Grants Form Less Than 1 Pct of $20 Billion Climate Finance Package for Indonesia, Official Confirms
Jakarta. Only $160 million of the promised $20 billion climate finance pact of the Just Energy Transition Partnership, or the JETP, had come in the form of grants, with commercial loans expected to account for the lion's share of the funding, a senior government official revealed on Tuesday.
Last year, coalitions of rich nations and global financial institutions offered Indonesia $20 billion in climate financing to wean it off coal.
One of the two alliances was the International Partners Group (IPG), co-led by the US and Japan, including Canada, Denmark, the European Union (EU), France, Germany, Italy, Norway, and the UK. The IPG will mobilize $10 billion of public money. The other coalition was the group of financial institutions under the Glasgow Financial Alliance for Net Zero (Gfanz), which pledged to chip in the remaining $10 billion.
The JETP money set to come in over a three-to-five-year period mixes different funding instruments, including grants, concessional loans, and market-rate loans. However, it turned out that grants only reached 0.8 percent of the climate financing package.
"The JETP grant stands at around $160 million. The same goes for the technical assistance," Dadan Kusdiana, a director-general at the Energy Ministry, told reporters on the sidelines of a JETP conference in Jakarta on Tuesday.
"About $10 billion comes from commercial loans. However, we still don't know the rate," Dadan said.
He said that the government was currently drafting a comprehensive investment plan expected to lay out the technical details of the JETP funding. Once released this August, the document will provide a comprehensive overview of the funding distribution, shedding light on the projects that stand to benefit from the JETP funds.
"We have secured the JETP financing by commitment, but we still need to convince them because it is mostly commercial loans," Dadan said, adding that it would take time before the funding could materialize.
Over the weekend, Chief Investment Minister Luhut Binsar Pandjaitan said Indonesia still awaited updates from the JETP donor countries and institutions.
"Today we are chasing after the US' group [IPG] and Gfanz, asking them 'where the money is,'" Luhut said at the 2023 Indonesia Net Zero Summit in Jakarta.
"If you ask what the problem is, you should ask them [IPG, Gfanz]. We have prepared everything, including picking the coal-fired power plants for early retirement," he added.