ADB Provides Financing Of 92.6 Million US Dollars To Support Green Energy Development In Indonesia

The Asian Development Bank (ADB) signed a 92.6 million US dollar financing agreement with PT Supreme Energy Muara Laboh (SEML) to develop geothermal power resources to support the green energy transition in the Republic of Indonesia (RI).

The development of geothermal power resources is carried out through the expansion of geothermal facilities in Muara Laboh in West Sumatra, as well as support in construction, operations, and maintenance of new geothermal power plants with a capacity of 83 megawatts (MW).

"Investment in the field of geothermal power generation is quite challenging, so support from ACFP and the Australian Government is very important in mitigating risks and realizing projects that help Indonesia meet its clean energy targets and providing affordable electricity," said Director of ADB for Indonesia Jiro Tominaga in Jakarta, quoted by Antara, Wednesday, January 15.

The total financing package of 92.6 million US dollars prepared by ADB consists of 38.8 million US dollars from ADB's ordinary capital resources (ordinary capital resources) and 38.8 million US dollars from B ADB syndicated loans from Sumitomo Mitsui Banking Corporation with ADB acting as a registered lender, as well as a soft loan of 15 million US dollars from the Australian Climate Financing Partnership (ACFP/Australian Climate Finance Partnership).

ADB is the bank that leads the process of determining the structure for the transaction, which mobilizes private commercial capital with project risks that have not been covered for the first time in a new development (greenfield) in the geothermal electric producer (IPP) sector in Indonesia.

A number of parallel lenders also participated with ADB, including Japan Bank for International Cooperation and several commercial banks with guarantees from Nippon Export and Investment Insurance.

"This project will help reduce greenhouse gas emissions and encourage sustainable energy solutions that will increase Indonesia's long-term energy security. It is very important for the private sector and the government sector to work together to advance geothermal development," said Jiro.

Since 2013, ADB has used its deep experience to finance four geothermal transactions in Indonesia. ADB shows its strong commitment to the geothermal sector of Indonesia by supporting private sector financing operations for a number of projects, including Muara Laboh Phase 1, Rantau Dedap, and the geothermal power plant project Sarulla.

"This project not only strengthens our renewable energy portfolio, but also contributes to the local economy by creating jobs and encouraging community development," said SEML President Director Nisriyanto.

Indonesia has the largest geothermal energy reserves in the world which is estimated to reach 23.1 gigawatts, but only a small part of this potential has been utilized. This abundant geothermal resource makes the government prioritize the development of geothermal power plants.

ACFP is a soft mixture financing facility, managed by ADB and funded by the Australian Government. ACFP seeks to be a catalyst for private sector financing in investment for climate adaptation and mitigation in the Pacific and Southeast Asia, as well as address market and demand inequalities by lowering the risk of development projects having a major impact and bringing the project to market.

SML is a special-purpose vehicle established to explore and develop geothermal resources in Indonesia. The company is a joint venture between Indonesia's geothermal power provider, PT Supreme Energy, a Japanese trading and investment company, Sumitomo Corporation, and Japan's largest oil and gas exploration and production company, INPEX Corporation.

ADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, and continues its efforts to eradicate extreme poverty. Founded in 1966, ADB was owned by 69 members, of which 49 were in the Asia and Pacific regions.