Indonesia’s energy sector has experienced years of underinvestment, and the country falls behind many of its Southeast Asian neighbours in the development of renewable energy sources, such as solar, wind and biomass.

“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…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,” he added.

The first loan is a $500m policy-based loan, including $100m from the ASEAN Infrastructure Fund, for the Sustainable and Inclusive Energy Program. The second $600m loan is results-based to the State Electricity Corporation which is said to boost access to sustainable and modern energy services in eastern Indonesia.

In 2016, the coal-dependent electricity industry accounted for more than half of the energy generation in Indonesia.