Official
Use Only
Malaysia
Ex-post Monitoring of Completed ODA Loan Project“Rehabilitation of the Tenom Pangi Hydropower Project”
External Evaluator：Nobuyuki Kobayashi(OPMAC Corporation)
Field Survey: September, 2009
1. Project Description

Map of the project area

Water intake gate of
the Tenom Pangi Hydropower Station

1.1 Project Objective
The objective of this project is to secure the stable supply of electricity by rehabilitating theTenom Pangi Hydropower Station damaged by flooding in the State of Sabah, thereby
contributing to the growth of local economy.
1.2 Outline of the Loan Agreement
543 million yen / 299 million yen

Approved Amount/
Disbursed Amount
Loan Agreement Signing Date/

May 1992 / September 1999

Final Disbursement Date
Ex-post Evaluation

FY 2003

Executing Agency

Sabah Electricity Sdn. Bhd. (SESB)

Main Consultant

Japanese companies, etc.

1.3 Background of Ex-post Monitoring
The Tenom Pangi Hydropower Station is a conduit type hydropower plant on the Padas
River with a maximum capacity of 66MW. It was constructed with assistance of Japanese ODA
loans. The power station started operation in 1984 but torrential downpours in 1988 damaged
the water intake gate (the trash boom and vertical gate) and resulted in unstable operations. This1

project implemented civil works to prevent accidents which could cause outages as well as therepair of damaged facilities. Ex-post evaluation confirmed the recovery of power generation but
it also revealed that the rehabilitated facilities had been damaged again. Among the facilities
repaired by this project, the trash boom, the strainer / sand separator, and the river flow rate
forecasting system were seriously damaged. The trash boom lost its floats and could not trap
trash at the water intake gate only a few weeks after its completion. The strainer / sand separator
also started malfunctioning a few weeks after completion, requiring the switch to an older
system. The river flow forecasting system also did not function and suffered from sand clogging
at meters. Some parts were stolen. Since this damage was expected to cause outages at the timeof the ex-post evaluation, the sustainability of project benefit was in doubt. Therefore, thisproject was selected for ex-post monitoring and each criterion reviewed with the findings fromthe field survey and other research activities. The conclusion was then drawn.

2. Monitoring Results
2.1 Effectiveness (Impact)
Power generation of the Tenom Pangi Hydropower Station increased after the ex-post
evaluation and remained at a high level (above 500GWh in FY2007 and FY2008). Althoughpower generation decreased due to the repair of the generators in FY2009, it is expected thatitwill recover as repair works are completed at the end of FY2009. The trash boom is still
damaged at the time of the ex-post monitoring but this damage only marginally affects theoperation of the power station.
2.1.1 Quantitative Effects(1) Electricity generation and maximum output of Tenom Pangi Hydropower Station
The rehabilitation works which this project implemented ended in 1998. Following this,the average annual electric generation from 1999 to 2002 reached 423GWh. 1 After the ex-post
evaluation, annual electric generation stood from 400 GWh to 510GWh between 2003 and 2007
and the average climbed to 466GWh (see Table 1 and Figure 1).
generation recorded a new high in 2007.

Furthermore, annual electric

A considerable decrease in the annual electricity

generation for FY2009 was due to the replacement of hydropower parts and the emergency
repairs of the Generation Unit III. Repairs were completed in August 2009 and, thus, electricity
generation is expected to recover. At the time of the ex-post monitoring, the damage to the trashboom still remains and flooding may cause further damage around the water intake gate.

Asthe damage to the trash boom does not result in a reduction in electricity generation, its
influence on daily operations is considered relatively marginal (further details on the damage tothe trash boom can be seen in “2.2.2 Current Status of Operation and Maintenance”).
1

Based on the ex-post evaluation report, “Malaysia: Rehabilitation of the Tenom Pangi Hydropower Project”

2

Table 1: Annual electricity generation of Tenom Pangi Hydropower Station
Unit: GWh
2

2002

2003

2004

2005

Electricity Generation

414.6

405.94435.17438.63Fiscal Year

2006

2007

2008

2009

Electricity Generation

496.40514.07505.33334.30Fiscal Year

Source：SESB

600
500
Damaged by flooding

GWh

400
300

Rehabilitation began
Repair of Generator

200
100

Operation began

Rehabilitation ended

19
84
19
85
19
86
19
87
19
88
19
89
19
90
19
91
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09

0

Source: SESB

Figure 1: Annual electricity generation of Tenom Pangi Hydropower Station
The maximum capacity of the Tenom Pangi Hydropower Station is 66MW (22MW×3
units). As mentioned earlier, however, maximum capacity started to decrease in August 2007
due to the replacement of hydropower parts and emergency repairs on the Generation Unit III(see Figure 2). After completion of the repairs, the maximum capacity recovered to 66MW after
September 2009.

2

In Table 1 and Table 2, SESB’s fiscal year is from August to September.

3

80
70
60

66 66 66 66 66 66 66 66 66 66 66 66 66 66 66 66 66 66 66

66 66 66

66

MW

50
40

44 44 44 44

44 44 44
37 37

30
20

22

10

09
M
ay
-0
9
Ju
l-0
9
Se
p09

M
ar
-

Ja
n09

ov
-0
8
N

Ju
l-0
8
Se
p08

08

08

M
ay
-

M
ar
-

Ja
n08

ov
-0
7
N

07
M
ay
-0
7
Ju
l-0
7
Se
p07

M
ar
-

Ja
n07

0

Source: SESB

Figure 2: Maximum capacity of Tenom Pangi Hydropower Station(2) Outage hours for the Tenom Pangi Hydropower Station
The outage hours for the Tenom Pangi Hydropower Station during the last three years(total hours of the three generators) is shown in Table 2. The large increase in unplanned
outages in FY2008 was due to the emergency repairs on the Generator Unit III. Unplanned
outages are expected to decrease after the completion of repair work on the Generator Unit III.
Table 2: Outage hours for the Tenom Pangi Hydropower Station
Unit: hour

Fiscal Year

2007

2008

2009

Unplanned

85.73

263.262177.50

Planned174.41281.75882.47

Total

260.14545.013059.97

Source: SESB

(3) Financial Internal Rate of Return (FIRR)The FIRR of this rehabilitation project is reviewed in accordance with the FIRR calculation
method at the time of the ex-post evaluation. The FIRR reaches 12.1%, a rate which is higher
than the 9.2 % at the time of the ex-post evaluation. The actual incremental electricity
generation after the completion of this rehabilitation project surpasses the estimation made at
the time of the ex-post evaluation. The increase in incremental electricity generation contributes
to the higher return of the FIRR. The recalculation of the FIRR is based on:

4

Cost

: investment, opportunity costs during project implementation, and O&M costs3

Benefit : incremental sales of electricity (incremental electric generation 4 ×sales price 5 ）Project life : 50 years after the completion of the power plant (until 2033)
2.1.2 Impact(1) Contribution to the local economy
After the ex-post evaluation, the GDP of the state of Sabah has been growing at 5% perannum and the population at 2% per annum (see Table 3). In tandem with the economic andpopulation growth, electricity consumption has recorded a high level of growth. Electricity
generation by the Tenom Pangi Power Station accounted for 12% of that of Sabah in 2008,
which accounted for 15% at the time of the ex-post evaluation. In light of its share in the electric
supply in Sabah, the Tenom Pangi Hydropower Station remains a major source at the time of the
ex-post monitoring and plays a vital role in sustaining the growth of the local economy.
Table 3: GDP, Population and Electricity Consumption in the State of Sabah
Ex-postEvaluation
GDP (Prices in year 2000, million RM) 6
Population (thousand)

7

Electricity consumption (GWh)8Ex-postMonitoring

Rate of Increase/ Year

21,702

26,5635.18%

2,603.5

3,219.2

2.69%

2,118.1

3,384.7

8.13%

Source: Department of Statistics Malaysia, SESB

(2) Supply and demand in the State of Sabah- Electricity statistics
In the State of Sabah, the supply and demand in electricity is tighter now than at the time ofthe ex-post evaluation. The Tenom Pangi Hydropower Station shoulders a critical burden for the
supply of electricity. A significant growth in electric demand contributes to this tighter supply
and demand, though both generation capacity and electric generation have increased in Sabah(see Table 4). The Ninth Five-year Plan aims to ensure 20% of power generation for SESB fromcoal-fired power plants. However, there are strong concerns regarding the negative impact on
the environment, which has resulted in a slow switching to coal-fired power plants, and which
3

Investment, opportunity cost during project implementation, and O&M costs are based on data at the time of
ex-post evaluation. O&M cost is estimated at 2% of accumulated investment costs.
4
Incremental electricity generation is based on actual data for 2003-2009 and the average for 2003-2009 after 2010.
5
Electric prices have not been revised since the time of the ex-post of evaluation. For this reason, the sales price isbased on the CPI-adjusted sales price at the time of the ex-post evaluation.
6
The figure at the time of the ex-post evaluation is based on actual data for 2002. The figure at the time of the
ex-post monitoring is based on preliminary data for 2006.
7
The figure at the time of the ex-post monitoring is based on the population census of 2000. The figure at the time ofthe ex-post monitoring is the estimated data for 2008.
8
The figure at the time of the ex-post evaluation is based on actual data for 2002. The figure at the time of the
ex-post monitoring is based on the actual data for 2008.

5

in turn is one of the reasons behind the tighter supply and demand.
Table 4: Supply and demand of electricity in the State of Sabah 9
At the time of
Ex-post Evaluation

At the time of
Ex-post Monitoring

Units generated per annum (GWh)

2,736.4

4,176.3

Units consumed per annum (GWh)

2,118.1

3,384.7

Unit generated/Units consumed

129.2%

123.4%

768

959

447.0

646.9

171.8%

148.3%

Installed capacity (MW）Peak demand (MW）Generation Capacity/Peak Demand
Source: Department of Statistics Malaysia, SESB

- Questionnaire survey and non-structured interviews with consumers
In order to assess the demand and supply ofelectricity, a questionnaire survey and non-structured

Photo 1: Questionnaire survey with
consumers

interviews with 15 manufacturing plants in Kota
Kinabalu,

theconducted.

10

state

capitalof

Sabah,

were

For comparable information, an

identical survey and interviews were carried out at 5
plants in the Kota Kinabalu Industrial Park (KKIP)
which has a preferential supply of electricity. The
questionnaire survey and non-structured interviews
proved that the demand and supply of electricity wastight.
Among the manufacturers in Kota Kinabalu, more than a half of the respondents chose“Unstable” or “A little unstable” to describe the electricity supply. Similarly, a majority selected“More unstable” regarding the stability of the electric supply compared with 5 years ago (seeTable 5 and Table 6).
Table 5: Current status of the energy supply
Very unstable

Unstable

A little Unstable

StableKota Kinabalu City

0

5

8

1

KKIP

0

0

1

4

9

The figure at the time of the ex-post evaluation is based on actual data for 2002. The figure at the time of the
ex-post monitoring is based actual data for 2008.
10
The questionnaire survey and non-structured interviews were conducted at Kelomnong, Inanam,and Penampang
in early September 2009.

6

Table 6: Status of the energy supply compared with 5 years ago
More Stable

Unchanged

More Unstable

Do Not Know

Kota Kinabalu

1

5

7

2

KKIP

2

1

1

1

Non- structured interviews revealed that an insufficient supply of electricity caused
rotating blackouts in some areas in Kota Kinabalu. The tight supply and demand is not the sole
reason for blackouts as accidents on distribution lines are also blackout cause. Interviewees
explained the negative effects of blackouts as followed: blackouts jeopardize the quality of
products, often waste work-in-progress products, prevent employees from working. Many
manufacturing plants in Kota Kinabalu own back-up generators but some plants do not, due toinsufficient capacity and additional costs. On the other hand, there is no plant with a back-up
generator in KKIP.
(3) Environmental and social impacts
As the project scope is mainly the rehabilitation of damaged facilities, land acquisition andresettlements were not carried out. During the site visit, significant changes in the environment
after the ex-post evaluation were not observed.
2.2 Sustainability
After the ex-post evaluation, there has been no significant change in the structural aspects
of operation and maintenance (O&M). As for the technical aspects, technological capability is
maintained by periodic training and has reached a satisfactory level by technological transfer.
Regarding the financial aspects of O&M, a review of the financial statements of Tenaga
Nasional Berhad (TNB), the parent company of SESB, shows that TNB’s profitability andfinancial stability improved between the ex-post evaluation (2003) and the ex-post monitoring(2008). The ex-post evaluation pointed out damages in the trash boom, the strainer / sandseparator, and the river flow forecasting system. The executing agency properly coped with thedamages excepting in one case at the trash boom. The current status of O&M shows
improvement.
2.2.1 Operation and Maintenance Agency
2.2.1.1 Structural Aspects of Operation and Maintenance
SESB is responsible for the O&M of the Tenom Pangi Hydropower Station. SESB is avertically integrated electric supplier and conducts generation, transmission, and distribution
activities.

In the operational units of SESB, the Division of Generation is in charge of the

O&M of the power station. After the ex-post evaluation, the state-owned electric company TNB
has continued to be a controlling shareholder of SESB and owns 80% of the total shares
outstanding. SESB is included in the consolidated financial statements of TNB.

7

2.2.1.2 Technical Aspects of Operation and MaintenanceAt the time of the ex-post monitoring, 98 employees were working at the Tenom Pangi
Hydropower Station. Out of these, 75 employees were engaged in the O&M of the power
station. At the time of ex-post evaluation, considering the technological transfer during the
project implementation of this project, the technological level was evaluated to be satisfactory.
At the time of the ex-post monitoring, SESB maintained technical capability at the power
station by periodic training. For employees at the power station, SESB currently conducts
internal training on the operation of power plants (7 courses) twice a year. While routine
maintenance (inspection on a daily, weekly, and monthly basis) and periodic maintenance (twicea year) are conducted by power plant staff, overhauls (once every 10 years) and emergency
repairs (whenever necessary) are outsourced to a contractor (TNB REMACO). Spare parts areavailable but it takes time to obtain them.
2.2.1.3 Financial Aspects of Operation and Maintenance
Since the financial statements of SESB are not disclosed to the public, financial stability is
analyzed from the financial statements of the parent company TNB (see Table 7). 11The

Return on Assets (ROA) fluctuates year by year but Interest Payment/EBIT suggests that TNB
has enough profit to satisfy interest payments. 12 As the Debt-to-Equity Ratio is stable and theCurrent Ratio has remained at 1.5, it can be concluded that TNB is financially stable.
Compared with financial ratios at the time of the ex-post evaluation, the ROA shows a better
profitability and the Interest Payment/EBIT and the Debt-to-Equity Ratio suggests an
improvement in financial stability at the time of the ex-post monitoring. Although the executing
agency SESB has not revised electricity prices since 1986, the solid financial stability of TNB
guarantees that the financial status of SESB has only a very marginal influence on thesustainability of this project.
Table 7: Financial Ratios of TNB
Fiscal Year
Interest Payment/EBIT

2003

2004

2005

2006

2007

2008

0.44

0.48

0.47

0.37

0.21

0.27

1.77%

1.28%

2.02%

3.32%

6.01%

3.72%

Current Ratio

0.92

1.73

1.22

1.41

1.51

1.68

Debt to Equity Ratio

3.27

3.26

2.92

2.33

1.81

1.71

ROA

Source: TNB

2.2.2 Current Status of Operation and MaintenanceThis project implemented 1) the rehabilitation of the hydropower station, 2) the
rehabilitation of civil works, and 3) the establishment of the river flow forecasting system. The
11

The financial ratios are calculated on the financial data from the annual reports from FY2003 to FY2008(consolidated basis). All of the annual reports are publicly disclosed.
12
EBIT: Earning before Interest Payment and Tax

8ex-post evaluation pointed out that, out of the facilities repaired and improved by this project,
the trash boom, the strainer / sand separator, and the river flow forecasting system had beendamaged. The executing agency conducted repair works on these facilities. Except for the trashboom, these facilities are now in a better condition. The current status of these facilities is asfollows:(1) Trash boom
At the time of ex-post evaluation, the facility to trap trash was broken as the floats of thetrash boom had been washed away. In 2004 (after the ex-post evaluation), a structure forcatching trash was constructed in front of the water intake gate (see photo 2). 13

After half year

from the completion of construction, however, damage occurred again. At the time of the
ex-post monitoring, no facility to prevent the clogging of trash had been installed at the water
intake gate (see photo 3).
Photo 2: Water intake gate after the ex-post
evaluation

Photo 3: Water intake gate at the time of the
ex-post monitoring

As counter measures, the executing agency is currently:
1) Expanding meshes in the trash grills installed in the water intake gate so that clogging oftrash does not occur2) Raking trash in the settling basin placed between the water intake gate and the watertunnel. Trash screens are placed in the settling basin. Raking machines are currently inuse.
3) Stopping the power plant, opening the diversion gate, and washing way trash, when agreat quantity of trash appears.
The lack of a facility to catch trash causes the danger of clogging and damage to the water
intake gate. In the case of 3), furthermore, a switch to a high cost power source such as a diesel

13

SESB conducted the comparison analysis between the period in which the structure was installed and the same
period of the previous year. The electric outage derived from the action 3) on the next page is reduced byapproximately 40% from 4177MWh to 1766 MWh.

9

generator or natural gas-fired generator is required in order to cope with the insufficient supplyof electricity. For this reason, the executing agency plans to redesign and install the trash boomwith an improvement in materials and movable parts.
(2) Strainer / Sand separator
The Tenom Pangi Hydropower Station

Photo 4: Sand Separator

separates sand from river water and producescooling water. The water is used for coolingthe bearings in the generators.

At the time ofthe ex-post evaluation, the strainer / sandseparator was not used because of malfunction.
A new system was installed after the ex-post
evaluation and the cooling system was updated.
As sand clogging is less than at the time of the
ex-post evaluation, cleaning of the coolingsystem does not hinder operation.
(3) River flow forecasting system
Although this project created gauging stations at three locations (Kemabong, Ansip, andBiah) in the upper Padas River, these gauging stations were not functioning at the time of the
ex-post evaluation. After the ex-post evaluation, SESB reestablished three gauging stations
working together with the Irrigation and Drainage Department of Sabah State.

At the time ofthe ex-post monitoring, flooding had damaged and one station disabling its function while othertwo stations continued to send data to the power station. The gauging stations are unmanned andthe equipment in the stations is extremely prone to theft. For tighter security, SESB cooperates
with the government which owns a facility nearby and their staffs inspect the gauging stations
more frequently than before.
Amongst other civil works which had been rehabilitated by this project, several gabion
walls collapsed due to landslides. However, access roads to the power plants were
well-maintained after the landslides, thus the traffic within the power station was not negatively
affected. Other facilities and equipment have sustained no serious damage and the operation of
the power station is not otherwise hindered.

3．Conclusion, Lessons Learned and Recommendations
3.1 Conclusion
The trash boom in front of the water intake gate was still damaged at the time of the
ex-post evaluation but power generation had recovered and a negative effect on the operation of
the power station was not confirmed. The supply and demand of electricity in the State of Sabah10

is tighter than at the time of ex-post evaluation. The Tenom Pangi Hydropower Station plays acrucial role in power supply. The damaged facilities, except the trash boom, are now in a better
condition. As the executing agency took appropriate remedial action for the problems raised by
the ex-post evalution, this project is still significant at the time of the ex-post monitoring.
3.2 Lessons Learned
None
3.3 Recommendations(1) Monitoring of repair work on the trash boom (for SESB)
The ex-post monitoring revealed that the trash boom had not been set up and, for thisreason, trash had gathered nearby the water intake gate. The executing agency SESB plans toreview the design and reconstruct the trash boom. However, the trash boom has broken threetimes (before project implementation, after project implementation and after the ex-post
evaluation) and this trouble is in danger of developing into damage of the water intake gate, asimilar accident which occurred in 1988. As trash clogging at the water intake gate isunavoidable due to the design of the power station, it is recommended that the executing agency
continues to monitor both trash clogging and its effects on the operation of the power plant andremove trash periodically.

11

Comparison of the Original and Actual Scope
Item

Original

ActualProject Outputs:
Trash control
1) Trash boom

1 set

2) Movable protection rack

1 set

3) Strainer/Sand Separator

1 set4) Differential pressure detecting

1 set

systemas planned
Rehabilitation of civil works
1) Front footholds of side walls/ apron
foot protectors

1 set2) Gabion wall

1 set

3) Slope protection on access roads

1 set

Update of river flow forecasting
system1) River flow forecasting system

1 set
Intern’l : 20.90 M/M
Local : 25.50 M/M

Intern’l : 21.24 M/M
Local : 25.70 M/M

May 1992

same as the left

January 1993～March 1993

January 1995

Preparation of tender documents

April 1993～May 1993

April 1995

TenderJune 1993～July 1993

Consulting service
Project Period:
Loan Agreement
Selection of consultant

Evaluation and Approval of Bids
Signing of contract

August 1993～September 1993

June 1996

October 1993

Construction works
1) Trash control

July 1994～November 1994

September 1996～January 1998

2) Rehabilitation of civil works

July 1994～December 1994

September 1996～January 1998

3) River flow forecasting system

July 1994～October 1994

September 1996～July 1997

Foreign currency

482 million yen

N/A

Local currency

243 million yen

N/A

Total

725 million yen

485 million yen

Japanese ODA loan portion

543 million yen

299 million yen

RM 1=JPY46.6 (1994)

N/A

Project Cost:

Exchange rate

12