The Asian Development Bank (ADB) is to provide a $49.5 million loan to help finance the construction of a new power line linking Indonesia and Malaysia.
The transmission line will link West Kalimantan with a hydropower plant in Sarawak, Malaysia and will bring the region one step closer to the development of a regional grid.
The project is the first of two planned links between the two countries. It will enable Sarawak to export hydropower while helping Indonesia utility PLN to reduce the use of oil on West Kalimantan.
"This will make a long-term relationship with our neighbours and a step forward to making the ASEAN interconnection a reality," said PLN's Head of Power System Planning, I Made Ro Sakya.
The project will build a 145 km distribution line, distribution feeder extensions, and a new substation to improve the reliability of power in West Kalimantan. An 83 km cross-border high-voltage transmission line and substation will connect the West Kalimantan power grid to that of neighbouring Sarawak, Malaysia.
A second link is planned between South Sumatra and the Malaysian peninsula and would come on line in 2017. This link would use HVDC technology and would enable Indonesia to export energy from coal fired plants on Sumatra to Malaysi.
ADB says that it is currently preparing a second loan to finance the transmission line of the Malaysian side of the West Kalimantan-Sarawak link. Power flows are expected to start in January 2015.
ADB will also administer a $49.5 million loan provided by the French development agency Agence Française de Dévelopment, as well as a $2 million grant provided by the Multi-Donor Clean Energy Fund under the Clean Energy Financing Partnership Facility.
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