ADB to Provide $1b Loan for Indonesia's Sustainable Energy Development
Jakarta. Manila-based Asian Development Bank has approved a total of $1.1 billion in loans to support Indonesia's sustainable energy sector development, according to a statement it released on Thursday (14/09).
"Increased access to affordable and sustainable sources of energy is a prerequisite for the government to meet its economic growth aspirations," Winfried Wicklein, ADB country director in Indonesia, said.
The two-part loan consists of a $500 million policy-based loan for sustainable and inclusive energy programs and a $600 million results-based loan to help state-electricity company PLN provide sustainable energy in eastern parts of Indonesia.
The second part of the loan will help PLN set a new growth hub in eastern Indonesia by strengthening electricity distribution across Nusa Tenggara and Sulawesi.
A more stable energy supply in these parts of the country will boost local agriculture, fisheries, small and medium enterprises and tourism.
"The two-part loan approved today will, respectively, improve policy environment and increase public and private investment in Indonesia’s energy sector, and improve power distribution in eastern Indonesia," Wicklein said.
Lack of electricity in the outermost parts of Indonesia is a consequence of the archipelago's challenging geography. The World Bank estimated Indonesia would have to invest $500 billion in the next five years to fill the infrastructure gap.
According to the 2016 World Energy Outlook (WEO) report, 41 million out of around 260 million people in Indonesia do not have access to electricity.
Indonesia's electrification rate was 84 percent in 2016, the report also said. The Indonesian government wants to achieve a 100 percent electrification rate by 2020.
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