

Profit Before Taxes -100 -100 27,664 28,475 29,408 30,480 31,709 33,115 34,721 36,555

Taxes 0 0 0 0 0 0 0 8,279 8,680 9,139

Profit After Taxes -100 -100 27,664 28,475 29,408 30,480 31,709 24,836 26,041 27,416

B/S 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

Unit：IDR MM Year -2 Year -1 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8

Assets Total Assets 85,743 186,415 205,094 223,474 241,539 259,275 276,663 285,409 293,372 281,813

Liabilities Long Term (Senior) Loan 11,197 111,969 102,984 92,889 81,546 68,802 54,482 38,392 20,313 -0

Long Term (Mezzanine) Loan 18,661 18,661 18,661 18,661 18,661 18,661 18,661 18,661 18,661 0

Total Liabilities 29,858 130,630 121,646 111,551 100,208 87,463 73,143 57,053 38,975 -0

Equity Capital 55,984 55,984 55,984 55,984 55,984 55,984 55,984 55,984 55,984 55,984

Reserve Fund 0 0 2,497 7,582 13,996 13,996 13,996 13,996 13,996 13,996

Undivided Profit -100 -200 24,967 48,357 71,351 101,831 133,540 158,376 184,416 211,832

Total Equity 55,884 55,784 83,448 111,923 141,331 171,811 203,520 228,356 254,397 281,813

Total Liabilities and Equity 85,743 186,415 205,094 223,474 241,539 259,275 276,663 285,409 293,372 281,813

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

Unit：IDR MM Year -2 Year -1 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8

Operatin Cash Flow -100 -100 45,611 46,422 47,356 48,428 49,656 42,783 43,988 45,363

Total Income 0 0 68,173 68,173 68,173 68,173 68,173 68,173 68,173 68,173

Total Expense 100 100 22,561 21,750 20,817 19,745 18,517 25,389 24,184 22,809

Investment Cash Flow -36,711 -143,764 0 0 0 0 0 0 0 0

EPC Cost -31,257 -125,028 0 0 0 0 0 0 0 0

Interests During Construction (Senior) -1,344 -13,436 0 0 0 0 0 0 0 0

Interests During Construction (Mezzanine) -2,799 -2,799 0 0 0 0 0 0 0 0

Others -1,311 -2,500 0 0 0 0 0 0 0 0

Financing Cash Flow 85,843 95,332 -8,688 -9,798 -11,046 -13,684 -15,111 -16,733 -11,155 -38,975

Loan (Senior) 11,197 100,772 -8,985 -10,095 -11,343 -12,745 -14,320 -16,090 -18,079 -20,313

Loan (Mezzanine) 18,661 0 0 0 0 0 0 0 0 -18,661

DSRA 0 -5,440 297 297 297 -940 -791 -643 6,924 0

Equity 55,984 0 0 0 0 0 0 0 0 0

Decidend payments 0 0 0 0 0 0 0 0 0 0

Increace (Decrease) in Cash & Cash related 49,032 -48,532 36,923 36,624 36,310 34,743 34,545 26,051 32,834 6,389

Beginning Cash & Cash related 0 49,032 500 37,423 74,047 110,357 145,100 179,645 205,696 238,529

Ending Cash & Cash related 49,032 500 37,423 74,047 110,357 145,100 179,645 205,696 238,529 244,918

Source: Created by the Survey Commission

5-6

Table 5-3-2 Plan 2 Case 1 Project Plan

P/L Plan 2 Case 1 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

Unit：IDR MM Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

Profit/Loss Total Sales 54,889 125,032 125,032 125,032 125,032 125,032 125,032 125,032 125,032 125,032

Total Cost 67,461 75,486 76,510 77,586 78,715 79,900 81,145 82,452 83,825 85,265

Total Sales Profit -12,573 49,546 48,521 47,446 46,317 45,131 43,887 42,579 41,207 39,767

Total Administrative Expenses 100 105 110 116 122 128 134 141 148 155

Operating Profit -12,673 49,441 48,411 47,330 46,195 45,004 43,753 42,439 41,059 39,612

Total Other Expenses 33,057 46,649 44,057 41,144 37,872 34,195 30,064 25,422 20,207 15,898

Current Profits -45,730 2,792 4,355 6,186 8,323 10,808 13,688 17,016 20,853 23,714

Profit Before Taxes -45,730 2,792 4,355 6,186 8,323 10,808 13,688 17,016 20,853 23,714

Taxes 0 0 0 0 0 0 0 0 0 0

Profit After Taxes -45,730 2,792 4,355 6,186 8,323 10,808 13,688 17,016 20,853 23,714

B/S 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

Unit：IDR MM Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

Assets Total Assets 514,808 496,629 477,421 457,132 435,709 413,093 389,227 364,046 337,486 264,847

Liabilities Long Term (Senior) Loan 261,343 240,373 216,810 190,335 160,588 127,164 89,609 47,412 0 0

Long Term (Mezzanine) Loan 96,353 96,353 96,353 96,353 96,353 96,353 96,353 96,353 96,353 0

Total Liabilities 357,696 336,725 313,163 286,688 256,941 223,517 185,962 143,765 96,353 0

Equity Capital 202,942 202,942 202,942 202,942 202,942 202,942 202,942 202,942 202,942 202,942

Reserve Fund 0 0 0 0 0 0 29 1,606 5,078 10,705

Undivided Profit -45,830 -43,038 -38,683 -32,497 -24,174 -13,365 294 15,734 33,114 51,200

Total Equity 157,112 159,904 164,258 170,444 178,768 189,576 203,265 220,281 241,134 264,847

Total Liabilities and Equity 514,808 496,629 477,421 457,132 435,709 413,093 389,227 364,046 337,486 264,847

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

Unit：IDR MM Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

Operatin Cash Flow 1,599 57,170 58,733 60,564 62,701 65,187 68,067 71,395 75,231 78,091

Total Income 54,889 125,032 125,032 125,032 125,032 125,032 125,032 125,032 125,032 125,032

Total Expense 53,290 67,862 66,299 64,468 62,330 59,845 56,965 53,637 49,801 46,941

Investment Cash Flow -70,492 0 0 0 0 0 0 0 0 0

EPC Cost -70,492 0 0 0 0 0 0 0 0 0

Interests During Construction (Senior) 0 0 0 0 0 0 0 0 0 0

Interests During Construction (Mezzanine) 0 0 0 0 0 0 0 0 0 0

Others 0 0 0 0 0 0 0 0 0 0

Financing Cash Flow 76,569 -22,229 -24,976 -28,063 -31,532 -35,429 -39,808 -44,729 -24,397 -96,353

Loan (Senior) -18,664 -20,971 -23,563 -26,475 -29,747 -33,424 -37,555 -42,197 -47,412 0

Loan (Mezzanine) 96,353 0 0 0 0 0 0 0 0 -96,353

DSRA -1,120 -1,258 -1,414 -1,588 -1,785 -2,005 -2,253 -2,532 23,016 0

Equity 0 0 0 0 0 0 0 0 0 0

Decidend payments 0 0 0 0 0 0 0 0 0 0

Increace (Decrease) in Cash & Cash related 7,676 34,941 33,756 32,501 31,170 29,757 28,258 26,666 50,834 -18,262

Beginning Cash & Cash related 500 8,176 43,117 76,874 109,374 140,544 170,301 198,559 225,225 276,059

Ending Cash & Cash related 8,176 43,117 76,874 109,374 140,544 170,301 198,559 225,225 276,059 257,797

Source: Created by the Survey Commission

5-7

Table 5-3-3 Plan 2 Case 2 Project Plan

P/L Plan 2 Case 2 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

Unit：IDR MM Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

Profit/Loss Total Sales 0 158,639 158,639 158,639 158,639 158,639 158,639 158,639 158,639 158,639

Total Cost 48,529 91,458 92,672 93,946 95,284 96,688 98,163 99,712 101,338 103,044

Total Sales Profit -48,529 67,180 65,967 64,693 63,355 61,950 60,475 58,927 57,301 55,594

Total Administrative Expenses 100 105 110 116 122 128 134 141 148 155

Operating Profit -48,629 67,075 65,857 64,577 63,233 61,823 60,341 58,786 57,153 55,439

Total Other Expenses 33,057 71,145 68,553 65,641 62,369 58,692 54,561 49,919 44,703 40,395

Current Profits -81,686 -4,070 -2,696 -1,064 865 3,131 5,781 8,867 12,450 15,044

Profit Before Taxes -81,686 -4,070 -2,696 -1,064 865 3,131 5,781 8,867 12,450 15,044

Taxes 0 0 0 0 0 0 0 0 0 0

Profit After Taxes -81,686 -4,070 -2,696 -1,064 865 3,131 5,781 8,867 12,450 15,044

B/S 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

Unit：IDR MM Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

Assets Total Assets 627,315 602,275 576,016 548,477 519,595 489,302 457,528 424,198 389,235 159,463

Liabilities Long Term (Senior) Loan 261,343 240,373 216,810 190,335 160,588 127,164 89,609 47,412 0 0

Long Term (Mezzanine) Loan 244,816 244,816 244,816 244,816 244,816 244,816 244,816 244,816 244,816 0

Total Liabilities 506,160 485,189 461,627 435,152 405,405 371,981 334,426 292,229 244,816 0

Equity Capital 202,942 202,942 202,942 202,942 202,942 202,942 202,942 202,942 202,942 202,942

Reserve Fund 0 0 0 0 0 0 0 0 0 0

Undivided Profit -81,786 -85,856 -88,552 -89,616 -88,751 -85,620 -79,840 -70,972 -58,523 -43,478

Total Equity 121,156 117,086 114,389 113,326 114,190 117,321 123,102 131,969 144,419 159,463

Total Liabilities and Equity 627,315 602,275 576,016 548,477 519,595 489,302 457,528 424,198 389,235 159,463

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

Unit：IDR MM Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

Operatin Cash Flow -34,357 62,327 63,700 65,333 67,261 69,527 72,177 75,264 78,846 81,440

Total Income 0 158,639 158,639 158,639 158,639 158,639 158,639 158,639 158,639 158,639

Total Expense 34,357 96,312 94,939 93,306 91,377 89,111 86,461 83,375 79,793 77,199

Investment Cash Flow -190,676 0 0 0 0 0 0 0 0 0

EPC Cost -190,676 0 0 0 0 0 0 0 0 0

Interests During Construction (Senior) 0 0 0 0 0 0 0 0 0 0

Interests During Construction (Mezzanine) 0 0 0 0 0 0 0 0 0 0

Others 0 0 0 0 0 0 0 0 0 0

Financing Cash Flow 225,033 -22,229 -24,976 -28,063 -31,532 -35,429 -39,808 -44,729 -24,397 -244,816

Loan (Senior) -18,664 -20,971 -23,563 -26,475 -29,747 -33,424 -37,555 -42,197 -47,412 0

Loan (Mezzanine) 244,816 0 0 0 0 0 0 0 0 -244,816

DSRA -1,120 -1,258 -1,414 -1,588 -1,785 -2,005 -2,253 -2,532 23,016 0

Equity 0 0 0 0 0 0 0 0 0 0

Decidend payments 0 0 0 0 0 0 0 0 0 0

Increace (Decrease) in Cash & Cash related 0 40,098 38,724 37,269 35,729 34,098 32,369 30,535 54,449 -163,377

Beginning Cash & Cash related 500 500 40,598 79,322 116,591 152,320 186,418 218,787 249,322 303,771

Ending Cash & Cash related 500 40,598 79,322 116,591 152,320 186,418 218,787 249,322 303,771 140,395

Source: Created by the Survey Commission

4) Summary of Financial Analysis Results

The FIRR, NPV, and B/C of the first 20 years of operation have been calculated below. The discount rates

used for the NPV and B/C at the time of calculation was the Indonesian Central Bank’s policy interest of

7.75%.

Table 5-4-1 Financial Analysis Results

Plan 1 Plan 2

Case 1 Case 2

Total Investment

Cost

millions

IDR 186,615 579,301 727,765

FIRR % 28.9% 17.6% 21.0%

NPV millions

IDR 232,964 371,093 563,640

B/C - 1.5 1.1 1.1

Source: Created by the Survey Commission

5-8

Plan 1 is a new proposal, while Plan 2 renovates or expands upon existing equipment to increase operating

ratios. As for the financial analysis of Plan 2, this plan is a renovation or expansion consisting of extant

machines, therefore the preexisting assets and debts have been included in the analysis of the project’s

overall benefits.

The FIRR for all plans exceed Indonesia’s long-term interest rates, the NPV is positive, and the B/C>1; it

can be said that the investments are valid, however the FIRR of Plan 1 is quite high, thus making it the

more efficient investment.

5) Summary of Economic Assessment Results

The economic impact and EIRR is calculated as follows, from a resource allocation efficiency standpoint

with regards to the national economy. The EIRR is calculated on the premise that costs reduce the national

income (i.e. an economic cost) while profit increases the national income (i.e. an economic profit).2

When calculating the economic cost, the cost of non-tradable commodities is converted to the international

standard by calculating the SCF, or Standard Conversion Factor.3

SCF=（I+E） / [（I+Id）+（E+Ed）]

I: Total Import Cost (CIF)

E: Total Export Cost (FOB)

Id: Total Import Duty

Ed: Total Export Duty

Table 5-5-1 SCF Calculation

Item

(billions IDR) 2007 2008 2009 2010 2011 5 Year Avg.

Import Cost 756,895 833,342 708,529 831,418 942,297 814,496

Export Cost 942,431 1,032,278 932,249 1,074,569 1,221,229 1,040,551

Import Duty 16,976 - - - 25,266 21,121

Export Duty 3,961 22,764 18,105 19,759 28,856 18,689

SCF 0.99 0.99 0.99 0.99 0.98 0.98

Source: JETRO and World Bank, World Development Indicators

2 From the JICA International Yen Loan Project Internal Rate of Return (IRR) Calculation Manual. 3 From same as above.

5-9

When calculating the total economic cost, civil engineering and electric supply construction costs are

considered domestic, while turbine equipment and other costs are considered foreign. Further, looking at

society at large, interest and taxes do not count as a consumption of resources, and have been excluded

from the economic cost calculations.

Table 5-5-2 Economic Cost Calculation

Plan 1 Plan 2

（millions

IDR） Case 1 Case 2

Domestic Costs Construction (Civil

Engineering) 62,293 64,084 95,400

Construction (Power

Supply) 15,400 0 15,400

Total 77,693 64,084 110,800

SFC 0.98 0.98 0.98

Economic Cost (1) 76,061 62,738 108,472

Foreign Costs Construction (Generator) 64,384 0 62,542

Other (Legal Fees, etc.) 1,200 1,200 1,200

Economic Cost (2) 65,584 1,200 63,742

Total Economic

Cost 141,645 63,938 172,214

Source: Created by the Survey Commission

The Economic Benefit calculation—a basic component of the benefits—is the value of the retrenched

replacement costs of the project (replacement cost reduction value).4 According to those on the project,

since diesel engines are being used to generate electricity in the area, the difference in the 20-year unit

price of electricity between this diesel and this project—to which the FIT applies—is calculated as the

replacement cost reduction value, and therefore the economic benefit. The unit price for diesel generation

is 3,286 IDR/kWh.5

The following cash flow table was made using this economic cost and benefit data. Maintenance costs

have been derived using similar projects as a reference. As price increases are not costs related to the

consumption of resources, they have not been included.

4 From the JICA International Yen Loan Project Internal Rate of Return (IRR) Calculation Manual. 5 PLN Statistics 2013

5-10

Table 5-5-3 Cash Flow for Economic Analysis (Plan 1)

Plan 1

(millions IDR) Economic CostOperation andMaintenance

Total CostSubstitute

Generation CostMini HydroPower Cost

Economic Benefit Net Benefit

1 29,289 29,289 -29,289

2 112,356 112,356 -112,356

3 5,277 5,277 189,362 68,173 121,190 115,913

4 5,277 5,277 189,362 68,173 121,190 115,913

5 5,277 5,277 189,362 68,173 121,190 115,913

6 5,277 5,277 189,362 68,173 121,190 115,913

7 5,277 5,277 189,362 68,173 121,190 115,913

8 5,277 5,277 189,362 68,173 121,190 115,913

9 5,277 5,277 189,362 68,173 121,190 115,913

10 5,277 5,277 189,362 68,173 121,190 115,913

11 5,277 5,277 189,362 47,542 141,820 136,543

12 5,277 5,277 189,362 47,542 141,820 136,543

13 5,277 5,277 189,362 47,542 141,820 136,543

14 5,277 5,277 189,362 47,542 141,820 136,543

15 5,277 5,277 189,362 47,542 141,820 136,543

16 5,277 5,277 189,362 47,542 141,820 136,543

17 5,277 5,277 189,362 47,542 141,820 136,543

18 5,277 5,277 189,362 47,542 141,820 136,543

19 5,277 5,277 189,362 47,542 141,820 136,543

20 5,277 5,277 189,362 47,542 141,820 136,543

Total 141,645 94,980 236,625 3,408,522 1,020,805 2,387,717 2,151,092

EIRR 71%

Source: Created by the Survey Commission

Table 5-5-4 Cash Flow for Economic Analysis (Plan 2 Case 1)

Plan 2 Case 1

(millions IDR) Economic CostOperation andMaintenance

Total CostSubstitute

Generation CostMini HydroPower Cost

Economic Benefit Net Benefit

1 63,938 1,804 65,742 19,272 5,149 14,123 -51,619

2 1,804 1,804 38,544 11,730 26,814 25,010

3 1,804 1,804 38,544 11,730 26,814 25,010

4 1,804 1,804 38,544 11,730 26,814 25,010

5 1,804 1,804 38,544 11,730 26,814 25,010

6 1,804 1,804 38,544 11,730 26,814 25,010

7 1,804 1,804 38,544 11,730 26,814 25,010

8 1,804 1,804 38,544 11,730 26,814 25,010

9 1,804 1,804 38,544 11,730 26,814 25,010

10 1,804 1,804 38,544 11,730 26,814 25,010

11 1,804 1,804 38,544 11,730 26,814 25,010

12 1,804 1,804 38,544 11,730 26,814 25,010

13 1,804 1,804 38,544 11,730 26,814 25,010

14 1,804 1,804 38,544 11,730 26,814 25,010

15 1,804 1,804 38,544 11,730 26,814 25,010

16 1,804 1,804 38,544 11,730 26,814 25,010

17 1,804 1,804 38,544 11,730 26,814 25,010

18 1,804 1,804 38,544 11,730 26,814 25,010

19 1,804 1,804 38,544 11,730 26,814 25,010

20 1,804 1,804 38,544 11,730 26,814 25,010

Total 63,938 36,086 100,023 751,604 228,014 523,590 423,567

EIRR 48%

Source: Created by the Survey Commission

5-11

Table 5-5-5 Cash Flow for Economic Analysis (Plan 2 Case 2)

Plan 2 Case 2

(millions IDR) Economic CostOperation andMaintenance

Total CostSubstitute

Generation CostMini HydroPower Cost

Economic Benefit Net Benefit

1 172,214 172,214 -172,214

2 0 6,575 6,575 148,976 45,337 103,639 97,065

3 0 6,575 6,575 148,976 45,337 103,639 97,065

4 0 6,575 6,575 148,976 45,337 103,639 97,065

5 0 6,575 6,575 148,976 45,337 103,639 97,065

6 0 6,575 6,575 148,976 45,337 103,639 97,065

7 0 6,575 6,575 148,976 45,337 103,639 97,065

8 0 6,575 6,575 148,976 45,337 103,639 97,065

9 0 6,575 6,575 148,976 45,337 103,639 97,065

10 0 6,575 6,575 148,976 45,337 103,639 97,065

11 0 6,575 6,575 148,976 45,337 103,639 97,065

12 0 6,575 6,575 148,976 45,337 103,639 97,065

13 0 6,575 6,575 148,976 45,337 103,639 97,065

14 0 6,575 6,575 148,976 45,337 103,639 97,065

15 0 6,575 6,575 148,976 45,337 103,639 97,065

16 0 6,575 6,575 148,976 45,337 103,639 97,065

17 0 6,575 6,575 148,976 45,337 103,639 97,065

18 0 6,575 6,575 148,976 45,337 103,639 97,065

19 0 6,575 6,575 148,976 45,337 103,639 97,065

20 0 6,575 6,575 148,976 45,337 103,639 97,065

Total 172,214 124,922 297,135 2,830,545 861,395 1,969,150 1,672,015

EIRR 56%

Source: Created by the Survey Commission

As all the above plans exceed the general social discount rate of 12% by a large margin, we have

determined that there is sufficient value in following through on this project. Just as the financial analysis

suggests, the EIRR of Plan 1 is the highest, and represents the most efficient investment of the three plans.

Chapter 6 Planned Project Schedule

6-1

The overall implementation schedule for this project is as shown in Figure 6-1.

1. Application/permission for project from relevant agencies (12 months)

2. Environmental applications/permissions (6 months)

3. Feasibility Study (14 months)

4. Detailed design and procurement (12 months)

5. Construction and commissioning tests (24 months)

Fig. 6-1 Project Implementation Schedule

Item

Year 1 Year 2 Year 3 Year 4 Year

5

3 6 9 12 3 6 9 12 3 6 9 12 3 6 9 12 3 6

1. Application/Permission

from Related Agencies

2. Environmental

Application/Permissions

3. Feasibility Study

4. Detailed Plan and

Procurement

5. Construction and

Commissioning Tests

Source: Created by the Study Team

The construction schedule is as shown in Fig. 6-2.

Fig. 6-2 Construction Schedule for Karai 12 Mini-Hydro Power Plant

Item Year 1 Year 2

2 4 6 8 10 12 2 4 6 8 10 12

Preparation/Access Roads

Intake Facilities

Sand Trap

Headrace

Head Pond

Penstock

Powerhouse and Tailrace

Electrical Equipment

Transmission and

Substation

Commissioning Tests

Source: Created by the Study Team

Chapter 7 Implementing Organization

7-1

The host country’s implementing organization of this survey, Bumi Investco Energi (BIE) is engaged not

only in the mini-hydro power project mentioned in this report, but also in the development and operation

of Silau 2 (9MW, operating since 2011), Karai 13 (7.6MW, operating since March 2014) and Karai 7

(6.8MW, under construction, expected to be completed December 2014) mini-hydro power projects in the

nearby area. Further, its subsidiary company, Bumi Hidro Engineering Construction (BHE) specializes in

the construction of mini-hydro power plants, building a value chain of the mini-hydro power generation

business. BIE has made a large commitment to mini-hydro power projects in Indonesia, and actively

endorses this survey while maintaining close relationships with the local governments which issue relevant

permissions.

However, in the technical fields such as planning and design, design and construction supervision, and

O&M management, there are some cases that the power plants experience the decrease of availability

factor due to the lack of accumulation of know-how. These are the fields where Japanese companies have

predominant expertise, and BIE expects to leverage the technique and know-how that Japanese

organizations bring to the planning projects in order to increase power generation as the result of increased

reliability and fewer cases of equipment breakdowns.

For this project, the duties and authorities of the relevant agencies of the host country have been organized

into Table 7-1. Each agency has the ability to fully perform all assigned tasks.

7-2

Table 7-1 Implementation capability of host country’s organizations

Relevant Agency Authorities, Management capacity upon completion of project etc.

BIE ・Holding company for mini-hydro power projects in Sumatra Island.

・Applied for the rights to this project, planning to own the majority share of

the SPC.

・Corporate profile

- Name: PT. Bumi Investco Energi

- Head Quarter: Graha IMP Jl. Penjernihan Raya no. 38, Jakarta 10210,

Indonesia

- Date of Establishment: 24 October 2008

- Shareholders: PT Bersaudara Group companies (PT Realty Investama*

(90%), PT Investco Medika Pratama (IMP)(10%))

* Also owned by IMP (99%)

- Directors: Mr. Husni, Mr. Assegaf

・BIE was established in October 24, 2008 by PT Bersaudara Group as a

development/investment company for renewable energy, primarily small

hydro energy. PT Investco Medika Pratama (IMP), the holding company of

Bersaudara Group, was established in 1962 by Mr. Husni Ahmad, Mr.

Husni’s father and their families. IMP is one of leading medical equipment

and medical consumer product distributor in Indonesia and the major

suppliers to Indonesia government, Ministry of Health and to various

hospitals across Indonesia. Currently the company has more than 10

branches all over Indonesia employing over 800 professionals nationwide.

・BIE is the second IPP (Independent Power Producer) of small hydro in

Sumatra Island and currently has more than 20 project pipelines in Indonesia,

most of which are in Simalungun district in North Sumatera where BIE has

close relationship with Bupati (local government) supporting its

developments. So far, the company has invested in three small hydro

projects, Silau 2, Karai 13 and Karai 7.

- Silau 2 (9MW): Silau 2 is BIE’s first small hydro project, which

started commercial operation in 2011. It was initially constructed by a

state owned construction company which was replaced by BHE due to

technical problems and continuing delay. After seeing stable electricity

production, BIE sold its ownership to PT. Tamaris Hydro in 2013 to

fund future projects.

- Karai 13 (9MW): The project started construction in 2011 by BHE

from the beginning and started commercial operation in 2014.

- Karai 7 (7.7MW): The project started in 2011 and is currently under

construction by BHE. As of December, 2014, it is expected to start

7-3

commercial operation in the middle of 2015.

BHE ・Subsidiary company of BIE in charge of mini-hydro power generation

engineering. Possess fundamental engineering expertise to construct

mini-hydro power plants.

・Corporate profile

- Name: PT. Bumi Hydro Engineering and Construction

- Head Quarter: Graha IMP Jl. Penjernihan Raya no. 38, Jakarta 10210,

Indonesia

- Date of Establishment: 25 April 2011

- Shareholders: PT Realty Investama (30.04%), Mr. Husni and his family

(39.92%), Ravindra Shankar (Director of BHE) (30.04%)

- Directors: Mr. Rachmanm, Mr. Ravidra

・BHE was established as a construction company to finish remaining work left

on Silau 2 after the initial main contractor, state owned construction

company, was replaced due to delay. BHE is currently stand along main

contractor of BIE's projects and utilizes local sub-contractors. BHE

supervises, coordinates and manages all activities in construction related to

the projects.

Simalungun ・Simalungun is a regency in North Sumatra. The regency covers an area of

4,386.6 square kilometers, and has a population of 830,000 (2012).

・Hold survey approval and business rights to the project. Have a favorable

working relationship with BIE

PLN North Sumatra ・PLN (Perusahaan Listrik Negara, or “State Electricity Company” in English)

is an Indonesian government-owned corporation which has a monopoly on

electricity distribution in Indonesia. PLN has been tackling the shortage of

electricity in the North Sumatra area, where supplies of power can no longer

meet the growing demand.

・Holds PPA contract rights and is the leading provider of electricity.

・Assumed to be the primary vendor, based on the FIT price.

Ministry of Energy and

Mineral Resources

・ESDM (Kementerian Energi dan Sumber Daya Minera, or“Ministry of

Energy and Mineral Resources” in English) is a ministry of the government

of Indonesia which is responsible for formulating and implementing policies

in all energy related sectors.

・The government agency that approves this project, enforcing renewable

energy laws.

Source: Created by the Survey Commission

Chapter 8 Technical Advantages Japanese Company

8-1

(1) Expected Form of Participation of Japanese Firms (Financing,

Parts/Equipment Provision, Facility Management, etc.)

Expected participation of Japanese firms includes project planning, design execution, O&M application

management, and funding of SPC. Also, from planning to application management, the Japanese firms will

not simply be participating in these various fields separately, but can be involved all-inclusively as a main

constituent. This will allow for a total consulting service; offering money, materials, and manpower.

At the present stage, this investigation plans to use the group company BHE which already has experience

with mini-hydro power project development in Indonesia. However, after taking into account price and

quality, a Japanese turbine maker is being considered. In terms of fundraising plans for construction costs,

the Japan International Cooperation Agency (hereafter referred to as JICA) and Indonesia Infrastructure

Finance are prime candidates for senior lenders, and IDI Infrastructures can enter as a mezzanine lender.

For equity, the sponsor company BIE for majority stock contribution, and BHE and Chodai Co., Ltd for

minority are being considered. A standard contract including consulting and investment has already been

formed with BIE and Chodai.

This investigation suggests the following format for the participation of Japanese firms in this project.

CHODAI CO., LTD ・Overall project advising and leadership

・Total consulting services from planning to application management as

owner’s engineer

・Consultation for the supplying of Japanese equipment and low interest

financing as one unit

・SPC Funding

IDI Infrastructures Inc. ・Mezzanine financing

・Advising for strategic partnerships

KISO-JIBAN

CONSULTANTS CO., LTD.

・Ground surveying to assess landslide risk etc., as well as ground conditions

from water intake to power generation

・SPC Funding

TOSHIBA CORPORATION

Voith Hydro Holding GmbH &

Co.

・Dynamo Installation

・O&M Application Management

8-2

(2) Advantages of Japanese Firms for this Project (Technological,

Economical)

The most important aspects when it comes to developing mini-hydro power projects is, from the initial

stages of planning, the rationality of the project site, safety, economy, efficiency, and management that can

create and implement the project with a big-picture view, and engineering ability to support it. This does

not come from just technical skill, but is a wisdom that comes experience and achievements gathered over

a long period of time, an intangible asset. When Japanese firms proactively participate in the project, the

high level of technical proficiency goes without saying, but are also backed up by more than 100 years of

carefully cultivated superior engineering skill in the field of hydroelectric power generation that deserves

special attention.

Besides these, it is highly likely that the participation of Japanese firms will participate in this project, and

will serve as a strong basis for convincing potential financers to invest.

Management

Ability

Ability to consider a problem from many angles, look at the big picture, and consider

issues with the project goal in mind

Japanese project management which can control manufacturing process, product

quality, and cost until project completion

Problem-solving

Ability

Ability to solve problem areas using new ideas and ingenuity

Ability to predict and avoid long term issues, not just problems at hand

Engineering

ability

Ability to design hydroelectric plans to increase output and yearly power generation

Use of cutting edge fluid dynamics for water turbine performance analysis to increase

turbine performance and power output

Technical

competitiveness

Designs, production, repair, and maintenance technological strength, wide scope for

choosing materials

O&M technological ability for increased reliability and lifespan

High Performance assessed by life cycle cost

Ability to create superior hydraulic plans to increase output and yearly power

generation with the same drainage systems

Superior schedule management of Japanese businesses for strict observance of

construction timeline and process

Know-how and for taking into account and prevention of sedimentation and water

damage based on area terrain and environmental factors (Ensuring long term safety)

Know-how for the removal of sand and grit in rivers with high quicksand content

Overseas order

history

Experience with investment and engineering for overseas mini-hydro power projects

Experience with supplying Japanese-made turbines for overseas mini-hydro power

8-3

projects

Funding ability Experience financing overseas mini-hydro power projects (Investment, Mezzanine

Financing)

Alliance building and consultation with JICA overseas investment program’s Jakarta

office concerning future financing prospects with this project

(3) Necessary Policies to Facilitate Successful Bid for Japanese Firms

In terms of the supply of equipment assets, it is difficult for Japanese firms to have competitive power

when it comes to the price of an individual machine. It is necessary to gain competitive advantage by

recommending Japanese firms from a life cycle cost perspective, such as product quality, reliability,

replacement part availability, and delivery speed, as well as the careful and comprehensive inspection,

repair, and leadership that comes with choosing a Japanese firm. In order to fully display the technological

advantages of Japanese firms, it is necessary to set up a system for smooth and easy financing negotiations

in Indonesia.

For the adoption of this project, the full commitment of Japanese enterprises, as well as building a

relationship of trust and mutual understanding with the relevant agencies in Indonesia as well. The main

proposal corporation, collaborative proposal corporation, and cooperative proposal corporations have been

working towards adoption in the following capacities:

・Chodai is committed to investment and engineering services for mini-hydro power projects in

Indonesia. Additionally, in October of 2013, it agreed upon a general contract for investment and

engineering services for this project.

・This was brought about when this project’s management from BIE and BHE management were

invited to Japan in October, 2013 when the “Training for the planning, designing, operation, and

maintenance for mini-hydro power projects in Indonesia” was adopted. It had been proposed as a

joint effort of Industrial Decisions and Toshiba stemming from the “2013 Business Infrastructure

Aid for Overseas Growth Training” enacted by The Overseas Human Resources and Industry

Development Association, which was entrusted to it by the Ministry of Economy.

・Japan’s extensive experience with hydroelectric systems, manufacturing processes for reliable

generators, and efficient operating procedures on site was introduced, and after recommending

the technological superiority of Japan throughout the life cycle, the above general contract was

agreed upon.

In the past, the Indonesian government has generally funded large-scale hydroelectric power

facilities through such methods as ODA. Now, with the demand for power in each region of

Indonesia continuing to increase, the government has adopted a new strategy. Taking into

account awareness of the environment and seeking to further promote electrification, the

energy market has been privatized, with the intent of expanding the construction and supply

8-4

of mini-hydro power plants.

Traditionally, large-scale hydroelectric power facilities funded through ODA comprised the majority, but

taking into account the increased power needs in rural Asia, as well as a focus on environmental

consciousness, the strategy has begun to change to one that increases the supply and construction of

mini-hydro power projects.

Recently, mini-hydro power projects are becoming more and more popular as an important actor on the

renewable energy stage. In many countries around the world, incentives to speed the development of

mini-hydro power projects such as the “Feed-in Tariff” (FIT) system are being introduced. Faced with this

state of events, Japanese firms are making the following considerations in regards to a likely increase in

orders.

・Japanese turbine generator makers see the global rise in need for mini-hydro power as a business

opportunity, and are focusing their attention on Asia’s markets, starting with Japan itself. By

using local subsidiaries in China and India but keeping to the Japanese standard in project

management, quality assurance, and product reliability, Japanese firms are creating a competitive

edge over foreign competition.

・Business partners Toshiba, and Voith Hydro already have systems in place for the supply and

development of machinery through local subsidiaries in China and India.

・Both companies intend to participate in this project through the fullest use of foreign subsidiaries,

and are assuming about 20% of the contract price from machinery exported from Japan. They

plan to increase group operations overall through coupling sales with foreign subsidiaries for the

remainder.

Chapter 9 Project Financing Prospects

9-1

(1) Funding Sources and Financing Plan

In the case that BIE adopts Plan 1, it plans to fund the total costs of the mini-hydro power project with

60% senior loans, 10% mezzanine financing, and 30% equity. In the case that Plan 2 is adopted, the current

plan is to fund additional construction fees through mezzanine financing. The amount of funding that the

senior lenders can offer is limited, so in order to secure adequate equity for this next project, BIE is

considering a mezzanine financing option.

1) Confirming the Amount of Debt Contributable by Senior Lenders

a) The financing stance of local Indonesian financial institutions regarding mini-hydro power projects

It is imperative to confirm the financing requirements to receive funding during the construction phase of a

mini-hydro power project in Indonesia for local, governmental, and foreign financial institutions. Even

though the introduction of FIT for energy sources like mini-hydro power that can function as a base load

energy source has caused a steady increase in the of usage of mini-hydro power facilities, financial

institutions with experience financing mini-hydro power projects are still few and far between. As a result,

most financial institutions utilize a corporate financing, relying on the credibility of the developer, or

individual guarantee and collateral when conducting funding operations. This is the current norm, and

project financing that creates security packages rating project risk with some construction risk is very rare.

However, since the revision of the FIT system in April of 2014, the increase in purchase price of

mini-hydro power has caused all players to begin to consider mini-hydro power as an attractive area.

Additionally, even in regards to financial institutions that are accepting of risks during the construction

period, many have in-house regulations that put an upper limit to the debt that they are allowed to provide.

In other words, even a reputable developer must provide a certain amount of equity. However, for an

developer that has several project pipelines in which to distribute limited assets, or for a small scale

developer that can’t provide the necessary amount, it is necessary to find mezzanine lenders, meaning

lenders that are subordinated to senior lenders. Also, considering the fact that many financial institutions

do not contribute funding for the interest that accrues during the construction period, it is necessary for the

sponsor to cover the difference with equity or funding from mezzanine lenders.

Senior lender candidates Syariah Mandiri and Bank Muamalat are financing Karai 13 and Karai 7, and

have indicated that they are open to financing continuing projects by BIE. Therefore, as soon as the other

materials are in place to make a financing decision, this project is planning to hold detailed conferences

with the above, including SMI and other financial institutions.

2) Feasibility of Assembling Mezzanine Lenders

Mezzanine Financing is a type of financing that has a mid-level priority. It is both subordinate to

repayment of senior loan, and prioritized over equity. It becomes necessary to assemble mezzanine lenders

when: (1) available equity is limited, and (2) senior lender funding is limited. If the sum of (1) and (2) is

9-2

not enough to fund the total project cost, it is necessary to find mezzanine lenders. In other words, needs

from both the developer and senior lender are necessary stipulations before considering mezzanine lenders.

The main examples of mezzanine financing include mezzanine loans, class shares, subordinate corporate

bonds, etc. However, in all cases, repayment will fall subordinate to senior lenders. Falling subordinate to

senior lenders means essentially that repayment of senior lenders takes precedence over all other payments

with the exception of taxes and other necessary operation expenses, etc. This also means that from a senior

lender’s point of view, adding mezzanine financing to the project is analogous to increasing equity funds.

Additionally, from a contractor’s perspective, since this is not regular shares, it has the merit of preventing

dilution of project share, and helping to retain majority voting rights, thus lending a freedom of

management to the project.

Fig. 9-1-1 Mezzanine Finance (Image)

Source: Created by the Survey Commission

BIE is currently in negotiations regarding investment conditions with the potential mezzanine lender IDI-I

concerning the next Karai mini-hydro power project. The investment conditions are, as far as funding is

concerned, 10% of total expenses for Plan 1, and total construction expansion expenses for Plan 2. The

term of the loan would be 10 years, the same as the senior loan.

When adopting a finance scheme that involves mezzanine financing, it is necessary to communicate with

the senior lender(s) concerning the above-mentioned repayment policies, etc. Islamic financial institutions

have served as senior lenders for Karai 7 and Karai 13. When regular financial institutions are allotted to

participate with projects that do not violate the doctrines of Islam, it is necessary to have consultation

regarding a collaborative financing scheme. “Channeling” is one example of a collaborative financing

scheme. Channeling takes the funds from the non-Islamic institution, and briefly funnels those funds into

the Islamic institution. From the perspective of the contractor, they are receiving all of their funds from an

Islamic institution. Another option, based on the results of consultations, is to not use an Islamic institution,

and fund the operation directly.

9-3

(2) Feasibility of Funding

This project producing sufficient cash flow is prerequisite to the feasibility of funding coming from both

financing and investment. As Chapter 5 attests, looking at the financial and economic value that this

project possesses, there should be no issues in achieving sufficient funding.

Below is a layout of the feasibility of funding from both a financing and investment point of view.

1) Feasibility of Financing from Local Indonesian Banks

a) Conditions for financing from local financial institutions

For Plan 1, it will be necessary to hold a conference concerning senior lender and new conditions for

financing. Below are the main points to be confirmed during negotiations.

Table 9-2-1 Financing Conditions for Local Financial Institutions (Projected)

Contract Parties The lessor is the senior lender, and the lessee is the developer

Fund Amount It is necessary to confirm if the construction interest, which is the interest that

occurs during the construction period, contributes to the total financing

amount

60% of the total project cost, approximately 100 billion IDR, will be funded

through financing

Repayment Period In general, the construction period (projected 2 years) is the grace period, and

principal repayment starts after the first day of operation

The principal repayment period is projected to be 10 years, but it is necessary

to confirm if there is an appropriate repayment schedule for if the cash flow

goes in the red during that period.

Interest This depends on the credibility of the developer and project, so it is necessary

to confirm

In general this is a moving rate, and is usually the sum of the rate decided by

local financial institutions based on political policy(1 year period), as well as

a margin set by the local financial institution

Funding Period Usually this provided to the developer in steps as construction progresses, but

it is necessary to confirm the payment stipulations

Upfront Fees/Agent Fees Financial Institutions will require a fixed upfront fee and/or agent fee

depending on the amount of financing, so it is necessary to confirm this

Prepayment There can be penalties affiliated with repaying part or all of the money before

the set limit, so this is also necessary to confirm

Late/Damage Penalty In general, if there is a circumstance that stops or delays payment on interest

or principal, late and/or damage penalties may occur

Cash Waterfall Mechanism This project will employ a cash waterfall payment method. A repayment

priority order will be defined in advance, and a special account for this

9-4

project will be managed by Escrow Agent.

Generally accounts are comprised of a Project Account, Operations Account

(Tax and expenses payment), Senior Repayment Cumulative Account, Debt

Service Reserve Account, Mezzanine Repayment Allocation Account,

Sponsor Release Account, etc.

Covenants A usual covenant is separated into legal duties, and legally forbidden acts.

These are acts laid out in the contract that the developer either must conform

to, or is forbidden to do.

In general, a covenant of legal duties includes such items as the preservation

of all proper permissions and licenses, submission of inspected financial

statements, preservation of financial covenants such as the Debt Service

Coverage Ration, etc. It is necessary to confirm the details here.

Forfeit the Benefit of Time When in violation of one of the above covenants, the lender will immediately

request the payment of principal, interest, or settlement funds. However, there

is sometimes a grace period available, so it is necessary to confirm the details

Collateral Usually for mini-hydro power projects the senior lender reserves rights on all

land, facilities, and assets of the project as primary collateral.

Additionally, the private assets of the management of the primary governing

organization of the project may also be acquired as collateral.

Source: Created by the Survey Commission

In general, the senior lender will write a clause in the lending contract stipulating that financing will not

occur if conditions are not met by the financing deadline. In the case of mini-hydro power projects,

generally it is a condition entering related project contracts as land use contracts, EPC related contracts,

turbine purchasing contracts, PPA, and insurance contracts etc. must be signed before lending can begin.

2) Feasibility of Funding from Mezzanine Lenders

In Indonesia, price for construction contracts is not always a fixed lump-sum, and there is the risk of

increased project costs. Additionally, Indonesian local financial institutions mainly operate based off of a

movable interest rate, and there is the possibility that the developers may have to bear the cost of an

increase in the interest rate that occurs during the construction period. Because repayment to mezzanine

lenders is subordinate to repayment to senior lenders, mezzanine lenders must also face risks of cost and

interest rate increases, similar to developers. It is essential to show that the developers have will have the

assets necessary to cope appropriately if these risks were to become actualities in order to secure

mezzanine financing. When the developer itself lacks the assets to cope by themselves, a potential strategy

would be to find an investor that wants to work with mini-hydro power project. Regarding BIE and

mezzanine lender candidate IDI-I, strategies for when risks become actualized, including the one

mentioned above, are under consideration, and it will be necessary to confirm the details of these

negotiations from here on out.

9-5

(3) Cash Flow Analysis

As described in Chapter 5, the Karai mini-hydro power project has been proven to be possible as a stable

form of revenue by selling power. This was proven by the financing conditions based on the general

numbers and assumptions based on the current financing plan under consideration, as well as contractual

provisions and hearings, etc. On the other hand, as described above, there is the risk of increased project

costs due to jumps in the prices of materials, or an increase in interest rates. As for Indonesia’s FIT system,

the purchase of mini-hydro power will be reformed, and before the reform even developers that enter into a

PPA may be subject to price increases. Additionally, changes in energy production capacity caused by

increases or decreases in the water level can affect cash flow. Because of this, using the assumptions laid

out in Chapter 5 as base cases, we conducted sensitivity analyses for construction cost changes, interest

changes, FIT price changes, and power production capacity changes. Furthermore, even in the case of an

increase or decrease in total project cost, the financing ratio has been set so that senior loans will comprise

60%, mezzanine financing 10%, and equity 30%.

1) Sensitivity Analysis for Changes in Construction Costs

There is the possibility in Indonesia that construction costs may increase because of construction delays,

exchange rate changes, and price increases, etc. This FIRR analysis will investigate the case in which

construction costs increase by 10%, as well as a case where they increase by 20%. Additionally, in the case

of Plan 2, we only looked at the costs associated with renewal/expansion.

Table 9-3-1 FIRR Sensitivity Analysis of Construction Cost Changes

Plan 1 Plan 2

Case 1 Case 2

Construction

Cost Base Case

28.9% 17.6% 21.0%

10% increase 25.7% 17.5% 20.8%

20% increase 23.0% 17.4% 20.7%

Source: Created by the Survey Commission

Both cases have a more than high enough FIRR level to justify investment, so the impact of changes on the

project are trivial.

2) Sensitivity Analysis for Changes in Interest

In the base case, the senior lender interest rate is set at 12%, but a moving interest rate has been generally

adopted in Indonesia, and future political policies may cause great changes in the interest rate, both up and

down. In this FIRR analysis, we will investigate a case where the 12% standard deviates by -1% and +2%.

9-6

Table 9-3-2 FIRR Sensitivity Analysis of Interest Changes

Plan 1 Plan 2

Case 1 Case 2

Senior Interest -1%

29.2% 17.6% 21.0%

Base Case 28.9% 17.6% 21.0%

+1%

28.7% 17.6% 21.0%

+2%

28.5% 17.6% 21.0%

Source: Created by the Survey Commission

For Plan 1, the FIRR changed in relation to the changes in the interest rate, but since payment of interest is

not viewed as a cost in FIRR calculations, there was no effect on the FIRR of Plan 2. Both cases have a

more than high enough FIRR level to justify investment however, so the impact of changes on the project

are trivial.

3) Sensitivity Analysis of the FIT Price

The FIT price is fixed by a Feed-in-Tariff system, and has some political policy risk. The current political

policy is a pattern of reducing oil consumption, thus the FIT price for mini-hydro power is on the rise, but

this FIRR sensitivity analysis will investigate the case where the PPA price drops to 800 IDR/kWh, and the

case where it rises to 1,300 IDR/kWh.

Table 9-3-3 FIRR Sensitivity Analysis of FIT Price Changes

Plan 1 Plan 2

Case 1 Case 2

FIT Price 1,300 IDR/kWh 33.4% 25.1% 28.2%

Base Case 28.9% 17.6% 21.0%

800 IDR/kWh 18.3% 12.3% 15.4%

Source: Created by the Survey Commission

If the FIT price increases, the FIRR of all plans and cases will also increase, thereby increasing the value

of the investment. However, if the FIT price falls to 800 IDR/kWh, the FIRR for Plan 1 and Plan 2 Case 2

remain above the mezzanine finance interest rate of 15%, but Plan 2 Case 1 falls below that level, requiring

some consideration.

4) Sensitivity Analysis of Power Generation Capacity

The base case makes the assumption that over the course of one year 10% of the time the plant will not be

operating due to inspections, or plant shut down, etc., resulting in a facility usage rate of 90%. However, in

the case of breakdown or other issues, there is a risk of long term shutdown. In this FIRR analysis, we will

look at cases where the facility usage rate drops another 10% or 20%.

9-7

Table 9-3-4 FIRR Sensitivity Analysis of Power Generation Capacity Changes

Plan 1 Plan 2

Case 1 Case 2

Facility Usage

Rate Base Case

28.9% 17.6% 21.0%

10% decrease 24.9% 14.7% 18.0%

20% decrease 20.7% 11.5% 14.8%

Source: Created by the Survey Commission

It can be said that a fall in the facility usage rate has a large impact on the FIRR. In the case of Plan 1, even

if the facility usage rate falls 20% to 70%, it still retains an eligible FIRR level for investment, but in the

case of Plan 2, it sees a drop below the finance interest rate, requiring some consideration.

Chapter 10 Plan of Action and Issues to Consider

Moving Forward to Implementation

10-1

(1) Status of Work Moving Forward to Implementation of the Project

As the power shortage issue in North Sumatra becomes more and more serious, projects like mini-hydro

power which are able to provide competitive base load energy are highly desired by PLN and local

governments. Especially in surrounding local areas, as development by Palm Kernel Shell (PKS) related

firms in the special industrial park called Sei Mangkei is being planned, it becomes obvious and important to

solve the power shortage for continuous economic growing in the area. This project must confirm with

contractors and related agencies (1) the acquisition and renewal of necessary permits and licenses, (2)

detailed engineering/technical considerations, and (3) financing necessary funds for construction.

1) Acquisition and Renewal of Necessary Permits and Licenses

The general process for development of mini-hydro power projects in Indonesia is as follows. After the

developer selects potential sites, it is necessary to apply for permits with the provincial governor to conduct

field surveys. If the developer has not purchased the land of potential sites, it is necessary to apply for

business permits with the provincial governor to secure the lands for the usage of a mini-hydro power project.

As for environmental considerations, the Environmental Management Plan/Environmental Monitoring Plan

(UKL/UPL) must be submitted to the provincial governor. Once that has been completed, a Power Supply for

Public Use Business License (IUPTL) must be applied for with the Ministry of Energy and Mineral

Resources (MEMR), and a PPA must be enacted through discussions for technical/engineering approval of

the transmission system with PLN. Lastly, if the target location falls within the jurisdiction of the Ministry of

Forestry, an “Izin Penjam Pakan Kawasan Hutan” (IPPKH), a necessary permit for rental, must be acquired.

If this project goes ahead with the new construction plan (Karai 12), the permits that have already been

acquired are laid out in the table below. However, because the IUPTL, the contract for retail power, PPA, and

the IPPKH all will need to be renewed, continued cooperation with the related agencies will be necessary.

Table 10-1-1 Karai 12 Permit/License Acquisition (Survey Commission Confirmation Status)

Name Authority Outline Status

Survey Permit Provincial

Governor

A necessary permit to conduct preliminary

field surveys and detailed field surveys.

Acquired

(Already received)

Business Permit Provincial

Governor

Necessary permit for the right to engage in

business in the target location

Not yet Acquired

（Unnecessary

because of

possession of

IPPKH）

UKL/UPL Provincial

Governor

Plans for environmental management and

monitoring that must be approved for the

execution of the project

Currently being

acquired

IUPTL MEMR Permit for engaging in the distribution and

generation of power for the public good

Acquired

(Already received)

10-2

PPA PLN A necessary contract with PLN for the

selling of power

Acquired

(Already received)

IPPKH Ministry of

Forestry

A permit needed if it becomes necessary to

rent land owned by the Ministry of Forestry

Acquired

(Already received)

Source: Created by the Survey Commission

Additionally, if this project proceeds with the plans to augment the currently operating facility (Karai 13) and

facility currently under construction (Karai 7) along the Pulung River, it will be necessary to acquire an

IPPKH permit for diverting the Pulung to the Karai River, and to conduct an environmental impact

assessment. Also, after the water has been diverted from the Pulung to the Karai River, because the Pulung

will eventually flow into the Karai River becoming a headwater, it would be necessary to calculate and retain

the proper water flow to protect the normal balance of the ecosystem, through careful management and

operations. According to the developer, the water of the Pulung River from the head to the tailwater is not

being used for irrigation, etc., and there are also no reported residents living in the area. However, it would

still be necessary to conduct detailed surveys and have conferences with the related agencies.

2) Detailed Engineering/Technical Considerations

Regardless of whether this project proceeds with the new construction (Karai 12) or augmentation (Karai 13,

Karai 7) plan, it will be necessary to carefully make careful considerations with specialist engineering

companies and EPC contractors concerning detailed topographical maps, geological surveys, brick and

mortar construction plans, structural calculations, execution plans, and plans for electrical equipment.

3) Financing Necessary Funds for Construction

Regardless of whether this project proceeds with the new construction (Karai 12) or augmentation (Karai 13,

Karai 7) plan, it will be necessary to secure funds for construction from outside financial institutions and

investors. Although the total project costs calculated in this report confirm the business feasibility of this

project, it is extremely rare that mini-hydro power projects in Indonesia are contracted as Engineering,

Procurement, and Construction (EPC) Full Turnkey, and experienced domestic firms are few and far between.

Even large-scale Indonesian state owned companies often deliver the construction delays. Therefore, it will

be necessary to carefully confirm contract details to make sure that appropriate measures will be taken to

mitigate construction completion delay risk, underperformance risk, defect collateral risk, etc., so that the

project can be completed within the amount of funding allotted in the beginning.

Based on projects that have been done up until now, the various projected risks facing this project have been

laid out in the table below, separated into the project planning phase, and the project execution phase (Table

10-1-2).

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Table 10-1-2 Projected Risks

Risk Item Projected Risk Initiatives/Countermeasures

Project Planning Stage

Business rights risk

Unable to secure permits

and licenses for business

operations

・IPPKH has already been acquired

Local negotiations,

other permit/license

acquisition risk

Unable to acquire local

resident understanding

and other permits/licenses

・Necessary permits and licenses have already been

acquired (or currently being acquired)

・Receive cooperation of relevant agencies and the

Indonesian government while explaining to the

local residents

Energy retail risk

Unable to sell power

・The necessary contract to sell power has already

been acquired from PLN

Construction delay

risk

Project exceeds arranged

construction period

・ Execution by BHE, with the cooperation and

management assistance of Chodai

Cost increase risk Costs exceed projected

amounts

・ Execution by BHE, with the cooperation and

management assistance of Chodai

・Start participation of the Japanese suppliers from the

planning phase

Project Execution Stage

Business structural

risk

Drop in sales, increase in

costs, decrease in

profitability, climate

change causing a drying

out, etc.

・Information gathering from local partners

Permit/license risk

Permits/licenses for

business operations

become invalid,

interrupting or shutting

down the project

・Information gathering from local partners

・Periodic communication with the authorities for

permits/licenses

Natural disaster risk

Natural disasters that

interrupt or shut down the

project

・Use of insurance, etc.

General unexpected

situations risk

Sudden unexpected

expenses or liabilities,

deterioration of relations

with the operations team,

investors, and other

・Information gathering from local partners

・Periodic communication with the authorities for

permits/licenses

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important related

corporate bodies, change

in laws and regulations,

etc.

Unexpected

international situation

risk

Economic crisis, political

crisis, etc.

・For government and policy change risks that are not

covered by general insurance, use of insurance

through the World Bank Group’s Multilateral

Investment Guarantee Agency (MIGA) is being

considered.

Source: Created by the Survey Commission

4) History of Formation of the Project and Future Intentions

a) History of Formation of the Project

IDI, a former industrial bank now working in the operation of funds and advisory business in

the environmental and renewable energy fields and who were involved as an investor candidate

in the FY 2012 Project Feasibility Study for Export Promotion of Infrastructure Systems

(Philippines Mini-hydro Power Project Study for the Wawa River in the Province of Agusan del

Sur), approached us in December 2012 concerning participation in mini-hydro power in

Indonesia.

The owner of the mini-hydro power proposal in question, BIE, were looking for an

international consulting firm who could invest in the project and participate in planning over

the long term. We determined that they met with our own development policy for mini-hydro

power projects, and in mid-April 2013 held talks with the owner company. This led to the

conclusion of a three party basic contract on October 30, 2013 with BIE and the construction

company that BIE established specifically for mini-hydro power projects, BHE, for the purposes

of implementing all forms of consulting, and including investment in the project.

b) On-site survey and future intentions

After the on-site survey was performed and report draft created for this project, in January

2015, we received the information that the turbine generation facilities at Karai 13 had

suffered a malfunction, and that power generation had stopped.

Our company had already conducted technical guidance with the help of specialists

dispatched by The Overseas Human Resources and Industry Development Association (HIDA),

and as technical guidance for the Karai 13 mini-hydro power plant we sent one of our own

electrical engineers to the site for one month, starting from January 13, who then investigated

the cause of the malfunction with the Karai 13 turbine generation facilities and conducted

technical guidance to the on-site technicians.

In regard to the new establishment of Karai 12 and the repair of the Karai 13

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malfunction, it is the intent of the owner to cover the damages to Karai 13 using insurance. If

Karai 12 will be newly established, future funds will be focused into the construction of Karai

12, and in regard to Karai 13 that suffered the damage, the intent is to continue to generate

power under O&M of the current facilities with the support of our company.

In regard to the new establishment of Karai 12, and taking funds into account, we intend to

make internal adjustments that will allow work to begin as quickly as possible, as well as

continuing discussions with those involved in the project to proactively contribute to new

development proposals in the future. Furthermore, we are also intending to make use of the

Ministry of Economy, Trade and Industry’s Joint Crediting Mechanism (JCM) in order to help

those involved in the project begin work on implementing a FS and commercialization

proposal.

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(2) Status of Work with Affiliated Government and Implementing

Agencies Moving Forward to Implementation of the Project

The energy shortage in North Sumatra is becoming a more and more urgent issue, and in the consultations

conducted with PLN and MEMR in October of 2014 also indicated, the target area has very high

expectations for the development of mini-hydro power projects. Not only from a power generation standpoint,

but also because this project is a step towards the spread of renewable energy, as well as to reduce the

dependence upon high-cost alternatives such as diesel power.

Currently, mini-hydro power projects under 10 MW are not required to negotiate a PPA price with PLN,

and the FIT system which allows for a long-term fixed selling price has been introduced by the Ministry of

Energy and Mineral Resources. FIT is a system laid out in the energy law of 2009 that applies to power

distribution by government-owned enterprises, public enterprises, private businesses, cooperatives, and

NGOs. The FIT price was reformed in May of 2014, and for mini-hydro power projects in the Sumatra

Islands, the selling price has risen from IDR787/kWh to IDR1,182.5/kWh (FIT Price term is from year 1 to

year 8 of operation). As for the application to currently existing mini-hydro power projects. MEMR and

PLN are still continuing their discussions. Although it is projected that the price will increase, how much

increase and the effective period still must be confirmed with the government and related agencies. Exactly

how the FIT price and period will apply to existing projects will have a big impact upon the business

feasibility of the various plans for this current project, and will greatly affect whether this project proceeds

with the new construction option (Karai 12) or the augmentation option (Karai 13, Karai 7).

Additionally, it is essential to understand the lending stance of local financial institutions toward mini-hydro

power projects. Although the introduction of the FIT system has seen an increase in the adoption of

mini-hydro power that can be used for base load energy, financial institutions that are readily willing to fund

mini-hydro power projects are still few and far between. There are number of mini-hydro power projects that

fall behind schedule, or exceed initial projected costs,; therefore many of financial institutions rely on a

corporate financing scheme, relying on the reputation of the developer, or personal guarantee and additional

collateral. In order to assess the risk and adopt a project finance system including a security package, it is

necessary for the funding financial institutions to receive the cooperation of technical consulting firms and

engineering firms, so that the institutions would be able to identify the foreseeable project risks. The

currently operating Karai 13 plant and the currently under construction Karai 7 plant are both making use of

Syariah financing through a corporate financing method. However, after conducting technical, social,

environmental, financial, and economic analyses, it appears to be possible to pursue a financing structure

similar to a non-recourse, project risk dependent style. Currently, this project has requested financing

consideration from the potential senior lenders and sharia financial institutions of Syariah Mandiri and

Muamalat banks. Also, this project is in conference with potential mezzanine lender IDI Infrastructures

concerning funding potential.

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(3) Indonesia Legal and Financial Restrictions

At this point, it is thought that this project will not be subject to any Indonesian legal or financial restrictions.

However, the 2014 Presidential Provision No. 39 on April 23, 2014, “Provisions Concerning the List of

Closed Business Fields and Business Fields Open on Conditions for Investment,” has been announced,

reforming prohibited investments, regulated fields, and upper limits for proportion of foreign investment. The

field of this project is mini-hydro power projects (1-10MW), and previously the only condition for unlimited

foreign investment was that the enterprise was a “partnership.” However, with the new reformations, foreign

investment has been restricted to a 49% stock shareholding. At present, there is no restriction upon

mezzanine financing, but at the time of changing mezzanine loans into regular stocks, it is necessary to keep

the foreign investment proportion in mind. It will also be necessary to continue to watch the government

trends.

On the other hand, in terms of legal restrictions, since this project is a private enterprise mini-hydro power

facility and not receiving any funding from the Indonesian government, there should be no legal restrictions

to consider.

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(4) Necessity for Additional Detailed Analyses

This investigation determined the business feasibility of the establishment of a new facility (Karai 12) as

compared to the installed capacity improvement of two other facilities (Karai 13, Karai 7) through the

application of technical, financial, and economical analyses. The results of these analyses indicated that the

Karai 12 plan is preferable. As laid out in Chapter 3, in order to proceed with the Karai 12 plan, enactment of

detailed technical plans and facility designs is necessary. At present, however, the project is not outfitted with

enough of these various documents and materials. Therefore, in order to continue advancing this project, it

will be necessary to pursue various detailed investigations. Also, this report has used information in which

many of them are still not yet fully fixed and still need to investigate accuracy of the data. During detailed

financing negotiations with various financial institutions, it will become necessary to revile definitive project

costs on a detailed engineering basis for each, as well as to justify the source of data and to make sure the

investment contributions from business partners.

1) River Flow Study

As there is no documentation of the actual river flow for the project area, theoretical flows will be created

using local observed rainfall data. As this data is essential for generation plans as well as equipment design, a

rainfall observation place (gauging station) will be installed near the planned site of the Karai 12 intake weir

during the initial stage of the next round of surveys, observations will be recorded, and a minimum of 1

years’ worth of river flow data will be collected. The details of the surveys are as follows: installment of a

gauging station, measurement of the river cross-section, measurement of rainfall (once a month),

measurement of water level (once a day), and creation of an H-Q curve.

2) Topographical Survey

The final layout of each piece of generation equipment must be scrutinized; a topographic map of 1m of the

entire contour line must be made, from the intake weir site to the power plant site. A detailed 1/200

topographic measurement of the area around each structure will be conducted. Further, along with

measurements of a cross-section of the river, the width of the river will be measured in 50m intervals for

drainage and flood calculation purposes. Details of the survey are as follows: establishment of reference

measurements (3 locations), topographical survey (total ground plan: scale 1/1,000, detailed structural

blueprints: scale 1/200), measurement of river cross section, measurement of river width (50m pitch).

3) Geological Survey

In order to understand the relevant terrain and geological characteristics around the various structures being

planned, field surveys from general to detailed are required. As far as specific survey contents go, the

following should be considered. (1)Make a general survey in a wide area around the project location, and

once the specifics have been narrowed down, take detailed measurements, and conduct detailed studies. (2)

Once a particular site has been narrowed down from the general field survey and plan outline, make a boring

survey to determine the ground conditions at the site. Conduct a Lugeon test using the boring hole. The

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Lugeon test would be conducted with the aim of examining the groundwater characteristics beneath the

foundation, and the presence of leaks brought on by the intake weir, etc. (3) In order to evaluate the

applicability of shirasu concrete, collect shirasu samples and test for particle size, density, water absorption,

unit weight, and percentage of volume solids, etc. and evaluate its characteristics in concrete via more

comprehensive tests.

4) Basic Execution Plan Draft

In order to secure long term reliability of a power generation facility as beneficial social capital, it is

necessary to draft a plan taking into account materials quality, manufacturing process, and safety; specifically,

supply methods (introduction of Japanese machinery), schedule consideration, execution management

system, and safety countermeasures.

5) Environmental and Social Considerations

Survey results regarding the various species of amphibians, fish, water-dwelling insects, and river-based flora

etc. that subsist near the target rivers for this project, the Pulung and Karai rivers, is not available. Detailed

information regarding these plants and animals, as well as the impact of the project upon them, must be

gathered at the time of the UKL-UPL. Social and environmental impact considerations will only become more

and more important, and it is essential to gain the support of the local residents. It is especially important for the

private businesses engaged in the project undertaking to obtain local understanding and support.

6) Operation Scheme, Funding Method

As this project goes on to sign financing contracts with senior and mezzanine lenders, construction costs,

financial institution fees, management costs, etc. must be confirmed. If this project is able to be managed

according to the projections and assumptions of this investigation, it is expected to make stable income sales

that can be used to repay the debts to the senior and mezzanine lenders on timely manner.