The funds will support ongoing Indonesian reforms aimed at improving governance in the energy sector by lowering subsidies, adopting cost-recovery-based tariffs and boosting the performance of state-owned electrical utilities.
“Indonesia’s energy sector has suffered severe underinvestment due to long-standing subsidies on fuel and electricity,” Pradeep Tharakan, senior energy specialist in ADB’s Southeast Asia regional department.
“This has resulted in poor access to modern forms of energy despite the country’s vast energy resource endowment. The project will help the government to enhance energy security, as well as increase supply from renewable sources and natural gas in the future energy mix.”
The money will also boost efforts to scale up renewable energy and prepare for the adoption of cleaner fossil fuel technologies such as carbon capture and storage.
