ADB approves $301m loan for RI

ADB approves $301m loan for RI

Agence France-Presse, Manila

Indonesia is to get two loans totaling US$301 million from the Asian Development Bank (ADB) to improve its power sector, the Philippines-based lender said Friday.

The bank will extend a $161 million loan for a project to expand the country's renewable energy generation capacity.

A second loan of $140 million would help set up a competitive electricity market in the key islands of Java and Bali as well as cut transmission bottlenecks, ADB statements said.

The renewable initiative involves 12 projects that will add 82 megawatts of capacity in five remote regions of the outer islands and boost associated power distribution networks.

The state utility Perusahaan Listrik Negara (PLN) is to provide the balance of the funding needed for the $256 million project, it said.

ADB would also administer an $800,000 technical assistance grant from Denmark to pilot a scheme allowing 10,000 low-income families in outer islands to defer the start-up costs of connections.

"Adding renewable energy power plants will improve the supply and reduce pollution generated by fossil fuels," said ADB energy specialist Anil Terway.

The other loan would provide information and communications technology-based equipment to PLN that is needed to operate a competitive electricity market.

Indonesia passed a milestone Electricity Law in September that provided the legal framework for a competitive electricity market.

"We are funding the hardware and software to create a competitive market that will result in efficiency gains and bring down electricity prices for consumers," Terway added.

The project also involves adding transformation capacity in Java and Bali as well as transmission lines in East Kalimantan and South Kalimantan provinces on Borneo island.

Both loans would come from the ADB's LIBOR-based window and mature in 25 years including a five-year grace.