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SARULLA GEOTHERMAL POWER GENERATION PROJECT

The project will develop the steam resources in the Sarulla concession area and construct, operate, and maintain three geothermal power generation units with a total capacity of about 320 megawatts (MW). The units will be powered by steam from production and injection facilities at the Silangkitang and Namora-I-Langit reservoirs, located in North Sumatra. The project will be developed and implemented under a 30-year energy sales contract (ESC) with PLN, a 30-year joint operating contract (JOC) with Pertamina Geothermal Energy (PGE) and a 20-year guarantee from the Ministry of Finance, as stipulated under a business viability guarantee letter (BVGL).

The project will help the government advance towards its renewable energy and climate change mitigation goals. Successful implementation of the project and deployment of concessional cofinacing will lead to: (i) increased geothermal power generation in Indonesia; (ii) more private sector investment in the geothermal sector; and (iii) increased electrification rate in

Indonesia.

The Project complies with ADB's energy policy supports the development of clean energy with private sector participation. The Project, which is to generate electric power from renewable resources, will reduce greenhouse gas emission from the use of fossil fuels for power generation, to mitigate climate change.

The Project is in line with ADB's Country Strategy and Program for Indonesia 2006-2009, emphasizing physical infrastructure development with private sector investment, strengthening environment and natural resource management, and reducing pollution. As the country's largest single-contract geothermal power project upon completion, the Project is also consistent with ADB's private sector operations in Indonesia, which highlights the development and financing of important infrastructure projects in energy with strong demonstration effect.