Coordinating Ministry For Maritime Affairs And Fisheries: Types Of JETP Funding Don't Burden The Economy

ILLUSTRATION BETWEEN

The Ministry of Maritime Affairs and Investment Coordinator stated that the government ensures that the type of funding agreed in Indonesia's Just Energy Transition Partnership (JETP) is the type of funding with the most appropriate interest rates and does not burden the national economy.

"The funds will be distributed multi-path and multi-party, depending on the investment scheme and depending on the type of project," said Deputy for Infrastructure and Transportation Coordination of the Coordinating Ministry for Maritime Affairs and Investment Rachmat Kaimuddin as reported by ANTARA, Saturday, May 20.

Indonesia's JETP funding consists of 10 billion US dollars in public funding from IPG members (United States, United Kingdom, Canada, Germany, France, Italy, Japan, Norway, Denmark, and the European Union).

In addition, 10 billion US dollars from 7 international financial institutions that are members of Glasgow Financial Alliance for Net Zero (GFANZ) are HSBC, Citibank. Standard Chartered, Bank of America, Deutsche Bank, MUFG and Macquarie.

According to him, the type of funding, among others, can change grants and loans, both soft and blended finance, which is a scheme in which commercial funding is mixed with other types of funding to generate low interest rates and the best requirements (cheaper capital costs).

Based on the agreement with JETP Indonesia, the mobilization of funding is targeted to occur in the 3rd year until the 5th year after the JETP Indonesia funding partnership is agreed.

The purpose of JETP Indonesia is stated in a joint statement signed by the government and members of the IPG. Thus, the goal set out in a joint statement is a common target.

Joint targets are targets that are conditional depending on the availability of international support, and mainly consist of a target of reducing the emissions of Indonesian greenhouse gas in the electricity sector in 2030 to reach 290 million tons of CO2 (from the baseline which is estimated to reach 357 million tons of CO2).

"In addition, it also seeks to achieve zero net emissions in the electricity sector by 2050 and accelerate the use of renewable energy to reach 34 percent of the electricity energy mix by 2030," he said.

On November 16, 2022, the Government of Indonesia together with developed countries that are members of the International Partners Group (IPG) signed an energy transition funding partnership worth US$20 billion.

This funding partnership follows a similar partnership signed by IPG with South Africa in 2021 of actual USD 8.5 billion (South African JETP). Apart from South Africa and Indonesia, Vietnam also signed a similar partnership in December 2022 worth USD 15.5 billion.

JETP Indonesia is the largest energy transition funding partnership in the world and is an innovative partnership led by a partnership-implementing country.