The $1.1 billion Asian Development Bank (ADB) loan will be split to implement two programmes. According to a statement, $500 million from the ADB will be directed towards the implementation of the Sustainable and Inclusive Energy Programme together with $100 million from the ASEAN Infrastructure Fund (AIF).
The AIF is a fund developed by the ADB and its member countries to provide funding to infrastructure upgrade projects.
Under the Sustainable and Inclusive Energy Programme, the government of Indonesia will develop new and improve existing energy policies. For instance, the loan will fund the development and adoption of energy efficiency standards in addition to developing regulation to attract and increase private investments in the gas and electric sectors.
The Sustainable and Inclusive Energy Programme will include the implementation of pilots on consumer smart home energy efficient appliances.
The loan will also cover efforts by the government to rationalise energy tariffs and to fund renewable energy projects.
Asian Development Bank and grid modernisation
The government of Indonesia will use the remaining loan from the ADB ($600 million) to help the State Electricity Corporation to modernise its services at the same time promoting sustainability in service territories, in eastern Indonesia. [Indonesia expands smart payment deal with Itron].
The State Electricity Corporation will use the loan to expand its clean energy portfolio to secure energy supply and ensure consumers are provided with affordable and clean energy.
The state utility says it will use the funding to strengthen its electricity distribution system and spur businesses including agriculture, fisheries, tourism and small and medium-sized enterprises relying on a stable energy supply in eight provinces across Nusa Tenggara and Sulawesi.
The loans will help the Asian country to reduce reliance on coal-fired energy generation under efforts to reduce carbon emissions. To date, the country produces more than 50% of its energy from conventional energy generation resources.
The development is also expected to help improve access to electricity to some 23 million people currently not connected to the grid system.
“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.
Image Credit: 123rf.