ADB to Provide Indonesia's Energy Sector with Over $1 Billion in Loans

ADB to Provide Indonesia's Energy Sector with Over $1 Billion in Loans

The Asian Development Bank's (ADB) Board of Directors on September 14
approved two loans totaling up to $1.1 billion to strengthen and diversify
Indonesia's energy sector - considered key to promoting inclusive growth and
sustainable development in the country.

The first is a $500 million policy-based loan (including $100 million from
the ASEAN Infrastructure Fund) for the Sustainable and Inclusive Energy
Program-Subprogram 2. The second is a $600 million results-based loan to the
State Electricity Corporation (PLN), guaranteed by the Republic of
Indonesia, which will boost access to sustainable and modern energy services
in eastern Indonesia.

"Increased access to affordable and sustainable sources of energy is a
pre-requisite for the government to meet its economic growth aspirations,"
said Winfried Wicklein, ADB Country Director in Indonesia. "The two loans
approved today will, respectively, improve the enabling policy environment
to increase public and private investment in Indonesia's energy sector, and
support and develop the power distribution network in Eastern Indonesia."

Indonesia's energy sector faces far-reaching and interrelated problems
throughout the value chain, from the supply of primary energy to the
distribution of electricity, leaving some 23 million people lacking access
to power. Energy subsidies over many years have led to underinvestment.
Indonesia also lags many of its Southeast Asian neighbors in the development
of its abundant renewable energy resources, such as solar, wind, and
biomass. This leaves the electricity industry dependent on coal, which
accounted for more than half of energy generation in 2016, according to ADB.

With help from this policy-based support, the government will build on
various reforms to improve fiscal sustainability, such as further
rationalizing tariffs; introduce measures to improve private investment in
electricity and gas; and support the scale-up of renewable energy and energy
efficiency measures. The accompanying technical assistance grant will
support the expansion of energy efficiency programs through efficiency
standards and labelling and testing programs for household appliances, and
the development of private-sector investments in energy efficiency projects.

The $600 million loan to PLN, meanwhile, is part of a series of investment
programs to enhance people's access to sustainable and modern energy
services, with a focus on developing the eastern part of the country as a
new growth hub. As part of the project, a strengthened electricity
distribution system will help eight provinces across Nusa Tenggara and
Sulawesi spur businesses and activities relying on a stable energy supply
including agriculture, fisheries, small and medium-sized enterprises, as
well as tourism.

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Link to Original Article:
http://www.finchannel.com/business/67814-adb-to-provide-indonesia-s-energy-s
ector-with-over-1-billion-in-loans

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John Diecker
APT Consulting Group Co., Ltd.

www.aptthailand.com




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