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.