ADB approves $400m in loans to Indonesia
ADB approves $400m in loans to Indonesia
MANILA (AFP): The Asian Development Bank (ADB) said here on
Tuesday that it has approved two loans totaling US$400 million
for a power sector restructuring program in Indonesia.
A $380 million loan will go to support a government reform
program for the sector while a $20 million loan will help set up
a competitive electricity market, the ADB said in a statement
from its Manila headquarters.
The loans are part of the ADB's efforts to help Indonesia
implement major economic reforms in the face of the Asian
currency crisis that broke out in 1997.
The state-owned power utility, Perusahaan Listrik Negara,
which is suffering heavy losses, requires such reforms in order
to survive, the ADB warned.
Among the objectives of the restructuring are creating an
environment for a competitive electricity market, setting up
competition in the supply of bulk electricity and adjusting
tariffs to assure the financial viability of the state utility
during the transition period.
The program also aims to increase private sector participation
and strengthen the regulatory environment, the ADB said.
Along with the loans, the ADB is providing a $20 million
technical assistance to provide consulting services for the
program.
Total cost of the restructuring of the power sector is
estimated at between $1 billion to $1.5 billion annually from
1999 to 2000.
ADB said here Tuesday that it will set up a $3.06 billion
facility to help countries that have been hit hard by the Asian
currency crisis.
The facility will receive its funding from the aid initiative
of Japanese Finance Minister Kiichi Miyazawa, the bank said.
The new Asian Currency Crisis Support Facility will provide
three forms of assistance, two of them in grant forms.
This will include grants to assist in payment of interest
charges related to bank-assisted projects and technical
assistance grants for projects such as bank and corporate debt
restructuring, financial monitoring and improving public sector
governance.