ANNEX A

CONSULTANCY SERVICES FOR PREPARATION OF ENVIRONMENTAL AND SOCIAL

SYSTEMS ASSESMENTS (ESSAs)

I. Background
The World Bank (the Bank) has been supporting Indonesia’s efforts to carry through its
ambitious energy transition agenda through a number of projects and analytical works. In this
context, the Bank started the preparation of two Program for Results (P4R) operations, namely,
(i) Transitioning to Sustainable, Clean and Efficient Energy, Program for Results (Energy
Transition P4R) and (ii) Indonesia Sustainable Least-cost Electrification Investment Program for
Results (ISLE-1 P4R). The former will be approximately $2 billion program to be implemented
over 8 years, with the funding from the Bank, Asian Development Bank (ADB), AfD and KfW,
which will support a combination of expenditures, support to reforms, technical assistance, and
other activities relating to energy transition that would be carried out by the PT Perusahaan
Listrik Negara (PLN), Ministry of Energy and Mining Resources (MEMR) and Ministry of Finance
(MoF). The Bank may cover about $500 million of the total program cost. The latter may be
about 2.2 billion program of which the Bank may contribute about US$350-400 million, while
the PLN is expected to contribute about US$ 1.2 billion. The remaining cost is expected to be
covered with private capital (about US$500 million) and Trust Funds.

The Energy Transition P4R would support three Results Areas, namely, (i) Supporting Sector
Transition and Decarbonization; (ii) Improving Sector Financial Sustainability and (iii) Improving
Sector Governance, Efficiency and Transparency. Through the three Results Areas, this P4R
would support a package of reforms and technical assistance, including: (a) assessing the
incremental cost to BPP of adding the planned RE capacity expansion and what investments
would be needed for system balancing and renewables integration; (b) developing an action
plan for coal phase-out, including modelling for least-cost pathways, a pipeline of possible
plants for early retirement and possible financing mechanisms; (c) developing relevant
strategies, guidelines and pilot transactions for innovative green financing; (d) supporting the
development of a new revenue model, tariff reform and subsidy reforms; (e) supporting new
coordination mechanism for the energy sector, establishing an independent regulator and
possible PLN unbundling; and (f) development of an ESG Strategy for PLN. In order to support
the reforms and technical assistance mentioned above, the P4R would finance the cost related
to (1) support to subsidy payments from MOF as compensation for the increased costs of
renewable energy capacity compared to fossil fuels; (2) preparation and transaction costs for
pilot renewable energy (RE) projects in new innovative sectors such as floating solar and
battery storage, as well as support for PPA payments in the initial years of operation; (3)
investments in small-medium size RE projects, such as the public solar rooftop program; (4)
associated technical upgrades to the dispatch centers and the grid; (5) smart metering, IT
systems for solar rooftop and possible compensation for losses; (6) MIS improvement program
for the PLN; and (7) staffing and consultancy costs.
The ISLE-1 P4R would support four Results Areas, namely, (i) Increased delivery, reliability and
resilience of the grid through (a) Improving reliability: interruption by 100km of line and/or
reduction in losses (reliability), (b) climate resilience of the grid: guidelines or actual
investments (resilience), (tbd): productive uses demand increase (delivery); (ii) Increased
readiness of the grid to integrate renewable energy resources through (a) Variable renewable
energy (VRE) integration upgrades of the network (battery storage); (iii) increased VRE
deployment through (a) deployment of publicly-owned solar projects and (b) deployment of
privately-owned solar projects; and (iv) Strengthened planning capacity through: (a) planning
capacity via tools and trainings.

Per Bank Policy, the World Bank is required to carry out an Environmental and Social Systems
Assessment (ESSA) to consider, as may be applicable or relevant in a particular country, sector,
or P4R Program circumstances, the degree to which the P4R Program Systems:
(a) promote environmental and social sustainability in the P4R Program design; avoid,
minimize, or mitigate adverse impacts, and promote informed decision-making relating to the
P4R Program’s environmental and social impacts;
(b) avoid, minimize, or mitigate adverse impacts on natural habitats and physical
cultural resources resulting from the P4R Program;
(c) protect public and worker safety against the potential risks associated with: (i)
construction and/or operations of facilities or other operational practices under the P4R
Program; (ii) exposure to toxic chemicals, hazardous wastes, and other dangerous materials
under the P4R Program; and (iii) reconstruction or rehabilitation of infrastructure located in
areas prone to natural hazards;
(d) manage land acquisition and loss of access to natural resources in a way that avoids
or minimizes displacement, and assist the affected people in improving, or at the minimum
restoring, their livelihoods and living standards;
(e) give due consideration to the cultural appropriateness of, and equitable access to,
P4R Program benefits, giving special attention to the rights and interests of the Indigenous
Peoples and to the needs or concerns of vulnerable groups; and
(f) avoid exacerbating social conflict, especially in fragile states, post-conflict areas, or
areas subject to territorial disputes.

Such an ESSA needs to be completed before, and as inputs to, the Bank’s Appraisal of the P4R
financing. The ESSA report should follow the format provided in the “Guidance: Program-for-
Results Financing Environmental and Social Systems Assessment” and include (1) Program
Description; (2) Description of Expected Program Environmental and Social Effects (including
benefits, adverse impacts, and risks); (3) Assessment of Borrower’s Environmental and Social
Management Systems relevant to the Program (including description of the applicable
borrower systems; assessment of borrower practices and performance record; and assessment
of the borrower systems against core principles and planning elements); (4) Recommendations
and Actions: Inputs to the Program Action Plan (PAP) and Implementation Support Plan; and (5)
Supporting Annexes and Reference Documents.
Preliminary “gap analysis” of PLN’s own E&S management system has been conducted by the
Bank, which assessed gaps between the national legal and regulatory framework applicable to
the Programs, including PLN’s own internal guidelines, and the Bank’s policy on P4R financing,
and identified potential gap filling measures including those based on existing practice
conducted on the ground. Particular focus was placed on solar power generation and
transmission given the focus of the ISLE P4R, however, gap analysis should be further expanded
to also cover additional investment categories that the ET P4R may support including the
piloting of a small portfolio of utility-level RE projects under the RUPTL, such as floating solar,
offshore wind, and solar parks. Since the two P4R programs are inter-related to and
complement one other, this “gap analysis1” focused on a high-level analysis of the relevant E&S
systems as a basis to start the required ESSA process described above for each P4R
program. Additional data collection and analysis, including through interview with relevant
staff of the MEMR, MOF and the PLN, need to be conducted and compiled into the ESSA report
for each P4R Program, tailored to the objective and scope of respective programs, following the
relevant Bank policy and guidance. This is particularly the case with regard to the ET P4R’s
potential support to the MEMR on government sponsored early and small-scale drilling for
geothermal (slim hole), and tariff and PSO reforms to improve tariff structures (including block
tariffs) allow subsidies to be directly passed to poor and vulnerable consumers, which will likely
involve some potential environmental and social risks and impacts.

II. Objective
The objective of the consultancy is to collect necessary data and conduct an analysis of the
environmental and social systems relevant to the Energy Transition P4R and ISLE P4R, and
develop the ESSA reports for the respective programs. The World Bank task team and its
Environmental and Social specialists will provide the consultant guidance and support to ensure
that the ESSA reports meet the requirements of the Bank’s Guidance on P4R.

III. Scope of consultancy and outputs

 Assess existing E&S management systems of the institutions involved (i.e., PLN and
other implementing agencies or ministries), relevant to the Energy Transition P4R and
ISLE-1 P4R, and identify gaps from the core principles of the Bank’s Guidance 2: Program-
for-Results Financing Environmental and Social Systems Assessment, building on the
preliminary “gap analysis” conducted so far on the PLN’s existing systems.
 The assessment should follow the methodology and the conceptual framework laid out
in the Guidance mentioned above, however, where material gaps exist compared
against good international E&S standards, the consultants should assess such gaps too
without regard to the specific requirements in the “Guidance”. The Consultants should
include the assessment based on the desk review of relevant guidelines and regulations
issued by the PLN and other implementing agencies of the respective P4Rs, and
interview with knowledgeable person on their implementation performance on the
ground. The consultants should pay particular attention to those guidelines and

1
Gap analysis report of PLN Corporate ES Management System will be shared with the consultant
2
Bank Guidance on P4R Financing ESSA will be shared with the consultants
 regulations that these implementing agencies have developed with the support of
international financiers which may apply higher standards than relevant national laws
and regulations. The consultants should also collect any good E&S management
practice that the PLN field staff and/or other implementing agencies employ going
beyond the requirements of national laws and regulations or the agencies’ formal E&S
management procedures. The consultants should separate critical gaps on the ground
that the implementing agencies should address as a matter of urgency as they cause
material impact on the ground and significant concerns to the investors, from less
critical gaps which are largely of procedural nature which the agencies may need to
improve on a longer time horizon.
 Identify gap filling measures, building on existing guidelines and regulations developed
with the support of international financiers and the good practice conducted on the
ground, which may apply to the respective P4Rs. The consultants should prepare a
time-bound action plan so that management plan and capacity are in place before
respective P4Rs start carrying out activities that may cause material risks and impact on
the ground.
 Prepare two ESSA reports, one for Energy Transition P4R and another for ISLE-1 P4R,
following the format provided in the “Guidance”. The consultants should do so in close
collaboration and communication with the Bank E&S specialists.

IV. Timeline
The consultancy will be carried out from February to June 2022. Time allocation will be reviewed
with potential extension based on project needs, depending on the preparation timeline of the
two P4Rs.

Indicative timeline
Desktop review of gap analysis of ES legislations and ES management Within 2-3
systems relevant to the P4Rs, including the gap analysis report on weeks of hiring
PLN’s corporate ES management system, against the scope of P4Rs laid
out in their Concept Notes
Initial draft ESSAs for discussion with the Bank task team, developed Within 1 month
based on the desktop review and discussions with relevant of hiring
government agencies on gap filling measures
Public consultations on draft ESSAs Within 2 months
of hiring
Submission of draft ESSA reports for Bank inputs Within 2-3
months of hiring
Revisions and finalization of ESSA reports Within 3 months
of hiring
V. Administration and reporting

The consultant will report to the World Bank Task Team Leaders (TTLs), with support from the
World Bank ES specialists. The TTLs will be the point of contact for contractual issues, with
support from the Project Assistant. The consultant shall submit a succinct progress/activity report
on a monthly basis outlining key activities and progress of the consultancy assignment, issues to
be addressed including the impact on schedule for delivery of the ESSAs. The consultants will be
expected to provide their own laptop and licensed software (e.g., Microsoft Office).

Any potential field visits or missions will need to receive prior approval from the World Bank TTLs
and processed before the proposed date of travel through the World Bank Travel Request
system. Costs related to field missions as approved by the World Bank TTLs will be covered by
the World Bank and the consultant shall submit all supporting documents to the TTLs and Team
Assistant per the World Bank Travel Policy.