ADB backs clean power in Indonesia

29 Apr 19

Efforts by Indonesia to reduce its dependence on coal and diesel for energy are being backed by the Asian Development Bank.

The ADB has announced the first drawdown of funds under a $305m financing package for Indonesia’s largest combined-cycle gas turbine power plant.

The project in Karawang, West Java, will be one of the first and largest projects in Indonesia to use liquefied natural gas (LNG) in a 1,760-megawatt power station.

“ADB is a partner of choice in Indonesia’s strategy to finance low-carbon power generation through private sector participation,” said Michael Barrow, director general for ADB’s Private Sector Operations Department.

“This project will support the country’s efforts to strengthen the liquefied natural gas supply chain and increase energy security, while helping to reduce power-generation costs.”  

ADB’s financing package for the project – which is known as Jawa-1 – includes a direct loan of $185m and a parallel loan of $120m provided by the Leading Asia’s Private Infrastructure Fund (LEAP) administered by the bank.

LEAP is an ADB co-financing vehicle dedicated to private sector infrastructure in Asia and the Pacific supported by Japan International Cooperation Agency through $1.5bn equity.

Combined with ADB’s own capital and that of commercial partners, the fund is expected to provide financing of at least $6bn for infrastructure.

The new power station aims to showcase the Indonesian government’s commitment to move towards cleaner domestic energy sources such as natural gas.

The CCGT will supply energy to PLN, the country’s national power utility and is expected to help it avoid 1.77 million tons of carbon dioxide emissions.

Jawa-1 is set to power 11 million households from 2021, pushing Indonesia towards achieving its target of 100% electrification by 2024.

About 4,800 jobs will be created in constructing the plant and 125 jobs when it is operational, and the project will also offer opportunities to improve women’s employment and training.

The ADB estimates that Indonesia needs infrastructure investment of $1.1 trillion for 2016–2030.

  • Gavin O'Toole, expert on Latin America
    Gavin O'Toole

    A freelance journalist. He has written six books about Latin America and taught the politics of the region at Queen Mary, University of London.

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