$35 Million ADB Loan to Enhance Electricity Services in Timor-Leste

$35 Million ADB Loan to Enhance Electricity Services in Timor-Leste

MANILA, PHILIPPINES (27 October 2021) — The Asian Development Bank (ADB) has approved a $35 million loan to help provide sustainable, reliable electricity to 12 municipalities by modernizing the power distribution system and strengthening the ability of state utility Electricidade de Timor-Leste to manage the electricity grid.

The Power Distribution Modernization Project, ADB’s first power sector project in Timor-Leste, will install 140,000 smart meters and distribute prepaid cards to help households manage their electricity usage. It will install a distribution automation system to improve network reliability and 30 distribution transformers to reduce overloading.

The project will rehabilitate 290 circuit kilometers of medium and low-voltage distribution lines, set up a distribution control center, establish a distribution management information system, and rehabilitate the main distribution warehouse in the country’s capital, Dili. The project will also boost women’s employment in the energy sector. It will train households, especially women, on electrical safety and productive uses of electricity.

“A resilient and reliable electricity system is crucial to the country’s goal of diversifying its economy and boosting industry, trade, tourism, and rural and urban social development,” said ADB Senior Finance Specialist Daniel Miller. “The project will improve the state utility’s operating efficiency, improve revenue collection, and strengthen its institutional capacity for electrical safety and operations. It will help improve the delivery of public services to households, create jobs, and support the government’s economy recovery plan.”

Electricidade de Timor-Leste provides electricity to more than 200,000 households, but its distribution network is in poor condition, with excessive voltage drops and persistent service outages. The cost of electricity supply is higher than neighboring countries because of the utility’s slow transition from expensive diesel generation to renewables, high technical losses, and wasteful consumer use of energy because of a lack of metering infrastructure.

The electricity sector receives substantial state subsidies to cover the operating costs of the electricity network. Improving the financial sustainability of the sector is a priority for the government, which has initiated energy sector reforms through the recent establishment of Electricidade de Timor-Leste as an autonomous state-owned enterprise. The project will support these reforms by reducing the high levels of network losses in the system and improve sector financial sustainability. 

ADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty. Established in 1966, it is owned by 68 members—49 from the region.